Inflation-busting supplier management

Companies relying on suppliers to get the best quality products at a minimum cost is a huge challenge. We have seen inflation rising rapidly, shortages of many key raw materials, supply chain bottlenecks, energy (and house) prices shooting up, and even labour shortages in certain key areas and countries. 

Procurement professionals are having to focus strongly on the fundamentals - assuring supply of goods and services for organisations. This includes supplier selection, collaboration and measurement of risk and resilience in supply chains. But it also needs to focus on cost management. Many professionals have never experienced inflation running at around 7% - much higher in certain spend areas - and resisting supplier demands for price increases has been relatively easy through the years, but it will be harder in 2022. Supply management is in uncharted waters.

With a long period of price increases possible, a proactive approach can help Procurement professionals weather the storm.

Prices for many items are already on the rise, and when supply management professionals evaluate how inflation will make their jobs more difficult, from conversations I have had, lost purchasing power is a major concern.

There are, however, some best practices and tools that can help deal with not just uncertainty in demand and supply, but supplier failures, price volatility and supply chain risk.

Being able to easily and quickly define and manage sourcing events, while ensuring best value will be critical, not only to success, but in some cases to survival. One way to achieve this is by improving the effectiveness and transparency of both strategic and tactical sourcing processes, all while reducing administrative time and effort. There are strategic tools available that provide flexible, collaborative, and efficient methods for performing effective sourcing events of all types. Competitive bidding will be encouraged by using one system for a level playing field.