Procurement agility

How procurement’s agility kept Primark moving during the pandemic

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International fashion, beauty and homeware retailer, Primark, like all nonessential retailers, has experienced huge disruption during the Covid-19 crisis.

Due to the uncertainty surrounding the pandemic and government responses to address it, maintaining flexibility and contingency planning were key. Cross-functional teams were set up and tasked with addressing the large-scale operational challenges, using an agile approach to ensure decisions could be made rapidly.

At the onset of the pandemic, the company faced three problems that required immediate support from procurement:

  1. Store closures due to government regulations
  2. New health and safety regulations to protect factory workers, including rising demand for PPE
  3. Logistics and transport disruption due to border closures

Primark’s retail operations procurement team, led by procurement business partner Robert Fitzmaurice, partnered with key stakeholders across the business to address these major operational disruptions in an agile way.

How they did it

In the face of extensive operational and market disruption, Robert and his team worked in an agile way to efficiently address the emerging spend categories and overhaul existing vendor relationships. The team partnered with the relevant stakeholders in cross-functional working groups to promptly support the business by using tried and tested procurement processes – assessing the market, interpreting stakeholder requirements, strategic sourcing, fostering partnerships with key suppliers, third-party risk management, and negotiating the best value from spend – in a more agile way to operate at pace and maintain flexibility.

Maintaining strategic relationships throughout store closures

As store closures would impact revenue for Primark, the team had to rapidly work through a solution that would minimise short-term costs while preserving the ability to reopen quickly and cost-effectively when restrictions lifted.

The first major task for procurement was to pull together the relevant market, supplier and regulatory facts so the business could make well-informed decisions. Some of the dimensions that were considered to inform decision-making included:

  • Which critical suppliers would be required to restore store operations (for example, Primark’s iconic brown paper bags, security, cleaning services)?
  • How flexible were the contracts already in place and what needed to be done to manage those that were not?
  • Level of financial dependencies of suppliers on Primark’s revenue.
  • What government financial support was being offered in all operating countries (such as the UK’s furlough scheme) and what implications would they have?

By offering insight into all the dependencies, risks, and intricacies of existing supplier relationships, the procurement team was able to add significant value to the cross-functional strategic decision-making and problem-solving process through the store closures.

Strategic sourcing of PPE

Sudden health and safety regulations meant that PPE was required in all stores and workplaces. The team had to navigate several challenges to ensure that PPE could be sourced effectively, including:

  • A sudden surge in demand for PPE led to price hikes, availability constraints and greater potential for fraud.
  • Spot-buying from new suppliers was required to secure supply, restricting the possibility for due diligence to avoid fraud and regulatory compliance.
  • Long lead times, coupled with unknown store reopening dates, across markets led to timing constraints.

Like any strategic sourcing activity, there were many factors considered to address these new needs, however, the sudden demand meant the team needed to adopt a faster and more agile approach. The team, therefore, accelerated its comparison of suppliers, risk assessment, and market and regulatory analysis to meet tighter turnarounds.

Procurement in a virtual world

Given the extensive disruption, collaboration and negotiations with third parties multiplied and new techniques were required to adapt to the virtual ways of working. Microsoft Teams became the primary tool for ongoing communication, which required negotiation and relationship-building tactics to be modified in the absence of nonverbal cues. Conversation structures had to be shortened to accommodate set meeting times, leading conversations to be highly focused and dependent on different relationship-building tactics so as not to feel stilted.

Did it work?

Yes. Procurement supporting the business on these cross-functional strategic projects resulted in the following benefits:

  • Stores safely opening on time, in compliance with health and safety regulations.
  • Ethical, environmentally sustainable, and compliant sourcing of PPE (including gloves, sanitisers and facemasks).
  • Effective spend management during periods of store closures without compromising the ability to reopen effectively.
  • Strong collaboration and relationship-building with strategic suppliers.
  • Partnership with key stakeholders across the business to improve ongoing strategic category management beyond the pandemic.

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