Sustainable procurement and the 'new normal' May 2020

The COVID-19 crisis has shaken the world in a way that has not been seen since World War II. There is no going back to business as usual and a ‘new normal’ will prevail, whatever that means.

Supply chains that were previously considered robust, collapsed under pressure in weeks, and panic buying prevailed around the world as health services struggled to buy essential supplies. Quality control and due diligence was ignored and sub-standard goods were delivered to only to be rejected on arrival, with some healthcare trusts finding their inventory management processes were not fit-for-purpose.

Organisations around the world will now need to rethink the concept of resilience. 

There is a growing body of evidence that governments and civil society will demand a greener and more ethical ‘new normal’. Cities around the world, such as Milan, are planning traffic-free city centres, where walking and cycling will be commonplace. Governments such as that of New Zealand, are abandoning the holy grail of GDP for measures of national wellbeing. The French government is placing green conditions on any bailouts. And the economic success of the mostly American tech giants – some of the winners in this crisis – will see corporate ambition set to achieve sustainability goals, despite the opinions of their president.

What does this mean for procurement?

Here are five actions to take forward in order to ensure a resilient supply chain:

1. We need a sustainable procurement policy that cascades throughout the supply chain.

Regular readers of my blogs will know I have long advocated ISO 20400, the Sustainable Procurement Standard. We need it, and we need it now.

2. We must understand our supply chains.

Many organisations around the world have no idea what happens in their supply chains below Tier 1. The work my team did a few years ago to trace the origins of high-visibility vests revealed it had more air miles than Richard Branson. To develop a resilient supply chain, we must first understand what it looks like. Transparency will be part of the ‘new normal’.

3. Collaboration is key.

Competition is probably not dead entirely, but throughout this crisis, organisations have had to learn to work together to force down a global threat. Collaboration will be key to delivering the ‘new normal’.

4. We need to build capacity in our supply chains.

If we don’t invest in developing the capacity of our supply chains and simply demand they do things differently, the inevitable results will mean fishing in a smaller pool of more capable suppliers. I am not an economist, but I understand if there is less supply and more demand, prices will go up.

5. What you measure is what you get.

The culture of “let and forget” has to go. We need to really understand if our supply chains are delivering the value and sustainability objectives we have set. This will require proactive performance management using real-time data.

So, the new normal?

I can’t wait!

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