ARM: what does the future hold for procurement and supply chain?

ARM's sister company, Serocor Projects, recently spoke to procurement and supply chain directors across their network to find out how COVID-19 impacted short and long-term plans across the industry. This included leaders at defence, aerospace and IT organisations.

They kept all the responses anonymous to allow for complete transparency and freedom of speech.

Each respondent echoed this statement, discussing the spotlight shone on their departments. This focus is an effort to maintain a flexible cost base that can be ramped up or down, according to demand. All respondents agreed that such business agility is more important now than ever before.

The importance of strong relationships

At its heart, procurement is a collaborative department, liaising with multiple suppliers and internal key stakeholders. The crisis has shown that relationships are everything, with changes in payment terms, deferments and reductions in scope cited as some of the main reasons for having solid partnerships with suppliers.

“It’s easier to flex when you have a trusted, transparent relationship,” pointed out a director in the professional services industry.

Having open, honest communications with suppliers during lockdown, enabled decisions and cost savings to be made quicker, and more efficiently. Ultimately, the crisis has meant investment decisions being delayed, or even put off indefinitely, with difficult conversations had across a range of industries. These demanding discussions put true partnering with suppliers firmly at the top of procurement directors’ agendas.

“Our suppliers need to step up and provide solutions which truly develop our plans and capabilities. Suppliers who understand our business need to drive down cost and put a halt on non-critical projects, become our partners – we feel like they are genuinely in the trenches with us. And these are the partners we’ll ensure are factored into our long-term growth strategies.”

More time for strategic thinking

In the first instance, procurement – as with many operational functions – was diverted to crisis management and cost streamlining. Once this reactive phase passed, with suppliers kept in the loop on parked/stalled projects, there was a more proactive stage where procurement focused on projects and programmes that could still be achieved.

Working from home was described as “efficient” by all respondents, allowing the whole department to catch-up on long-standing tasks and have time to focus on “innovative thinking and strategic goals”.

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