The health crisis and tensions in the supply chain have hit procurement hard. That's why, as economies start to recover and the world of business looks set for a transformation, there are lessons to be learnt from the more positive experiences that could help energise the field of procurement.
The most compelling ideas to help procurement departments progress centre around three main themes:
- Trust in their employees
- A relentless search for the best suppliers
- The pursuit of digital transformation
Focus on skills
The first lesson from the health crisis is the importance of expertise in enabling those in key procurement roles to face any turmoil head on. Indeed, experience and a cool head proved essential when it came to getting around sudden shortages or organising remote working from one day to the next.
This means that the effort to develop skills must be maintained even—perhaps especially—when everything has calmed down.
Maintain a passion for performance
In addition to keeping supply channels open, optimising purchasing conditions remains one of the foundations of procurement. This is why an effort to make savings must return to the forefront once the supply chain is redeployed.
This quest for savings should be all-encompassing:
- Purchase price
- Logistics costs
- Storage and usage conditions for supplies
Make provisions for dual sourcing
The second big lesson of the crisis is not relying on a handful of suppliers for strategic purchases. In other words, procurement departments need to avoid bottlenecks.
A company's flexibility and responsiveness depend on the choice it has to increase production or change its value chain. Current tensions surrounding microchips or even vaccines are a good example of what procurement needs to avoid as much as possible!
Rank your supplier portfolio
Some suppliers proved to be strong partners when the going got tough, while others were less reliable. The crisis has provided an opportunity to analyse the value of your supplier portfolio in greater depth.
This is why a new supplier hierarchy is emerging, with greater importance placed on criteria such as:
- Resistance to stress
- Service quality
- Ability to find alternative solutions
Strive for process continuity
The digital transformation of procurement has demonstrated its usefulness in detecting problems and evaluating alternatives more quickly. This means we must continue to invest in this area to connect even more processes and have an even wider range of data at our disposal.
The digitalisation of procurement is a process of continuous improvement, as the technology is evolving rapidly. A team's responsiveness actually also depends on how up to date its tools are.
With that in mind, the challenge is to be constantly on the lookout for the next phase of technological innovation so you can benefit ahead of the curve. This is a tool to help set you apart and is intrinsically linked to business growth.
In conclusion, adhering to the basic principles of procurement such as the quality of supplier relationships or the ability to take advantage of a diversified range of information remains the best strategy for success.
Nevertheless, a procurement department's professionalism and its ability to absorb shocks is also a matter of organisation. That's why the improvement of practices must also be a constant focus.