By: Sakthi Prasad -- Content Director
09 August, 2020
Data Collection and Compilation by Mirza Zack
The Coronavirus (Covid-19) pandemic continues to wax and wane across the globe with no end in sight. Countries across the globe continue to instruct its citizens to avoid discretionary travel while encouraging people to work from home where possible.
The pandemic has resulted in prolonged lockdown in many countries around the world, impacting the trade flows.
Manufacturing sector is the heartbeat of any economy. The sector plays an important role in the global growth.
The Bloomberg heat map given below highlights what purchasing managers are saying about the manufacturing outlook—positive or negative. From the depths of April and May, the situation seems to be slowly improving but still not in the green territory.
Amidst this great disruption to trade, business and normal way of life, Beroe has been receiving multiple queries from Procurement Managers relating to supply uncertainty arising out of this situation.
In order to get a clear picture, we ran a survey among users of Beroe LiVE, a community of thousands of procurement decision makers, to find out their priorities in these challenging times. This was a continuation of our previous survey where we mapped out the level of preparedness when it comes to BCP.
Sourcing and Supply Chain professionals from nearly 300 companies across the globe participated in the survey. A majority of them were from North America while a quarter of the respondents were from Europe.
My company rolled out a Business Continuity Plan (BCP) to tackle disruptions relating to Coronavirus (Covid-19) outbreak
Almost all the respondents said their company has rolled out Business Continuity Plan (BCP), a marked improvement from our previous survey. However, 4 percent of respondents still said their company has not implemented a BCP plan to tackle disruptions.
We continue to experience supply chain disruptions for some of the materials/inputs/ products
Nearly one-third of respondents said they continue to experience supply chain disruptions for some of the materials/inputs/ products. This is significant given that it has been nearly 5 months since the pandemic outbreak and things don’t appear to have settled down.
However, 25 percent have people have said they don’t experience disruption.
I see longer lead times -- as compared to historical average -- from our suppliers based in the following regions
Delivery lead time is an important element in supply chain management. Nearly one-third of respondents have said they are experiencing longer lead times -- as compared to historical average -- from suppliers based in China. This shows even though the country managed to quell the spread the Covid-19 infection, the business is slow to come back online.
More importantly, over one-fifth of respondents said they are experiencing longer lead times -- as compared to historical average -- from suppliers based in North America (mainly the U.S.). This could be because the country is continuing to witness a spike in the infection rate.
“Cost Savings” is now my team’s primary goal as we expect the revenue to be weak for the rest of the year
The verdict is out. “Cost Savings” is back in vogue -- but many would argue that it never went out of fashion. Companies are looking to rein in costs in the face of uncertain global economic situation. 35 percent agreed that “Cost Savings” is now the team’s primary goal due to weak revenue forecast for the rest of the year. 39 percent of people partially agreed.
Interestingly, 21 percent disagreed. They could be from those sectors that continue to do well despite the pandemic.
My team is working on contract renegotiation with suppliers to reduce costs
Nearly 80 percent of respondents either agreed or partially agreed when Beroe asked them whether they are looking to renegotiate supplier contracts with the aim of reducing the cost base.
16 percent disagreed.
My team is working to mitigate the impact of reduction in demand for the company products/services
Many countries are experiencing demand contraction, which is prompting companies across affected sectors to plan for the demand shift.
Nearly 50 percent said they are working to mitigate the impact of reduction in demand for the company products/services, while 26 percent partially agreed. 15 percent disagreed.
A Senior Vice President of Procurement based in North America said that protein markets continue to have issues.
In a contrarian move, we are experiencing a surge in demand for our company’s products/ services due to the Covid-19 pandemic
It is not all gloom and doom. While many sectors continue to feel the pain of weak demand and supply uncertainty, there are some sectors that are doing well even during the pandemic.
Nearly 20 percent of respondents said they are experiencing a surge in demand for their company’s products/ services due to the Covid-19 pandemic. However, nearly 38 percent of people outright disagreed.
When do you think the Covid-19 Pandemic will eventually end?
An overwhelming majority of respondents said that the pandemic will not end until a vaccine or therapy is found. 22 percent of respondents said they expect the pandemic to peter out by the middle of 2021, while nearly 10 percent expect it to end by the end of 2020.
Yet another 10 percent of people said they don’t know when the pandemic will end.
The results show it will take a long while for normalcy to be restored.
Voice of Community
Here are the selected comments from respondents. We are not revealing their names as they are not authorised to speak on behalf of the company.
-- Strategic Procurement Director based in North America
-- Category Manager based in North America
-- Category Manager based in North America
-- Category Manager based in South East Asia
-- Strategic Sourcing Director based in North America
-- Senior Vice President based in North America
-- Sourcing Director based in Europe
-- Category Manager based in South Asia
-- Procurement Director based in North America
-- Procurement Director based in Europe
-- Procurement Director based in North America
-- Vice President, Global Sourcing based in North America
-- Purchasing Manager based in North America
-- Category Manager based in North America
-- Procurement Director based in North America
-- Supply Chain Director based in North America
-- Supply Chain Director based in Europe
-- Procurement Director based in North America
-- Strategic Sourcing Director based in North America
-- Head of Supply Management based in Europe
-- Vice President based in North America
-- Supply Chain Director based in North America
-- Sourcing Manager based in North America
-- Strategic Sourcing Manager based in North America
-- Purchasing Manager based in North America
-- Purchasing Manager based in North America
-- Category Manager based in Australia
-- AVP and CPO based in North America
-- Vice President of Procurment based in North America
-- Sourcing Director based in North America
-- Procurement Director based in Europe
-- Sourcing Director based in North America
-- Procurement Director based in North America
-- Sourcing Director based in Europe
-- Sourcing Director based in North America
-- Senior Vice President based in North America
-- Procurement Manager based in South Asia
-- Category Director based in North America
-- Strategic Sourcing Manager based in Australia
-- Procurement Manager based in South Asia
-- Vice President Procurement based in North America
-- Procurement Director based in North America
-- Category Manager based in South East Asia
One thing is clear: the supply situation has certainly become better compared to the dark days of March and April. However, business uncertainty still lingers as many countries continue to experience a spike in infection rate.
Stay safe and follow your local government guidelines.