How to Drive Operational Efficiency: Key Pandemic Takeaways for Procurement Executives

Editor’s Note: Kim Cullen, is Director, Marketing, for Strategic Sourcing at mdf commerce

Since the emergence of the global pandemic, uncertainty and risk have become an unavoidable part of daily life. From an economic perspective, Covid-19 has transformed entire industries, and no sector has been left unscathed – but few elements of the global business environment have been put under the spotlight in the way that supply chain and procurement have.

The pandemic has revealed the fundamental importance of resiliency in supply chain and procurement. It has become clear that no organization can reliably move forward without investing in the durability and flexibility of supply chain in order to both mitigate risk and meet changing consumer demands.

To successfully navigate this “new normal,” procurement and supply chain executives and their teams must adjust their tactics based on the latest best practices if they hope to gain competitive advantages, both during and following the pandemic.

Below are some steps executives can take to ensure the resiliency of supply chain and procurement operations moving forward.

Invest in Agility

Organizations that hope to thrive in the current atmosphere of uncertainty must prioritize agility. Deloitte’s Global Chief Procurement survey found that higher-performing procurement organizations display key agile characteristics. They are almost twice as likely to leverage hybrid managed service support models to access knowledge, capabilities, and experiences unavailable in-house; ten times more likely to have fully deployed robotic process automation (RPA) solutions; and 50% less likely to have business-wide and C-suite hesitancy as a barrier to realizing the shift from tactical and operational to strategic focus. Evidently, a strong link exists between strengthening procurement performance and investing in developing agility.

Agility allows organizations to view change as an opportunity, rather than a threat. Adopting agility as a foundational principle enables organizations to act faster and more efficiently than competitors, giving them an edge moving forward. Implementing agility in the real world means executives must take a systematic approach towards accessing and deploying flexible resource pools, accommodating demand and supply variability, and rapidly reconfiguring the value chain and internal processes to meet business needs and market demands.

Build Resilience

Supply chain disruption poses a perennial risk to companies, especially in highly globalized environments where businesses have long, complex, and opaque supply chains. These supply chain structures are fundamentally ill equipped to cope with increasing numbers of unplanned disruptions, including ongoing Covid-19 complications. In the past year, 56% of CPOs reported having suppliers that were facing bankruptcy, and 33% have lost revenue through supply shortages. The pandemic caught many companies off guard and underscored the notion that a rigid supply chain can fail under stress. Rather than relying on previous systems, organizations must revisit their supply chain strategies to build more resilient systems.

Strongly Commit to Technology Adoption

One clear way tp improve both agility and resilience is by adopting technology to streamline and secure supply chain operations. Supply chain and procurement management technology can accelerate organizations’ ability to implement operating model changes, while automation tools can deliver significant savings by automating business processes. According to Deloitte, higher- performing procurement organizations are four to five times more likely to have fully deployed advanced analytics with visualization and, in general, more likely to have fully deployed predictive analytics capabilities. Additionally, these organizations are roughly 18 times more likely to have fully deployed AI solutions and other cognitive capabilities. Strong digital capabilities can help procurement organizations enhance data visibility and the ability to collaborate/synchronize with suppliers, enabling greater agility both within these organizations and across supply networks.

Once implemented, digital tools can help your organization eliminate manual transactional processes, provide easier access to procurement services by seamlessly routing work between procurement and finance systems, simplify onboarding, and automate risk assessment and governance. Overall, prioritizing technological adoption enhances the efficiency, cost- effectiveness, and accuracy of a business.

Become Data Driven

Many emerging and existing technologies that can improve agility, efficiency and resilience rely on information derived from a company’s data to gain actionable insights. By prioritizing data, both internal (master data capture and consumption) and external (market intelligence), particularly during the decision-making process, CPOs can uncover hidden opportunities and identify emerging risks. Decision-making based on shared knowledge, common data and analysis requires all information to exist with a shared viewpoint, language, and methodology, meaning that companies must make an active effort to procure, store, and, most importantly, employ their data. Those that do so are better equipped to not only recognize but act effectively when faced with developing trends or challenges.

Looking Ahead

As procurement and supply chain executives continue to navigate the unprecedented disruptions wrought by the pandemic, technology will continue to be a key enabler of organizational resilience, agility and productivity. The key takeaway: without strong supply chain and procurement processes in place, there is no way to effectively intuit what the impact of future disruptions might be.

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