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How Covid-19 exposed the need for human intervention as procurement digitises

Many organisations have been under pressure for some time to minimise costs and reduce risk in their supply chains. But as supply chains have been impacted across the globe thanks to coronavirus, these pressures have intensified.

Digital transformation has been lauded as part of the answer to these challenges.

The arguments are clear: digital platforms create opportunities for procurement and finance teams to step away from admin-heavy tasks and reduce the risk of human error; they create stronger data sets to help inform these teams; they facilitate greater control over spend and the entire Source-to-Pay process.

And yet, if the pandemic has proved anything, it is the value of softer skills, of human intervention and understanding.

The increasing complexities facing procurement teams – pandemic or not – mean that procurement professionals must apply greater critical and strategic thinking to meet key priorities. Now we face supply chains under significant pressure, working out how to handle real life business situations is a skill many procurement and finance professionals have had to hone.

Indeed, the most prevalent challenge facing organisations right now is continued supply chain disruption created by coronavirus.

In 2019, supplier collaboration was one of the top three priorities for CPOs looking at the year ahead (Deloitte Global CPO Survey). With ongoing Covid-induced supply chain disruption, collaboration between buyers and suppliers has become even more of a priority – and likely even a necessity.

Take hospitality, with the industry’s fluctuating lockdown restrictions, as an example. A restaurant could be running a reduced menu that results in an increase in demand for a small set of products, and a reduction or outright end in demand for others.

As restrictions flex, the restaurant switches to offering takeaway-only at short notice and therefore suddenly, it increases orders for takeaway packaging. Maybe eventually, it can fully reopen, suddenly increasing its demand for a host of products while reducing its need for takeaway packaging.

Even a fully-automated system will not appreciate the impact this flux will be having on the supply chain – it’s not just supply and demand, but livelihoods and incredible pressure.

Whether looking at a small restaurant or a large corporation, the idea is the same: it is critical for businesses to maintain strong supplier relationships, especially as many businesses and their suppliers face uncertainty.

Internally, procurement teams must also work with stakeholders –finance and risk being the obvious two – to provide strategic value to internal functions. While digital adoption can enable greater integration with these departments, strong relationships between internal teams and greater cross-collaboration is more likely to be delivered through the human procurement professionals themselves. While a finance or risk team could mine procurement software for data, insights that can address organisational complexity are more likely to come from human intelligence.

Right now, success for procurement teams often comes down to the relationships that they must foster and grow. Whether externally with the supply chain or with internal stakeholders, strong relationships and tactical problem solving are becoming an essential demand of the procurement team.

To enable a procurement team to focus on these complexities, a combination of artificial and human intelligence is essential. Digital can enable a business to be more flexible, have greater control of spend and minimise risk, but it also importantly enables the humans to focus on the crucial, higher-value parts of the job.