Living in a World of Change – Procurement 2019 vs Procurement 2022

Three years is a lifetime in procurement. Just look back at the state of constant change for the profession since 2019 to understand why.

Time at work can be so strange, can’t it? Sometimes the days seem so long, and the weeks feel never-ending. But then, all of sudden, you’re farewelling yet another year and snowballing into the next one. Often, you simply don’t take the time to sit back and reflect just how much has changed, especially when – and we think this is an honest assessment at this point – you simply have to catapult from one disaster to the next. 

The recent invasion of Ukraine by Russia is yet another example of a type of supply chain crisis that we haven’t faced before, and one that leaves us with countless questions that only other like-minded procurement professionals can hope to answer for us. 

Yet this latest disaster, one of many recent ones if you think about it (including, but not limited to, the pandemic, the Suez canal blockage, and multiple climate-related disasters, including the Australian bushfires), got us hankering for less chaotic times. Specifically, it got us wishing we were three years back in time. Yes, just three years. If you look carefully at procurement trends, a LOT has changed since then. So, are you keeping up, or falling behind? 

If the last three tumultuous years have taught us anything, it’s this. Here’s what’s changed between 2019 and now: 

1. 2019: Let’s manufacture everything in China; 2022: Local supply is the only way to go 

Since at least the 80s, China has been a global powerhouse of production. In fact, at its peak in the early 2010s, a whopping 29% of the world’s manufacturing took place in China alone. Manufacturing also represented a significant proportion – or 40% to be exact – of the country’s GDP. 

Since the early 2010s, some companies have slowly been diversifying their supplier base, but not enough to put a significant dent in the 28% figure. That was, until the pandemic came along. Now, the total global percentage of manufacturing in China has shrunk as much as 5%

So, what happened? 

Firstly, at the very beginning of the pandemic, many factories in China had to temporarily shut down, which affected up to 94% of the world’s supply chains. Although China was quickly able to resolve this, an element of trust was lost. 

After ripping through China, COVID moved everywhere in the world, further disrupting supply chains, and increasing the cost of shipping up to tenfold. As a result, China became more expensive, a phenomenon that was already occurring due to China’s burgeoning middle class. 

This, as well as lingering environmental and human rights concerns, led many companies to adopt (or at least look into) a local sourcing strategy.

In 2019 procurement wasn’t even talking about this, but here we are in 2022, and it’s becoming a reality for many businesses. 

2. 2019: Ethical sourcing is a nice-to-have; 2022: Ethical sourcing is our focus

Between 2019 and now, the sheer number of climate-related natural disasters is truly breathtaking. Firstly, there was the 2020 Australian bushfires, which killed an estimated 3 billion animals. Also in 2020 there was a volcano and typhoon in the Philippines, an earthquake in Turkey, flash flooding in Indonesia, and a cyclone in India.  

In 2021, there were tornadoes and cyclones in the US, landslides in China, and an earthquake in Haiti that killed nearly 3000 people. 

For the skeptics among us, there has always been (and always will be) natural disasters. However, scientists believe that climate change is increasing occurrences of natural disasters by up to 15%.

Fortunately, in 2022, most procurement professionals, and the organisations they represent, are paying attention to this and ensuring they take action. In 2019, an ethical sourcing strategy might have been a nice-to-have.In 2022, it’s essential. 

But how do you know you’re doing ethical sourcing well? Firstly, all of your suppliers should be abiding by these ethical practices. You should also be moving towards a carbon-zero supply chain, as well as moving your sustainability program from beginner to advanced.

3. 2019: We work in offices; 2022: We work from home. Perhaps permanently. 

Would you believe us if we told you that prior to the pandemic, only 8% of people worked from home? You probably would believe it, because you were like among the 92% of people that didn’t. But things have certainly changed. 

Nowadays, that figure has basically flipped on its head. The number of people working remotely has increased by over 150% in recent years, with 66% of all professional employees now working remotely some or all of the time. For procurement employees, managers and departments, this change has been a boon: 77% of remote workers say they are more productive at home, while 74% say they are less likely to leave if remote work is offered. 

Yet things haven’t been all sunshine and rainbows, with many procurement executives feeling a little overwhelmed with how to lead their newly-remote teams. 

Despite the challenges of remote work, however, it’s clear it’s here to stay, which is something that we certainly could not have said in 2019. 

What other drastic procurement and supply chain changes have you noticed between 2019 and now? How have you had to reset? Join us at this year’s CPO Forum, with the timely theme of the ‘Great Procurement Reset’, to navigate a safe and successful path through disruptions with all of Asia-Pacific’s procurement leaders.