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COVID19 and its impact on procurement processes of organisations in the private and public sector within the Twente region

Lochan, N.K. (2021) COVID19 and its impact on procurement processes of organisations in the private and public sector within the Twente region.

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Abstract:COVID19 has had a major impact on our society and economies. The crisis this pandemic has created led to the fact that many industries and economies came to a standstill due to many factors. Therefore, this paper is taking a deeper view into how this crisis is impacting organisations in the way how they are active in procurement, with public and private organisations in the Twente region as focus group. In other words, the research seeks to how purchasing processes are affected and how they will change in the near future. First of all what could be seen was that this crisis came with many risks and negative side effects, both internally as externally. After a literature review, qualitive research was done in the form of expert interviews to gather as much as valuable data. Data is gathered from 26 public and private organisations within the Twente region Internally it could be seen that output was decreasing. Next to that there was much internal uncertainty about how to cope with the crisis which has led to the fact that organisations created crises teams and communication became very important. Externally organisations saw supply insecurities and scarcities due to the supply chains drying up further up the stream. This has led to the fact that communication with suppliers became very important. Also many organisations, were buffering stock. Next to that, multiple sourcing and looking for alternatives got very much attention. Also, becoming a preferred customer is becoming increasingly important. What also could be seen was that demands were declining, leading to decreasing turnover. Therefore, organisations are suspending non-critical investments and projects, next to skimming off personnel. Finally, organisations who source their supplies remotely, got in contact with very high transportation costs and times. When comparing public and private companies, it could be seen that there was no specific difference in how they are both affected by the crisis. However, public organisations are less likely to have a preferred customer status. Next to that, risk management can be seen as a good way in order to hedge for risks as the organisations who had a risk management model in place coped well overall. Finally, organisations who source remotely saw more problems compared to the organisations who source their products locally. First of all, this research has practical implications as it summarizes how COVID19 affects procurement and what organisations can do in terms of strategy in order to cope with the negative effects. Next to that, it provides a future outlook on how procurement has to and will change. The strategies proposed are 1) communicating 2) buffering stock 3) multiple sourcing 4) increasing supply chain visibility 5) suspending non-critical investments and 6) risk management. These strategies turned out to help the studied organisations and this can also be used by other organisations in their combat against COVID19.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/86421
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