In the early days of the pandemic outbreak, the personal protective equipment (PPE) shortage loomed large. That’s when Len DeCandia, chief procurement officer of Johnson & Johnson and the Johnson & Johnson Procurement organization, kicked the group’s work into high gear. The team called upon some strategic partners to collaborate with them to ensure there were available PPE supplies for critical Johnson & Johnson employees to continue providing life-saving products and also to support frontline healthcare workers in their communities.
Procurement isn’t usually thought of as a hub for innovation. But DeCandia believed it could be that—and a whole lot more. Four years ago, he saw the potential of data and digitalization to transform procurement from a simple manufacturing support role into a key strategic partner across the company’s pharmaceutical, medical device, and consumer health divisions, which together generate more than $80 billion in revenue annually. As DeCandia puts it, “We see procurement as a growth driver and competitive advantage.”
Not everyone shares DeCandia’s vision. Until COVID-19 hit, the complexity of procurement had never been fully appreciated—or capitalized upon. Historically, procurement has focused almost exclusively on generating the most efficiency from the supply chain at the lowest cost. But the pandemic exposed that model’s flaws, says Cheryl D’Cruz-Young, a Korn Ferry senior client partner who leads the firm’s Chief Procurement Officer practice. She points to the severe disruption and financial damage sustained by companies reliant on a transactional relationship with limited suppliers and strict inventory management. “COVID accelerated five years’ worth of trends in procurement,” she says.
To be sure, procurement across a variety of industries and companies has been moving toward a more integrated, data-driven, ecosystem-based approach. But change has been more incremental than transformational, owing to everything from corporate inertia and lack of visionary leadership to inconsistent digital implementation and low risk tolerance.
As D’Cruz-Young says, however, the risk is in not changing. Whether a pandemic, a natural disaster, a terrorist attack, or even a trade war, there is no shortage of events that can derail a supply chain solely focused on cost savings. “Procurement needs to be married with digitalization and integrated across all operations to enable suppliers and internal business leaders to innovate together,” says D’Cruz-Young. “That’s the only way to survive when the next inevitable shock hits.”