A text by our redaction team, with the precious collaboration of Ovidiu Ciochina, J2 procurement expert.
The way procurement specialists work has changed. Numerous events have impacted their daily workload : the pandemic, pricing issues, port strikes, Canada Post strikes, the redirection of international shipping routes to the Cape of Good Hope, strikes in railways companies, international conflicts, and the importance of social acceptability of projects. The methods used by buyers have had to be reviewed, modified, and updated frequently in just a few years.
We took a moment with a raw materials procurement specialist (particularly aluminium) here at J2, Ovidiu Ciochina, to discuss and take stock of these changes and of how purchasing specialists have had to adapt their practices in the face of often fluctuating conditions.
Adaptation in maritime transport
Raw materials are transported via an international network, and this market is global in scope.
Since 2024, tensions in the Red Sea and the Suez Canal, routes usually used for east-west transport, have forced companies to rethink the route that would bring their goods to their destination. The preferred route now passes via the Cape of Good Hope. This widespread redirection of freight transport has caused a considerable increase in traffic volume there.
“This increase in traffic has led to delivery times being extended by no less than two weeks, as well as an increase in transport and insurance costs. Proportionally, the workload of procurement specialists has also increased. The situation continues, but we are adjusting accordingly. These are new lessons to be learned for ourselves.” – Ovidiu Ciochina
Buyers who do not work for companies operating their own fleet of transport vessels now have to contend with stronger competition for space on cargo ships that will meet the expected delivery times.
These crews and their ships must be able to commit and confirm beyond any doubt that the passage will be via the Cape of Good Hope in order to ensure adequate risk management. Obtaining passage on the right ship and at the right time to ensure that raw materials are received on time has become a constant challenge.
Adaptation in negociation skills
The increase in demand for their services has caused a rise in sea freight prices, and buyers must not only put their negotiating skills to the test, but also know how to identify shipping companies that will provide reliable service and proposals without putting materials at risk.
In addition, lead times are now longer, putting even greater pressure on raw material inventories.
Impeccable interpersonal skills are needed here to deal with the nervousness generated by the current challenges and tensions. Running out of raw materials is not an option. A raw material melting pot (for steel or aluminium, for example) cannot be shut down under any circumstances, as restarting it would incur considerable costs. We now have to deal with a negotiation lead time that has increased by at least an additional month compared to the lead times we were familiar with a year or two ago.
“In response to this, some organizations will even be tempted to completely overhaul their inventory strategy to ensure that no shortages occur, at any time. A melting pot must be operational at all times.” – Ovidiu Ciochina
Staying in solution mode
While different challenges and events may seem to follow one after another, none of them are really alike. Procurement specialists who remain open to learning, who know how to draw on their own experience and that of their colleagues, and who can quickly offer solutions and proposals for the scenarios unfolding before their eyes will be the ones who stand out from the crowd.
Working in silos in this type of context, which is often characterized by urgency, is not recommended. Calling on different departments (engineering, operations, quality, etc.) will be essential in establishing a truly effective strategy or solution to the problem.
We repeat: the most seasoned negotiation skills are most useful in today’s contexts, even if there is not always much room for maneuver.
A dose of realism
Even the best strategy can be thrown off course by an unexpected situation. In the world of transportation, weather conditions are one of the factors that cannot be controlled and that could impact supply processes, through no one’s fault.
“Maritime transportation operates according to high standards. That being said, it is also well known that it operates according to the popular maxim ‘AGW,WP: all going well, weather permitting.’ This means that no one is ever safe to unforeseen circumstances beyond anyone’s control, such as the weather!” – Ovidiu Ciochina
In these specific cases, the best practice remains agility and the ability to rely on a well-established risk management strategy. Prevention is always better than cure, and to prevent, you have to be prepared.
What about J2?
In conclusion, the pace of work has increased, requiring procurement specialists to make informed decisions more quickly and have multiple risk management scenarios prepared. Ensure that your teams have the necessary skills to deal with these situations.
Do you need to update your procurement team’s skills? Nowadays, adaptability is the key to success, and J2 is here to help.
Contact us to find out more about our skills development and consulting services.
Do you have a question?
If you would like more information, feel free to contact us for more details.
