The pandemic has severely disrupted supply chains on a global scale, and managing your chain, and the risks involved, is now absolutely critical to your organization’s financial health and competitive performance. We have identified a number of areas that Procurement leaders should focus on:
Manage and mitigate supply uncertainty with suppliers of all sizes
Procurement has had to evolve rapidly in a relatively short timeframe. It has become more connected with its external partners and internal customers, but the pandemic has also taught some Procurement executives some hard lessons about the viability of their business continuity plans. Contingency plans shown up to be too small in scale and failure to consider the possibility of disruption across multiple geographies are just a couple of examples. And many companies’ smaller suppliers, which are highly dependent on cash flow, have struggled with digital connectivity or even had to close down.
Companies now need to engage more with their suppliers to understand the risks or cash-flow challenges. Current “high-risk” suppliers need to be carefully analyzed. Can the supplier guarantee that it can continue to supply the goods and services you need? What is the risk to you if the supplier “disappears” overnight? While these will depend upon a number of factors it is a timely consideration. Focus should be on selecting suppliers that pose the least risk and, where necessary, have alternative suppliers vetted and ready to go.
Looking to build up your local supply chain, so that you are not relying on goods and services from other parts of the world, could be key. And there are a number of solutions and partners available to help you find the “right” suppliers – even at a local level. Companies such as Proactis provide the tools needed for more local business transactions and communication with suppliers
, to make transactions faster, easier and more efficient for both you and your suppliers. Setting up new suppliers is quick and easy, with intuitive designs and user experience to ensure that both staff and suppliers are comfortable using it.
Minimize unnecessary spending and preserve cash for future growth initiatives
Many companies face reduced revenue for the foreseeable future. Preserving cash responsibly will therefore be one of Procurement’s primary goals. It may seem obvious but stop spending and doing things you don’t need to do. Freeing up your staff's time by automating procurement processes, digitizing interactions with suppliers (such as invoice and payment processing) and monitoring results are just a couple of possibilities.
Ensure resilient, purpose-led procurement decisions
While the pandemic caught many companies unprepared, it has shone a light on the importance of centralized and coordinated visibility in risk management
. Organizations must now focus on their abilities to respond to future challenges. Risk management simply cannot be ignored, even while you work to reduce costs, and should be embedded into procurement decisions, from sourcing through to payment. True visibility of supplier risk should be maintained through consistent, consolidated, and ongoing management of supplier information throughout the supplier relationship lifecycle.
Never before have Procurement leaders been asked to play such a leading role in safeguarding their company’s financial viability and protecting a severely disrupted supply base. We would love to discuss your experiences and requirements you may have. Talk to us today.