A four step procurement strategy for economic recovery
The COVID-19 pandemic posed significant challenges for supply chains globally, forcing business leaders to quickly shift from a posture of growth to survival. As a result of the disruption, cost management and supply continuity were suddenly top of the agenda and all eyes turned to the procurement to help companies reach their goals and form a strategy. However, there is a perception among business leaders that procurement is only required when exclusively aligned with cost management and supply continuity. They add tremendous value when it comes to operational efficiency, product quality and collaboration.
According to Gartner, “Procurement’s influence naturally increases during a recession. For example, immediately following the Great Recession in 2009, 85% of procurement leaders reported having significantly more influence over business decisions than prior to the crisis”.
However, outside of these major economic struggles, procurement teams are not being taken seriously and are instead kept in the dark on critical business decisions. Leading organizations who had the right procurement processes and tools in place were able to mitigate the impact of the pandemic by staying agile and using their accurate data to make rapid, informed business-decisions. However, once recovery mode took over, businesses started to lose sight of the true value of strategic procurement.
Procurement teams must capitalize on today’s moment with a strong procurement strategy and sustain influence as the economy recovers.
What challenges are procurement teams facing due to the pandemic?
Since procurement has a direct impact on an organization’s bottom line, the role comes with various challenges surrounding risk, their suppliers, contracts and cost savings. However, one of the biggest challenges highlighted since the pandemic is being kept informed of ever-changing business priorities and having their strategic proposals listened too, so they don’t focus their efforts on the wrong areas.
A Gartner report finds that “less than one-third of procurement organizations maintain intelligence about business partners’ priorities and when or how they change, limiting procurement’s ability to remain aligned with business priorities as economic conditions fluctuate”. To maintain this intelligence and make more sound procurement decisions, they not only need access to accurate and reliable data but have a strategy in place so they can really show their potential and be more aligned.
How can procurement be more strategic?
Today’s procurement landscape calls for a more strategic approach aligned with the overall organizational strategy. For a truly strategic procurement process, the entire organization must be involved. Although, many of those in procurement will have experienced resistance from the business when trying to introduce a procurement strategy, controls or processes. Even if the benefits are apparent, it can be hard work getting buy-in.
If your organization doesn’t understand what procurement is trying to achieve or has a misconception of its role within the business, then you will meet resistance. It’s essential to foster relationships so procurement can be seen as a driver of value there to support work colleagues and their goals. By working collaboratively rather than in silos, procurement can enhance its reputation while being fully immersed in the business.
As we move toward the new realities of a post-COVID-19 world, Gartner research outlines four key tactics that procurement can use to hold on to the seat at the table they’ve gained during the pandemic.
- Map the value of procurement projects to business priorities beyond cost and supply assurance.
- Help staff monitor and determine when business priorities change with the business cycle.
- Teach staff how to sell procurement’s support using business priorities.
- Monitor functional alignment with business priorities over time using an annual business alignment survey.
What does the future hold for procurement?
Regardless of economic conditions, to ensure procurement teams remain involved in key discussions that impact the business, they need to map the value of procurement projects to business priorities. Procurement leaders must challenge the misconceptions of procurement’s value and demonstrate its ability to keep supporting business priorities, given that they have the right tools and support.
That’s where Enable comes in. With A procurement strategy which involves mitigating risk, negotiate better deals and form stronger trading partner relationships will only aid the economic recovery. When procurement can collect supplier data, track performance, manage deal workflows, and report on real-time data, they can quickly adjust to supply chain disruption. There is a future in which procurement is digitally woven not just into the operation, but in the strategy of the business.
Download the Gartner report: “4 tactics procurement can use to sustain influence as economic conditions improve” to find detailed findings on how procurement can focus on becoming more relevant and tactical on the other side of the pandemic.