Will coronavirus change our supply chains forever?
It is unsurprising that the COVID-19 crisis is influencing global supply chains.
In the case of ongoing procurements, suppliers may fail to meet their contractual obligations, which will put their financial viability, ability to retain staff and supply chains at risk.
Buyers must adapt, quickly, and this could mean that one of the lasting impacts of the coronavirus crisis is an acceleration toward the automation of systems and near-shoring.
How has Coronavirus affected Supply
The UK has done well to support its procurement community.
If a public sector organisation has an urgent requirement for goods, services or works due to COVID-19, they must procure this requirement under the Public Contracts Regulations 2015 but may be able to use accelerated procurement measures. As stated in the Cabinet Office Procurement Policy Note, accelerated procurement measures can include:
- direct award due to extreme urgency
- direct award due to the absence of competition or protection of exclusive rights
- call off from an existing framework agreement or dynamic purchasing system
- call for competition using a standard procedure with accelerated timescales
- extending or modifying a contract during its term
Regulation 32 deals with the direct award due to extreme urgency or direct award due to the absence of competition or protection of exclusive rights.
Buyers can implement Regulation 32 in specific cases and circumstances. Using the Regulation, contracting authorities may award public contracts by using a negotiated procedure without prior publication.
The Coronavirus is affecting supply chains across the world, not just in the UK. The outbreak has had a significant impact on businesses of all sizes all over the world as many suppliers are struggling to meet their contractual obligations, putting their financial viability, ability to retain staff and their supply chains at risk. The lockdown period has also meant that many businesses have had to close and if suppliers do not have the right equipment and supplies this can also halt both the procurement process and work on existing contracts.
As the COVID-19 virus spread from China and then quickly over to European countries like Spain and Italy, infrastructure and networks of supply chains have been disrupted internationally. China was affected particularly badly as roadblocks and factory closures led to empty shipping containers stacking up in Chinese ports, causing a knock-on effect of shortages of containers in other parts of the globe.
The future of supply chains
Although the world is still facing may challenge from the COVID-19 crisis, experts are already thinking about the future and how procurement will adapt.
BRINK, an online publication that focuses on risk and resilience around the world, has predicted that post COVID-19:
“We may see shorter, simpler supply chains with new levels of resilience built in – as well as the all-important new levels of flex and adaptability in strategy and management.”
This is nothing new for the Ministry of Defence as it wants to encourage innovation and attract new and non-traditional suppliers, including SMEs, at all levels of the defence supply chain. This drive for innovation gained momentum following the Government’s publication of the Strategic Defence and Security Review in 2015.
The document outlined the MOD’s ambition to improve its ability to exploit innovative opportunities more quickly and with greater agility in order to secure strategic and tactical advantage over adversaries. It also acknowledged the necessity to recognise and respond quickly to transformative ideas and technologies.
Encouraging and Engaging with Innovation
The MOD wants to encourage innovation and attract new and non-traditional suppliers, including SMEs, at all levels of the supply chain.
If you are already working within the defence marketplace and want to learn more about how you can support future defence procurements, download the latest white paper from DCI – ‘Encouraging and Engaging with Innovation in Defence’.
In this short paper, we explore the hottest topics high on the agenda for the Ministry of Defence, including:
- Artificial Intelligence (AI)
- Machine Learning
- Cyber Security Applications
- The Defence and Security Accelerator (DASA)
The advancement of technology creates both threats and opportunities for the UK’s security and prosperity, and innovation is vital to maintaining the UK’s military advantage.
Download your copy here.