How Procurement Can React Quickly in Times of Crisis

Businesses around the world have been impacted by COVID-19, a deadly pandemic that’s taken a steep toll on human life and well-being, while also prompting an unprecedented wave of factory closures, operational disruptions, supply chain bottlenecks and uncertainty over when things might return to “normal.”  

From his vantage point as VP of strategy and commercial, APAC, for RS Components International, Suroor Anwar has witnessed the impacts of COVID on industrial and electronics suppliers, distributors and buyers. Few (if any) have escaped the pandemic’s wrath, but through good cooperation and a dose of empathy, many of these entities are beginning to regain their footing in what has become an extremely uncertain business environment.

In an interview with SourceToday, Anwar discusses the key challenges that electronics buyers are dealing with in the context of the pandemic, offers advice on how to effectively work through these obstacles and shares his thoughts on what procurement professionals can expect in the post-COVID sourcing environment. 

SourceToday: Things are tough all over right now, but what are some of the current challenges that are currently impacting the electronics supply chain?

Suroor Anwar: Issues like COVID-19, the trade wars and the whole sentiment of nationalization that’s going around just amplify the issues that you already have lurking around in your traditional supply chain. Taking it from an electronics buyer’s perspective, the key challenge is still the availability of the latest products. They want it on time and at the right price. Buyers are happy to pay a little bit more, particularly when it comes to smaller volumes.

With COVID, we’ve seen a disruption of the world’s entire logistic setup. That’s largely been due to the restrictions that have been put in place for people, mobility and other functions. This has actually hurt buyers in terms of availability of product, speed of delivery and price.  

SA: At this point, I think most of the online electronics distributors have been able to leverage their connected networks to ensure that they have more stock available in their warehouses. They’re also using data and analytics to make good future predictions in this disruptive environment. By modulating the global network, for example, we’ve been able to deliver on our customers’ expectations, even if its costs us a little more to do that (namely due to transportation disruptions).

ST: How can electronics distributors support their customers during these trying times? 

SA: Generally, in any market where we operate, we have two types of setups from a logistics standpoint. We have a local warehouse that caters to the needs of the local customers, and then we have our global “mother” warehouse that manages overflow items, the latter of which aren’t in high demand in the local market. During this crisis, we’ve been utilizing our data and digital activities—across all transactions—to track spikes in certain volumes or drops in demand in certain areas.

For example, we detected the crisis in China as far back as late-December/early-January. At that point, we mobilized our stock to capitalize on the event and ensure good product availability for buyers. As a result, our business in Asia increased by 11% between Jan. 1 and March 15 (versus a typical 2%).

ST: What would you say to electronics buyers who are dealing with more than the “usual” share of component and parts sourcing challenges right now?

SA: I would tell them to work with a specialist. At the end of the day, everything in this world is now moving towards specialization and supply chain is a specialization in and of itself. Buyers need to make sure that they are getting the right customer experience, which means leveraging specialization. I’d also tell them to continue adapting to digitalization, which is the way forward. It gives you full transparency of your supply chain, data, and more control over where and how you spend.

ST: What’s ahead for the rest of 2020?

SA: Over the last 10 years, we’ve moved into a very customer-centric environment, where everything is about customer experience. Unfortunately, procurement and the buying process itself haven’t modernized in that space. In times of crises, the issues that we already see in the buying space, and the non-modernization of it, are amplified by the external environment.

If buyers start adapting specialists to do the job—and if they can start adapting digitalization, auto-connectivity, good data management and supply chain transparency—they’ll be able to react much quicker to any market disruptions.