BME conduct a survey with German buyers regarding the current Corona impact.
Supply chain managers are under enormous stress due to the Corona crisis – new solutions need to be found daily.
The effect of the rapidly expanding crisis and the number of newly infected people, leaves companies, buyers and supply chain managers facing major challenges. Last week, the BME (Association Supply Chain Management, Procurement and Logistics, Germany) surveyed its German expert group members on the repercussions they are currently facing as a result of the Corona crisis. The results of the interactive discussion from the 1st of April were as follows:
“The current situation and the resulting challenges on procurement and supply chains is that the challenges practically change daily, due to the crisis. “To manage and control such dynamism, demands a high degree of flexibility from companies” says Olaf Holzgrefe, Head of International at the BME. “What was uncritical yesterday may have completely changed today”.
Bit by bit, the crisis affects more companies daily. As of Monday, March 30th, 50% of the medium-sized and global corporations surveyed, described the effects of the crisis as “no to slight effects”. While 27% reported "noticeable effects", 23% are already facing "strong to critical effects”. The effects differed between industries. Looking at the current "hot spots" in supply chains, the survey highlights Italy, which presents challenges to over 35% of companies. Likewise, Spain is also the focus of buyers' supply chain concerns. With regard to China, the picture is not quite clear. While some of those surveyed did not experience any supply chain challenges in recent months, other companies are still facing difficulties, such as those in the IT goods and production materials industry, among others. However, a significant number of companies are already noticing an improvement in the overall situation. "There is a great deal of uncertainty," says Olaf Holzgrefe, "and based on the direct discussions with buyers, in addition to the current problems in Europe and China, buyers are increasingly concerned with the question: What is happening in the USA? And what developments can possibly be expected in India?" A rather surprising result of the survey is that just under 70% of respondents currently rate “delays in delivery” as the biggest problem and thus well ahead of the “supply failure”, which is clearly behind at "still only" just under 10%. Other challenges such as price increases and insolvencies barely emerged from those surveyed. However, the survey also clearly highlights the topic of "uncertainty”. "It is currently difficult to predict whether the delivery delay will continue or whether it will result in a supply failure," says Judith Richard, speaker of the BME's "Supplier Management" expert group. In addition to the operational challenges in the supply chain, procurement departments are also specifically concerned with the issue of "liquidity" and the question of what mitigating measures need to be taken in this regard.
Completely new challenges are being faced during this crisis. The operational solution to the crisis goes hand-in-hand with a work organisation that is new for many companies, through "decentralised working" and working from home. In addition, the procurement of protective equipment and hygiene products for staff is also a major problem. It is interesting to note that German companies partially support their suppliers financially to buy protective equipment.
Other current developments came to light in discussions with the buyers. It was pointed out, for example, that airfreight prices from China are currently rising severely and, understandably the preferential treatment for hygiene articles and medical equipment is limiting capacity. A statement by a buyer also highlights the interconnectedness of supply chains: "For us as a company, due to the discontinuation of ferry shipping on the Mediterranean, important freight capacities are lost. The same applies in the airfreight sector as a result of a reduced number of passenger flights.
The question regarding the future is difficult to answer at this present time. "Currently we can only react in the moment and not think proactively" say the buyers, but the first developments are emerging. Individual companies are stocking up or in some cases moving away from Just-In-Time approach. One thing is for sure, the majority of the companies surveyed agree that this crisis will accelerate the issue of digitisation, also in order to achieve transparency in the supply chain.
To conclude, the BME ventures to take a look into the crystal ball. The companies responded to the question of how long this crisis will have an effect with: “Overcoming the crisis is one thing, but until we reach the level of 2019 – that’s a completely different question.”
Picture: BME e.V.
The BME (Association Supply Chain Management, Procurement and Logistics, Germany):
In the last years, the BME has grown tord. 10,000 individual and corporate members - from small businesses to large enterprises. In 2010, the purchasing volume of our members summarized to 1.25 trillion euros, representing around the half of the German gross domestic product (GDP).
In Germany 38 regions create a network and organize annually about 400 meetings like lectures or company visits. More than 30 specialized experts' panels are working on new practical concepts, which are provided to our members and the public. 4 sections combine our activities in various segments. In addition to the procurement categories. we provide an own section each for public procurement, logistics and service providers.
Since its founding, the BME has welcomed 200,000 visitors to its education and training opportunities. Year by year, around 900 events in Germany and abroad are established by the BME and its subcompanies. The range goes from certified courses, seminars and management forums to large conferences. Every year, wide more than 2,000 buyers, supply chain managers and logisticians are meeting in Berlin for the largest buyers' congress in Europe – the BME-Symposium.
The BME is a member association of the IFPSM.
Copyright: BME e.V.