It’s no secret that global supply chains have experienced disruptions and challenges over the last couple of months. With no time to prepare for the sudden shift in global exchange, businesses continue to juggle changes around their process, people, and paperwork. Transitioning overnight to a remote workforce has ignited business cases for digitization and automation, specifically in accounting roles, but while company-wide buying activity is lower, let’s consider some ways to align procurement for success when the economy improves.
The effect of the pandemic on procurement operations
Within hours, worldwide travel restrictions brought transportation businesses to a screeching halt. Without the ability to travel, the option to visit a supplier’s plant or distribution center was no longer viable. Yet for procurement, we know these visits are critical. In many instances, for example, these visits were used as an opportunity to see if the supplier was actively meeting a company’s standards, working efficiently to meet demands, while also manufacturing, storing, and shipping ethically.
Other policies, such as delivery times, were also immediately impacted by the pandemic. And though you or your suppliers might be able to find alternative methods of logistics, you’re likely still experiencing delayed deliveries on many orders.
Then there’s the especially bad news if one of your crucial suppliers is impacted by the pandemic to the point of no longer being a reliable partner for your company. In this case, you’re now dealing with replacing the partner, either for the short-term or indefinitely.
What can we do to prepare for the upturn?
Surveys are showing that procurement professionals within companies are starting to look at what’s happening post-pandemic. A lot are thinking recovery. And many already have recovery plans in place.
(The EIU has determined the 5 Factors Defining a New Era for Global Trade in 2020 and Beyond. Read more here.)
In procurement, we’d consider supplier relationships one of the most critical elements to ensure company success. Strengthening your communication with key suppliers and partners is increasingly important right now. You need to understand the challenges they face, so if needed, you can budget with the intent to pay more for your most essential supplies and protect these relationships.
With regards to supplier risk, now is the time to take a breath, take a step back, and evaluate your supply chain. Evaluate what’s going to happen post-pandemic. Review your suppliers, assess your suppliers’ sustainability and solvency, and make sure they’re ready when volumes spike. Look at re-evaluating policy and structure and implementing changes while the demand on your supply chain is low.
Bolster your procurement strategy with data
We know that visibility across your supply chain, allows you to make better and quicker decisions. Moving forward, you must have the data and tools in place to predict and plan for the future. So, what’s not working and what would you like to achieve post-pandemic?
Greater spend visibility?
Better control over costs?
Increased operational efficiency?
Improved contract compliance?
More spend under management?
Easier supplier collaboration?
Improvements across the entire purchase-to-pay process?
While internal transactions are lower than average and suppliers are desperate to keep cash flowing, let’s look at some steps to help put together a plan to begin evaluating procurement partners.
7 steps for successful e-procurement:
1. Know your stakeholders and their spend profiles
2. Build a vision statement to be clear about what you want
3. Establish project scope
4. Set quantifiable objectives to measure success
5. Get clear on processes with all functions involved
6. Start small and build from there
7. Keep measuring and improving
Modifications to these steps may be necessary to make sure you’re aligning properly with other business units feeling a similar impact. For example, it may be hard to commit to a concrete budget at this time, but by establishing stakeholders, scope, and a clear vision of the desired outcomes, you’ll be well on your way!
So, when you start re-opening spend, what can you do now to avoid a mad scramble to get things back in-line? What don’t you know that you wish you knew? And what are you doing right now to you make sure you’ve got answers post-pandemic? We’re here to help. Check out our dedicated resource hub to learn more or request a demo.