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Post-pandemic procurement problems (and how to fix them)
The pandemic has left businesses facing tremendous procurement challenges, some of which were lurking pre-COVID. Read on for an analysis of what’s gone wrong and what you can do to resolve it.
1. Maverick spend
Maverick spend--when employees buy supplies outside existing contracts it can cost businesses billions. It means you lose out on volume discounts with established suppliers, and you may end up with inferior services that cause problems or need replacing.
2. Longer procurement cycles
The longer your procurement cycle takes, the less you’ll achieve and the more it’ll cost. Manual procurement practices are now getting left in the dust by competitors who have gone digital.
3. Inaccurate data
Another issue with manual procurement is human error. The bigger your business gets, the easier it is to lose revenue to billing fraud without even noticing.
4. Supplier management issues
Pre-pandemic, companies would vet suppliers thoroughly and monitor them to make sure they kept delivering good quality services reliably and billing honestly.
How the pandemic made procurement problems worse
1. Supply chain disruptions and rising prices
Businesses had to scramble to fill gaps in supply chains as their regular suppliers went into lockdown. This naturally drove prices up.
2. Rapid change
Shortages and rising prices meant businesses relying on traditional RFI and RFP processes couldn’t move fast enough to grab the few available supplies. The new normal demands agility; long-term contracts with carefully chosen vendors are on the way out.
3. Remote working issues
With many procurement staff working remotely, leaders have to rethink talent management and development, as well as relationship-building with internal stakeholders.
4. Tightening budgets
Many businesses are being forced to cut costs, and procurement professionals must be involved in these discussions from the start.
How digital transformation can help
1. Better supplier relationship
Digital procurement makes it easier to proactively monitor your supply chain, assess the risks of working with a new supplier, and plan for the future.
2. More efficiency
Digital transformation allows time-consuming operations to be automated, making them faster and cheaper, and freeing up human employees to focus on higher-value tasks.
3. Reduced costs
Digital procurement offers real-time spend visibility, cutting maverick spend and helping you predict demand and make better decisions.
4. Better connectivity
Digital procurement provides a better user experience through a simple, consumerised app environment that connects users across the globe, making it easier to stay on the same page with stakeholders.
In conclusion, any organisation looking to succeed post-COVID needs to invest in digital transformation to create the kind of agile procurement operation the new normal demands.‹ Back