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The Transformation of the Vendor-Buyer Relationship in the times of Covid

The Transformation of the Vendor-Buyer Relationship in the times of Covid
Dr Nitin Nagrale

Dr Nitin Nagrale, CEO – India and Emerging Markets, Quality New Zealand Limited.

Q. What was the level of preparation among procurement professionals for such a pandemic?

A: Overall, we were absolutely unprepared. Every hospitality procurement team has its own set of standards and SOPs and norms in each organisation, based on their brand. But the pandemic made us examine all this in more detail by taking us on deep-dive into food safety, hygiene, and sanitation. Earlier, we would rely on certifications and believe that products that have come to us were hygienically sanitised. Vegetables and fruits were washed, but we never thought of sanitising them. We never used to sanitise crockery and glassware when they came in, only when they needed to be used.

Now, we don’t even touch invoices/challans. We ask it to be kept in a tray, which is checked later on. When food products come in, everything is washed as soon as it comes in. Some things which can’t be washed are kept isolated, based on WHO standards.

We stopped trusting people’s standards. How is my supplier buying? Where is he buying from? How is he processing? Who is his transporter? Are crates being sanitised? Have employees been tested for Covid? We never thought we would be doing something like this.

Q. In what basic ways has procurement changed in the last six months?

A: Anything we do, we have to be very careful. Pricing, quality, reliability, credibility – these are the four qualities we look for in a vendor. Earlier, we would focus on one or two and be flexible on others, but now all four are very important. If even one pillar is lacking, we won’t select the product.

Although they were with us because of contracts, a lot of vendors went out of their way and supported us despite the lockdown. They have become partners for life.

Q. What has the role of procurement professionals been in the pandemic?

A: Purchasing managers were the only people who didn’t get time off from Day 1 until now. Restaurants, hotels, malls, and product manufacturing all closed down. What was working was the supply chain, with basic dals, pulses etc. Purchasing professionals did not showcase stress, even though we had to deliver a lot in very little time.

We had to rewrite our own policies, and relook procuring and warehousing. We identified vendors who could develop things we wanted. Sanitisers and masks were not available for some time; we had to ensure they were brought from some other place or manufactured here. Even when things were closed, we had to provide cleaning equipment and chemicals.

To achieve all thus, some of us have even personally visited vendors during lockdown.

Q. How has the quality of a product become more important for procurement?

A: Gone are those days when we looked at pricing as the first criterion. Now safety, sanitation, reliability, preparedness of vendors has become critical. Today you may have 1,000 masks, but tomorrow you may have none. Any vendor who goes over and above what is expected gets preference.

Q. When budgets have shrunk, how is purchasing affected vis-a-vis pricing?

A: We tell the vendors, “The benchmark for quality is this high, now you tell me what the price is.” The tightrope is for supply partners, not us. Earlier, they would quote, we would negotiate. Now, the profitability of the vendor has reduced. His credit period has increased. But we inform them about this well in advance, and ask him to supply only if he is ready for this.

Q. As India continues to unlock, how will procurement managers respond to the dynamic situation?

A: Whether things open in a phased manner or all together, buyers will have to be ready with everything. All raw material will be needed, only the quantity will be less. We may procure 100 kg instead of 150 kg, but we will still need tomatoes. Audits, self-declarations and sanitisation of premises will become mandatory.

Every buyer has ensured that each contract is re-negotiated, not only for price but also for health and safety standards. We have new SOPs for how to receive products, how to check quality, how to keep it outside the receiving area till the time it gets into a safe zone, how would you keep stock, issue, re-order, how to evaluate vendors.

Q. In what permanent ways has the pandemic changed procurement?

A: We were dealing with a large number of vendors earlier, which we have reduced. It’s better to deal with fewer vendors to reduce chances of viral transmission. There’s a set of timings which are followed; if a vegetable supplier has to deliver between 9 to 10, then he has to come in at that time, to avoid cross-contamination.

We do not necessarily keep large volumes of products in our stores, but we ensure the supplier has a backup of supplies. Regular business operation – however minimal – requires a certain minimum quantity of product, which we keep, for 15 days to a month, and not more.

Touchless technology will stay around forever. We never thought we could run an organisation from home, but we have all learnt that it is possible to work virtually too. Banqueting will reduce for sure, as people will realise meetings can be held remotely. However, pandemic or not, the desire to meet people face to face will never go away.

Dr Nitin Nagrale,CEO – India and Emerging Markets,
Quality New Zealand Limited.

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