Quality and value, and not cost savings, remain the two biggest factors for businesses, when looking for a new supplier.
The Facing the Future survey, conducted by Exeter based procurement consultancy BCR Associates, canvassed the opinion of South West businesses from a variety of sectors, including manufacturing, professional services and construction. The survey provides a snapshot of how Covid-19 has impacted the supply chain.
In the survey, participants were asked to share their supply chain challenges, priorities and predictions. Steve Bolt, Director for BCR, comments:
“None of the businesses chose ‘the cheapest’, as a reason for supplier selection, and when asked to predict the key trends for 2021, cost over quality scored just 13%.”
“It’s good to see that quality and value continue to drive procurement decisions, despite a tough 2020 and the ongoing economic uncertainty.”
Steve explains: “The pandemic may have refocused businesses’ priorities, when it comes to choosing a supplier, and this could be because some have felt let down by certain suppliers.”
Regarding the impact of Covid on the supply chain, the survey uncovers the issues businesses faced, as suppliers transitioned to remote working.
53% said reliability of service had marginally declined, while 51% noted a marginal decline in communication with suppliers. One respondent commented “the main issue has been, and continues to be, just getting in touch with the right person.”
Steve Bolt says that even BCR, with their direct line into suppliers, noticed some disruption. Promisingly, however, survey respondents found only a marginal decline in service, with one business leader commenting “people have demonstrated human values: patience, flexibility and a willingness to explore creative solutions to problems.”
When asked about the priorities for supplier selection, the top answers were as follows:
- Value for money
- Quality of service/ products
- Good reputation in the marketplace
Steve says: “Sustainability also scores highly, with a third of businesses claiming it is a key priority, but right now a lot of supply chain decisions are still driven by value, quality and reputation, with sustainability considerations underpinning these ‘cornerstones’ of a great procurement strategy.”
Looking to the future, Steve comments: “When asked about the key trends for 2021, given the economic uncertainty we are currently facing, I’m surprised that just 40% of businesses chose volatility in the market.”
“At BCR, we predict this will continue to be a big challenge, with some suppliers failing and certain sectors battling the impact of the pandemic.
“This is why we encourage businesses to plan ahead, set a procurement strategy and do their due diligence to check that a supplier is well capitalised.
Steve continues: “There have been 15 corporate failures in the last 18 months, in the energy market alone, and so it is important to ensure the long term viability of a supply partnership.”
Read the Facing the Future: challenges for the supply chain report in full: https://www.bcrassociates.co.uk/our-first-supply-chain-survey