Fit the crisis: A case study on changes in procurement strategies due to the energy crisis caused by the Ukraine war

Abstract

In the current turbulence within the supply chains, the strategic importance of procurement and related activities in the supply chain are given an increased role in companies’ formulation for corporate strategy. Energy crisis affects all businesses and thus the new context needs to be studied in terms of how companies could better their position in the new environment.

The study approaches the procurement strategies in general from traditional procurement strategy concept perspective and relates to existing literature on trends seen from the past crises. The study elaborates on the contingency theory which is managerial approach towards different organizations located in different operating environments. The theory suggests that in all the mega disruptions, such as energy crisis caused by the war in Ukraine, the approaches ought to be fit to the context.

The literature highlights the importance of mitigating the dependencies to external, exogenous, risks since the effects have been studied to be more significant than the company specific internal disruptions. The case company is then evaluated on the strategic approach towards the energy crisis. The ways the company had adjusted their strategies included to be more regional, opting to supply from many rather than the few to reduce their supply risk, enhancing the cooperation with suppliers, reducing the needs for logistics, viewing the possible new political disruption risks, ensuring alternative choices for supply but also creating more visibility to cost structures to ensure profitable pricing in sales phase.