Critically discuss, be means of literature review, the relationship between environmental scanning and strategic procurement

1. Introduction

Can a business like Airbnb, operating in the home-sharing and tourism sector, disregard months-long lockdowns and shutdowns caused by a global pandemic and yet sustain its growth in the long run?

Was it possible for a global investment bank like Lehman Bros. to evade an inevitable bankruptcy in the face of a disastrous financial crisis that primarily hit the US market in the late 2010s, with ripple effects eventually felt worldwide?

In both cases, the answer is a straight “NO.” Thousands of small and medium brick-and-mortar enterprises around the world faced forced shutdowns, at least temporarily, due to COVID-19 over the last couple of years. However, a significant number of entrepreneurs not only sustained their businesses but, in fact, successfully grew them over the pandemic period.

How could they stand out from the rest in a market hit by one of the deadliest human crises ever known to mankind? How could a lot of entrepreneurs successfully keep their businesses like bakeries or restaurants operational by exploring the online route while others could not?

These questions can be answered with a detailed discussion of environmental scanning. In this paper, we will also discuss strategic procurement and its relationship with environmental scanning. We will begin with a brief literature review, followed by a case study. 

2. Literature Review

2.1 Environmental Scanning

Environmental scanning is the process of obtaining information about an organization’s external factors, such as different events, trends, and forces attributing to potential changes, with the sole intention of making informed and knowledge-based decisions in the context of the organization’s future plan of action. So, the scanning involves “knowing and interpreting the external changes,” which effectively becomes “a primary mode of organizational learning.” (Choo 1999)

Here, it is noteworthy that scanning an organization’s external environment is not merely an act of gathering information; there is more to it. It helps the management to determine potential threats and explore possible opportunities while protecting the organization from facing any impending surprises.

Environmental scanning, as Chun Wei Choo (1999) elaborates, “…analyzes information about every sector of the external environment that can help management to plan for the organization's future. Scanning covers not only competitors, suppliers and customers, but also includes technology, economic conditions, political and regulatory environment, and social and demographic trends.”

Delving deep into the study of environmental scanning, Chun Wei Choo (1999) comes up with four different aspects of information sought. Situational dimensions demonstrate a strong co-relation between environmental uncertainty and the intensity and frequency of scanning. The complexity of external factors, coupled with frequently changing external forces, makes a strong case for an environmental uncertainty that demands an increased rate and greater intensity of environmental scanning.

The second aspect reveals an intrinsic relationship between organizational strategy and scanning strategy. A strategy or a set of strategies adopted by an organization- be it from Porter’s (1985) Generic strategies or strategic stances proposed by Miles & Snow (1978)- determines the intensity, purview, and fineness of environmental scanning.

Looking into different sectors of the environment is what is called Information Needs, while sources and modes of scanning come under the purview of Information Seeking. Information use, on the other hand, guides the management towards a better understanding of the organization and helps devise its future planning, leading to desired performance. Managerial traits, too, play a significant role in determining the nature of environmental scanning administered by the organization. Managers at the upper echelon of the organization tend to scan more extensively than those in the downstream hierarchy.

Organizational learning by means of environmental scanning requires both searching information and viewing information. Based on these two acts of information seeking and viewing, Chun Wei Choo (1999) proposes four different modes of scanning the external environment of an organization, namely, Undirected viewing, Conditioned viewing, Informal search, and Formal search.

As the name suggests, undirected viewing means looking at information spread over a wide area to identify any traces of potential change early so that information can be used in an organization’s planning to gain a competitive advantage over others. Keeping no particular information needed into consideration, the management employs distinct sources in large numbers to screen a huge volume of information collected.

Conditioned viewing, on the other hand, is used in scanning when the management intends to study the potential influence a set of information could have on the organization. Information need is much more specific in nature, so the scope of screening is narrow as well, meaning it entails less time and minimal effort. Once the information is proven to be important enough for the organization, the searching mode of scanning is triggered by the management.

Informal search comes into play when there is a need for information to develop a more detailed understanding of a particular topic. Following no formal methodology, the search intends to delve deep into the topic, seeking specific insights and details, to realize whether to employ more time and effort on this issue. 

The most sophisticated and formal mode of scanning goes by the name "formal search." A well-planned, structured methodology is followed here to collect reliable information from comparatively more trustworthy and knowledgeable sources compared to other modes of scanning. Particular information on a specific area or topic is sought so that it can be used in the process of planning the organization’s future course of action. So, the relative significance of the information sought necessitates enhanced focus on its accuracy and overall quality.  

Describing an intelligent organization, Garvin (1993) says, “…an intelligent organization is a learning organization that is skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reflect the new knowledge and insights.”

Environmental scanning can be a great tool for an intelligent organization to better understand and learn about itself and its external forces, and if carried out effectively, it can provide the organization with a sustained competitive advantage over its competitors in the long run. However, to successfully administer a scanning project, the organization must have a long-term plan in mind and employ sufficient resources and efforts for it to bear fruit in the form of enhanced organizational understanding for the management. Scanning programs generally take 3 to 5 years to make significant contributions to the organization’s long-term progress. (Choo 1999)

Another highly significant trait of an intelligent organization is its holistic approach. “The intelligent organization adopts a holistic approach to knowledge management,” opines Chun Wei Choo (2002), “that successfully combines tacit, rule-based, and background knowledge at all levels of the organization.”

So, as a highly effective tool for organizational learning, environmental scanning needs to be incorporated into the organization’s formal system, in which coordinated efforts from a domain expert, a skilled information manager, and an information technology expert can be a great recipe for holding a sustained competitive edge in the market over a long period.

Japanese companies like Canon and Honda have proven how continuous monitoring of external factors and sustained research and development (R&D) efforts over time have continued to provide them with a technological edge in a highly competitive global technology market. (Choo 2002)

However, effective coordination between different parts of information management- identifying, acquiring, organizing and storing, developing and disseminating, and using information- must be ensured to get the best results from environmental scanning. Regarding best practices of scanning, Chun Wei Choo (1999) writes, “environmental scanning has to balance the tensions between control and creativity, centralization and decentralization, focus and exploration.” 

If this balance can be maintained, coupled with effective use of time and resources, environmental scanning can generate valuable assets for an organization in the form of knowledge about the organization’s relative stance to the market forces and future opportunities and threats, based on which an informed plan of future actions can be formulated.

2.2 Strategic Procurement

Strategic procurement means a continued process of timely, flawless supply of goods and services that complements the organization’s primary business objectives. It aims to keep the overall supply chain uninterrupted while always seeking to minimize risks and maximize value creation both at the supplier’s end and the customer’s end.

A modern procurement strategy is no longer limited to traditional savings and compliance. Strategic procurement today explores different creative ways of creating value for the organization- and this value proposition goes far beyond the narrow purview of savings and compliance.

For the study of strategic procurement, here, I intend to employ the theoretical perspective of Dynamic capabilities along with Barney’s (1991) Resource-based view (RBV).

The theory of Dynamic Capabilities (DC) highlights an organization’s capability of coordinating its internal and external resources, thus making the organization better placed and more equipped to respond to the changing factors in its environment.

Dynamic capabilities, proposed by Teece, Pisano, and Shuen (1997), “analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change.” So, under this theory, an organization’s competencies- both internal and external- are intended to be well coordinated so that new avenues of opportunities can be explored while avoiding impending threats posed by changing external forces.

J.B. Barney holds quite a similar stance in his Resource-based view (RBV), a highly influential theory in the domain of strategic management, emphasizing the identification of a firm’s strategic resources that can be utilized for gaining a long-term competitive edge in the market. Barney (1991) says, “... sustained competitive advantage derives from the resources and capabilities a firm controls that are valuable, rare, imperfectly imitable, and not substitutable. These resources and capabilities can be viewed as bundles of tangible and intangible assets, including a firm’s management skills, its organizational processes and routines, and the information and knowledge it controls.”

However, one criticism that can be labeled as RBV is that it primarily focuses on the internal resource base of an organization. This is where dynamic capabilities (DC) theory seems to hold a more holistic approach. Yet, there are many who view a strong evolutionary connection between RBV and dynamic capabilities theory.

Nelson and Winter (1982) are of the opinion that the theory of dynamic capabilities stems from RBV theory, a view that cannot be discounted altogether, given how similar propositions they make in terms of resource identification, maximization, and utilization of organizational resources.

Dynamic capabilities (DC) theory can be applied with great effect to the holistic nature of environmental scanning, in which information management can be of great value to this theory. While DC intends to integrate and exploit an organization’s internal and external capabilities, to positively and progressively respond to the changing forces in the external environment, scanning provides information about those forces. Now, the organization can utilize its holistic resources to make informed decisions on the basis of information collected through environmental scanning.

So, dynamic capabilities, if put into practice with a well-planned and structured scanning program over a period of time, can produce sustained competitive advantages for the organization. It can now be fairly ascertained that a scanning project greatly complements the dynamic capabilities theory.

A good example of how closely-knit they can be comes from some of the garment factories in Asia, particularly in Bangladesh and Vietnam. During the early stages of the COVID 19 pandemic, a lot of garment factories in Asia suffered the cancellation of orders and delayed payments from buyers, accounting for losses in the millions, while major players like Vietnam and Bangladesh saw raw material imports from China- the largest producer- completely halted.

However, some factories in Bangladesh could still remain operational even during the high wave of COVID disasters. It was possible because they shifted their focus to manufacturing personal protective equipment (PPEs) and face masks, both of which were in high demand in the domestic as well as international markets. (Bangladesh garment makers turn virus gloom into boom 2022)

It shows that these garment manufacturers utilized their internal competencies and external resources in the form of their goodwill and a strong, loyal client base to respond to the changing external forces. Scanning the environment, they must have identified factors- not just negatives but some positives as well.

If lockdowns, order cancelations, delayed payments, and shortage of raw materials were negative forces, the management must not have overlooked opportunities like strong and ever-increasing demands for PPEs and face masks, with some highly conducive government schemes and policies like low-interest, subsidized credit loans for the garment industry, and exemption of their factories from the country-wide lockdowns and shutdowns.

But does it mean all the factories could take such informed decisions and make progress? Or, may I inquire, were those who were unable to make such fateful decisions capable of capitalizing on the opportunities created; did they have a holistic scanning mechanism in place, or did they lag behind at the level of competence; or did both play a role in their relative misery?

However, it may not be entirely correct to attribute their perceived inability to respond to changing forces to incompetence and a lack of scanning mechanisms. A curious mind might wonder if the industry had a level playing field and if socio-political and socio-economic studies could provide additional information needed to determine the true cause of their demise.

Now, coming back to strategic procurement, this domain of knowledge now harbors more of a customer-centric approach, clearly shifting away from its traditional supplier-centric narrow view. Modern procurement strategies are now devised to collaborate with all the stakeholders across the departments in an organization. Strategic procurement now intends to have a more holistic view, integrating both the upstream and downstream organizational operations.

2.2.1 Customer-centric procurement

Customer-centrism as an approach has swept across the field of business organizations, advancing and redefining almost all the traditional theories and approaches across the board, keeping customers at the core. Business literature has seen numerous studies by renowned business experts all over the world.

Webster (1992) remarks that marketing’s focus will be "managing strategic partnership and positioning the firm between vendors and customers in the value chain." Duncan Jones (2017), VP and Principal Analyst, Forrester, thinks that the next generation of procurement will be customer-focused. Customer preferences will be playing an increasing role in procurement decisions and solutions.

The ever-advancing landscape of technology can be the driving force behind a customer-centric procurement strategy. Technology-assisted strategic procurement will open up new and varied avenues for the increasing role of customer preferences in the process of procurement.

With the availability of an increasing amount of digital data coupled with data analytics, modern technology can foster the process of procurement and help the management make much more informed and accurate decisions. Advanced communication technology can also assist a procurement professional in maintaining coordination with a supplier and the marketing personnel. Moreover, technology or digital procurement itself has been a new area of study that deals with a structured analysis of digital buying processes and solutions.

3. The Relationship between Environmental Scanning and Strategic Procurement

Environmental scanning of a business organization can play a significant role in modern strategic procurement, which entails a holistic view of operations. Information coming through an effective scanning program will provide vital knowledge of the potential opportunities to explore and of possible threats to avoid. Early detection of a possible market trend or identifying an untapped market opportunity could lead to a highly successful procurement drive, providing the organization with a significant competitive advantage in the market.

To further discuss the relationship between environmental scanning and strategic procurement, let us take up a real-life case study, in which we will explore how complementary environmental scanning could be towards an organization’s strategic procurement. 

3.1 A Case Study: High Penetration of Broadband Internet in Bangladesh during Covid and Potential Business Opportunities

Bangladesh, an emerging economy from South Asia, has experienced almost a three-fold increase in economic growth over the past 10 years, not an expendable feat by any standard. (Statista, 2022) The turnaround of its fortune began when the technology-driven project, Digital Bangladesh, was launched back in 2008, and its implications started becoming visible since 2010.

A countrywide digitization drive was successfully undertaken, establishing more than 4,500 digital centers. Government services were extensively made available online, and most importantly, a significant reduction in internet prices, coupled with a sustained high growth of mobile phone adoption, saw a whopping 60% internet penetration. (Chowdhury 2020)

On the back of continuous infrastructural development undertaken by the government in the communication and technology sectors, industries like ICT and e-Commerce have experienced tremendous growth. Moreover, the successful proliferation of mobile financial services has turned it into a technology-driven economy in every sense of the word. Even during the pandemic-forced lockdowns, people immensely benefited from the digitized economy.

Bangladesh, a country of roughly 170 million people, currently has 181 million mobile phone subscribers and 123 million internet subscribers, of which 113 million access the internet on their mobile phones. (Mobile Phone Subscribers in Bangladesh 2021; Internet Subscribers in Bangladesh 2021)

While broadband internet penetration till the outbreak of the pandemic was not yet satisfactory, the scenario has started changing over the last couple of years. The pandemic-forced extended homestays, home offices, and online education have seen broadband subscriptions getting doubled since 2019. (Broadband internet providers eye growth 2021)

The number of broadband users may still be very small compared to mobile internet subscribers. But the increasing need for high-speed broadband internet in everyday life- and that so not just in cities- clearly indicates that the recent high penetration of broadband adoption will continue in the coming years as well. In particular, online education has been a pressing need that was deeply felt across the country during the pandemic. So, a blended learning system has been in discussion in the media over the past year, and the government is also working towards introducing a blended approach to the education sector. Moreover, high-speed 5G internet has been launched recently in the country. (Bangladesh enters 5G era today 2021)

Realizing an imminent broadband boom, Internet Service Providers (ISPs) are now moving towards semi-rural and rural areas, a clearly untapped market for them to explore. Here, it is noteworthy that more than 60% of the population still lives in rural areas in Bangladesh.

A well-planned environmental scanning would clearly indicate that the increasing adoption of broadband internet across the country would create a huge demand for affordable digital devices like laptops, notebooks, and smartphones. Students will particularly require learning-friendly devices with built-in education applications in them. The high adoption of laptops and smartphones will also create a huge demand for related accessories, especially those needed for online education.

So, upon acquiring the knowledge of this relatively untapped market, local laptop and smartphone manufacturers can undertake a strategic procurement drive, leading to potential strategic partnerships with various suppliers.

4. Conclusion

Knowledge based on information is an asset to an organization. The success of any organization largely depends on taking informed decisions successfully. While collecting information about internal factors looks less difficult and less complex because they can be controlled to some extent, the same cannot be said about external forces. Various modes of environmental scanning intend to provide valuable information about factors external to an organization.

A procurement professional can create value for an organization in more than one way. But for that, one requires knowledge coming from different departments. As strategic procurement now takes into account the knowledge of all the stakeholders of an organization, information about external factors can be of immense value to procurement professionals.

Critically evaluate what is considered to be the most important and relevant contractual, legislative/or regulatory arrangements that are involved in the commercial arrangement of delivering the procurement and supply of goods and services at your organization in 2022 and in the future?

1. Introduction:

Have we ever wondered why some countries are ahead of others when it comes to attracting outsourcing jobs from the US and Europe? How does a small country like Bangladesh become one of the top global manufacturers of readymade garments (RMG)? Is it because of the availability of cheap worker? But then, how could Bangladesh lose out to the Philippines when it comes to Business Process Outsourcing (BPO)? Now, if you say this is because Filipinos are generally much better at English than the average Bangladeshi, then how come the former concede significant ground to India when it comes to software development despite having much better English proficiency and a higher literacy rate?

Answers to all these questions are related to factors influencing business-to-business (B2B) partnerships, such as how one partner is chosen over another at a remote location; how, in a particular business, different segments follow different preferences while striking partnerships; how buyer-seller power dynamics play out during the procurement process; and various other issues leading to awarding contracts.

Now, let us explore the above-mentioned questions from a different perspective. Tech research and consulting firm Gartner last year found that 80% of the world’s logistics heads have seen their outsourcing budget grow by 5% by 2020 (Outsource Accelerator, 2021). It is because outsourcing has largely been conducive for them in fulfilling their end-to-end supply chain and other business goals. But does it mean that countries in their respective outsourcing segments will continue to dominate globally in the years to come?

Technologies like robotic process automation (RPA) and many others powered by artificial intelligence and machine learning are increasingly coming into the scene. Even in traditional BPOs, cybersecurity and data protection are becoming significant issues to deal with. More advanced and newer technologies are constantly threatening low-skilled jobs while creating new opportunities for high-skilled ones. What does it mean?

It means that the outsourcing industry worldwide is not going to shrink; rather, quite the opposite trend is being reported. But the industry itself is constantly changing and reshaping in terms of required skills, calling for greater ability to adapt to the changing nature of the jobs. With more frequent changes in jobs and skill requirements, the competition for stakes in the outsourcing market is going to be even more intensified, with a high potential for strong new entrants joining the race in the upcoming years. In such a scenario, the balance of power would be further tilted towards organizations looking for offshore logistics partners during the negotiation process. However, a completely different and contrasting buyer-seller dynamic can be observed in the context of India’s agriculture sector.

2. Indian government’s withdrawal of three new farm laws: A Case for Buyer-Supplier Power Dynamics:

The Indian government was forced to take back three new farm laws in November 2021 following a year-long protest by farmers from states such as Punjab, Haryana and the western part of Uttar Pradesh. The government tried its best, both through flexing muscles and through several rounds of negotiations, to convince the farmers of the benefits of the three new bills. At last, the government had to concede defeat, taking them back just a few months before elections in five highly important states.

A number of industry leaders supported these bills and, upon their repeal, expressed concern about their impact on exports and the related food processing industry. (Seth 2021) Those in favor advocated these bills being an expansionary reform that had been long overdue for the agriculture sector.

Both the government and those who have a dominating presence in the industry echoed that these firm laws would have created new growth opportunities for Indian farmers as they would have been able to sell their agricultural products directly to the private companies, bypassing the APMC (Agricultural Produce Market Committee) markets and the middlemen. They would also suggest how these laws would have made way for farmers to get into large-scale contract farming, thus scaling up productivity and better storage systems resulting in reduced wastage. Most importantly, as they claimed, farmers would have received a much better price for their product compared to what they get now. (Bhushan and Anand 2021)

Farmers, on the other hand, were suspicious of the government’s intent, given its pro-capitalist policy practices, as exemplified by large scale tax-cuts to the country’s select few business houses, and also by the continuous privatization drive of public sector units (PSUs), such as Air India, a former government-owned airline. The sticking point, however, for the farmers was that there was no mention of MSPs in these farm laws. The MSP or minimum support price, launched in the 1960s under the APMC acts, was one of the most successful welfare systems introduced by an Indian government.

Under this system, the government procures certain major crops (over 23 now), if they remain unsold in the APMC market, for a minimum support price through FCI (Food Corporation of India), and the government, then, uses these crops for its various other welfare schemes. Over the years, this has performed as a safety cushion for the farmers. However, since the 1990s, the APMC market system has been involved in a number of malpractices, gradually shifting its focus away from providing better infrastructure for farmers and toward profit maximization. Middlemen have become overpowering, exploitative figures, while government procurement through MSPs is not equally practiced across the states. (The Indian Express 2020)

Throughout the farmers' protests, there was an ever-increasing demand for MSPs to be made mandatory by law. The rationality behind a mandatory MSP now requires a different discussion altogether. But even the farmers have agreed that India’s agriculture sector needs reforms.

In this battle over farm laws between farmers as suppliers and the government as a buyer, the latter had to concede defeat, at least for now. Maybe it was the very nature of how the government introduced the bills and bulldozed through the parliament to turn them into laws overnight that escalated the elements of suspicion among the farmers, which did not dissipate ever since.

The power dynamics between a buyer and a seller depend on a lot of issues. The electoral power held by farmers played a significant role in forcing the repeal of these laws. But the same power dynamics could act unfavorably for the farmers if they were to negotiate directly with large business corporations, a potential reality that proved too inhibiting for the farmers to even consider the idea of lucrative contract farming.

India’s agricultural and processed food sector is showing a strong revival following the economic downturn in the last couple of years. The ongoing 2021-22 fiscal year has already recorded $23.1 billion in exports in this sector, well on course to meet the annual target. However, the MSP-style welfare structure could overburden the economy and disrupt the fair distribution of government investment in agriculture. So, private sector procurement should be encouraged through different policies, but not without the consent of the farmers. (Ministry of Commerce and Industry, India 2022)

APMC’s structural reform could yield greater value for agricultural products, which would be a win-win scenario for both the farmers and the business organizations. Value creation is an important aspect of the commercial management of procurement and supply chain. As suggested by Lowe and Leiringer (2006), “Value can be read from an economic, marketing and business perspective. Contemporary theory sees ‘value’ in a procurement sense, as a social construct; different firms in the procurement supply chain, dependent upon their position and power, will interpret value in different ways. To some, value in procurement will be the traditional ‘low price’; to others it will encompass a wider set of selection criteria such as soft values of compatibility, social chemistry, shared vision and co-operation. Hence, value in procurement is a social and political construct as well as being bounded by economic selectivity…”

Effective government policies taking farmers into confidence can genuinely lead to the creation of new opportunities for the agriculture sector and the associated processed food industry.

3. Supply Chain Management (SCM) and Logistics:

Supply chain and logistics are a significant part of the commercial management of an organization. Supply chain management (SCM) intends to manage and coordinate the overall flow of products or services through different departments and/or organizations, from their inception to their consumption.

While describing SCM, Bernard J. "Bud" Lalonde (1997) sees it as being “defined as the delivery of enhanced customer and economic value through synchronized management of the flow of physical goods and associated information from sourcing to consumption.”

Though the idea of logistics predates that of SCM, the former, today, is considered just a part of the supply chain. While SCM focuses on the process of integrating workflows of various phases of a product’s journey from the beginning to reaching the consumer’s end, logistics, on the other hand, only focuses on ensuring customer satisfaction, dealing with the flow and storage of goods in an organization.

Supply Chain Management (SCM) is actually the evolved version of earlier logistics management with a more holistic approach towards buyer-supplier transactions. Earlier, the supplier’s and customer’s ends used to be viewed separately; thus segregated approaches were employed in their management. Over the years, industry leaders and academics have felt the need for a dyadic buyer-supplier relationship. (Cox et al. 2004)

With the growing realization of the need to view procurement value beyond cost reduction and compliance, this modern holistic approach to SCM gradually emerged. As industry leaders started to recognize how significant a procurement drive can be in terms of product innovation, revenue generation and customer satisfaction, SCM began to appear as a system in which the whole process of product inception to consumption is administered with a clear focus on achieving a sustained competitive advantage in the market. From procurement to product innovation to order management to transportation of products to customers, this whole process comes within the scope of supply chain management.

In the e-commerce sector, last mile delivery has been a big challenge across the world, especially in those countries where a small population is scattered over a large geographic area. This is definitely a logistics issue, for it is directly concerned with customer satisfaction in terms of product delivery time and cost. However, the logistics manager cannot solve the problem on his or her own. For that, the management of the supply chain has to take initiatives, such as making strategic partnerships with courier companies and local shops (for product drop off and pick up), and setting up warehouses in strategically important locations and employing a part-time local workforce. Offering services like same-day delivery and Q-commerce, which are in high demand in the global e-commerce industry, are the conceptions of SCM while maintaining and monitoring the smooth flow of quick delivery system comes under the logistics department.

4. India’s Last Mile Delivery Boom in E-commerce:

A country of India’s population size and density, it has a huge potential for growth in the last mile delivery segment. The country’s overall logistics market stands at a whopping $320 billion as of August 2021, of which $240 billion is contributed by shipping products by road. Going by the penetration rate of over 10 percent in India’s last mile delivery segment, RedSeer analysis has projected the market to reach $6 to $7 billion by 2024.

In a pandemic-hit economy, home delivery is increasingly becoming the most convenient way of shopping. Naturally, innovations in product delivery services, such as same-day delivery and Q-commerce, are grabbing attention in global e-commerce. The same-day delivery market has gone from $4,810.1 million in 2020 to an expected $16,739 million by 2027. (Singh 2021)

India’s Q-commerce or quick commerce portals like Swiggy, Instamart and Dunzo are driving the country’s e-commerce popularity, with annual shipments expected to reach 5000 million by 2025, a sharp increase from 1364 million in 2020. As the pandemic is still around the corner, it is expected that demand for home delivery services is going to persist. So, new innovations in this segment of the global e-commerce supply chain will remain dominant too.

5. Russia-Ukraine Crisis and Global Pandemic: A disruptive economy for procurement and supply chain:

Nothing could have been worse than an ongoing war between Russia and Ukraine when the world economy had already been struggling to cope up with a global pandemic. Russia and Ukraine are among the world’s largest wheat-producing nations, thus, a supply chain disruption has already been in view with regards to wheat exports to different parts of the world, especially to the African countries. Wheat is the main ingredient of bakery products, thus, a prolonged status quo of the war could lead to inflation not only in Africa but all over the world. (Mureithi 2022)

Food prices have already been on the rise across the globe, and they are still progressively rising. The upward march of fuel the price, too, indicates more threatening inflation and a severe downturn in the economy. The United Nation’s Food and Agricultural Organization (FAO) has just painted a gloomy picture (BBC 2022):

“The UN’s Food and Agricultural Organisation warned last month that food prices could rise by up to 20% as a result of the conflict in Ukraine, raising the risk of increased malnutrition across the world.

It has cut its world wheat projection for 2022 from 790 million tons to 784 million, because of the possibility that at least 20% of Ukraine's winter crop will not be harvested because of “direct destruction”.

But it said global cereal stocks could end the year 2.4% higher than the start because of stockpiles building up in Russia and Ukraine as both countries’ exports would shrink.”

Though the first three months of 2022 have seen some semblance of an economic recovery in the absence of strict lockdown, the Russia-Ukraine conflict is now posing a renewed challenge for the world economy to deal with.

The disruptive nature of the economy calls for different measures. While the challenges are huge, we should not forget that new challenges always open up some new opportunities as well. A supply chain manager must be diligent enough to explore different alternatives and should have the vision to explore new sources for procurement and supply. A supply chain manager may not be too comfortable with ‘manufacture to order,’ one-off procurement, or temporary partnership for procurement, but in the current economic climate, a supply chain head should not be too rigid to take up new opportunities, even if it is for the short-term.

Different industries demand different supply chain approaches. While awarding short-term temporary contracts suits well with the construction industry, a more settled setup like the food industry seeks long-term, proactive supply chain contracts. However, the current economic scenario is not an ideal one. So, looking for an ideal solution could eventually prove to be a futile practice.

No matter how bleak the overall picture may look, there is always a way or set of ways to lighten up things. Finding that is the challenge. Now is the time to look into the traditional process, but not necessarily remain limited to it. For example, a detailed cost and price analysis should be explored, factoring in all the relevant aspects of the internal as well as external environments. But with an inquisitive mind, one can always explore other avenues, innovating new ideas and solutions to supply chain practice.

6. Conclusion:

This is the age of information. Extensive data analysis to make informed decisions is now a common practice that organizations follow in order to gain competitive advantages in the market. Strategies such as environmental scanning, employing Porter’s generic strategies, or the 4 Ps are all aimed at gaining sustained competitive advantages in the market. For that, an organization’s resource base must be strengthened and kept updated over time. But while focusing on resources and strategies to gain an advantage over competitors, risk factors often get pushed to the backseat.

Risk factors are there in any business, and mitigating risks while maximizing profit is the fundamental principle of business. Risk management is at the core of business management. From risk identification to monitoring and adaptation of risk, an in-depth analysis needs to be carried out with the use of different risk management strategies.

7. Works Cited:

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Seth, D. (2021). How Repealing the Farm Laws Will Hit Exports and the Food Processing Sector. [online] Business Today. Available at: https://www.businesstoday.in/magazine/briefings/story/how-repealing-the-farm-laws-will-hit-exports-and-the-food-processing-sector-313612-2021-11-26 [Accessed 21 Apr. 2022].

Bhushan, R. and Anand, S. (2021). Farm law rollback: Move may hit sourcing and expansion plans of food processing companies. [online] The Economic Times. Available at: https://economictimes.indiatimes.com/news/economy/agriculture/farm-law-rollback-move-may-hit-sourcing-and-expansion-plans-of-food-processing-companies/articleshow/87809474.cms [Accessed 21 Apr. 2022].

The Indian Express. (2020). Ideas Explained: How APMC markets went from being a solution to a problem. [online] Available at: https://indianexpress.com/article/explained/explained-ideas-how-apmc-markets-went-from-being-a-solution-to-a-problem-6864862/ [Accessed 21 Apr. 2022].

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