Those of you that went to procurement school in the 80’s and 90’s, the Porters Five Forces model would have been familiar, and probably still features in many category management handbooks. The problem is that it has been used as a snapshot during the creation of a category strategy to analyse the supply market at a point in time and is seldom used as a predictive tool. If it had been effectively deployed in that way in recent years, how many of the supply market ‘shocks’ could have been anticipated?
Clearly up until the end of 2019 a global pandemic was not a hypothesis that many companies would have run if they had revisited the five forces model, but now that we know what we know, what will the future hold?
Porter's five forces source: Porter (1979)
Analysis; Hypothesis 2020 State of Flux research
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As imprecise as these predictions may be, they can give you the head start needed to address supply chain scenarios proactively rather than reactively. They, along with more detailed work can form part of not just de-risking future supply chain decisions but de-risking future company performance.
So how will you respond to these potential changes, will you wait and see and then be driven by events? Or will you anticipate challenges and work with suppliers to respond?
What is clear is that COVID-19 will have a profound effect on the so called balance of power in customer / supplier relationships. The extent of change coming will inevitably lead to more ‘churn’ with some suppliers exiting and others on boarding. At the heart of any future procurement and supply chain strategy is the need to secure well managed, risk free exits and effective and efficient on boarding. This is bound to test procurement and supply chain change management and collaboration skills. This period of change will make it essential to revisit supplier segmentation and re-evaluate current and future relationships strategic significance.
Our 2020 global supplier management research is currently underway and will explore topics ranging from the definition of supply side value beyond price, the importance of senior stakeholder engagement, the place of good governance, the role of technology and how collaboration is solving some of our biggest problems. In addition we’ll also be looking at the specific experiences and lessons learned from the current COVID-19 crisis and how to respond by implementing supplier management at speed. Share your views before the 2nd July 2020. Take part in the 2020 Supplier management survey.