Three conditions procurement departments must fulfil to boost recovery in the second half of the year

covid-19 ; procurement
May 27th, 2020
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For procurement departments, the fight to keep companies operational amidst the COVID-19 lockdown is coming to an end. Procurement departments have done what they need to do to ensure business continuity.

Now, they have a new battle to win. Procurement departments face the challenge of getting companies into a position where they can regain the ground lost during the crisis. Or, better yet, a position where they can take on the inevitable shake-up set to occur in the second half of the year.

There are three conditions that procurement departments must meet: 

Procurement departments completing the digitalisation of their processes

Procurement has already come a long way in terms of digitalising its processes.

The COVID-19 crisis now means that procurement departments need to speed things up in this regard, with the idea being to become more integrated in an increasingly remote global ecosystem.

Remote working practices are likely to become increasingly common for everyone:

  • The procurement team itself
  • Its contacts at partners and suppliers
  • Its internal customer contacts

This means that procurement departments will need to quickly find new digital solutions to address the challenges posed by this change:

  • Ensure that exchanges are secure and that data and information is properly stored
  • Come up with fully digital validation and decision-making protocols
  • Finish digitalising the processes for requesting purchases and processing supplier invoices

Procurement departments ahead of the curve in harnessing innovation

The second condition procurement departments must fulfil in order to contribute to the expected recovery in the second half of the year concerns innovation. Basically, things will have to change quickly:

  • New customer expectations
  • New structure of the corporate value chain
  • Strategic importance of traceability of components in the company's value proposition

For example, new customer expectations could mean higher demand in terms of the safety of their supplies. 

The COVID-19 crisis and the resulting new power relationships have shown companies that they need to better anticipate disruption in organisations.

Finally, traceability⁠—already a familiar issue in a procurement department's day-to-day life⁠—has taken on new importance thanks to CSR requirements. Indeed, the risk-management strategy for the company's B2B customers will mean a new focus on tier 2 supplies. In other words, companies will increasingly want to track components that are part of their value chains (tier 1 supplies) as well as components that form part of their suppliers' value chains (tier 2 supplies).

Procurement departments conscious of strengthening the supply chain

A company's dependence on a robust supply chain in order to continue its business activities has already been the subject of numerous articles and analyses.

With the peak of the crisis largely over and emergency solutions found, procurement departments must now look at overhauling their systems.

In particular, the current climate is an invitation to reinvent procurement strategy by giving extra weight to these three priorities:

  • Diversification of suppliers, to reduce dependency on any one of them
  • Streamlining of product portfolios, to increase the interchangeability of partners in case one of them fails
  • The proximity of critical suppliers, from a geographical but above all systemic point of view, to increase the mutual benefit of the relationship

In conclusion, the transformation of businesses and markets is accelerating. This shift is both a consequence of the crisis and a tool to help confront it in a sustainable way. Procurement departments are clearly compelled to come up with new solutions. Indeed, companies are relying on their solutions to pave the way towards much-needed recovery.

The next step is within reach of procurement departments, which have for a long time been rising to the challenge of continuous transformation. If you're not convinced, just read the latest analysis by Pierre-Olivier Brial, Managing Director of the Manutan Group: Why should procurement departments reinvent how they work?

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