Procurement: A seat at the top table?
The devastating impact of the coronavirus has put immense strain on procurement teams across the globe. During the COVID-19 lockdown period we have spoken to many procurement leaders across a wide variety to industries to understand how they are re-evaluating their agenda to aid resilience and recovery. Many of them are already tackling the difficult questions head-on to identify and respond to new priorities and adjusted ways of working. Although everyone is under more pressure to keep their organisations afloat, the praise and profile procurement teams have received has been outstanding.
For some sectors this has been an important wake-up call for the board, who now know their supply chains are not as resilient as they need to be, and understand that they need to unlock areas of procurement value that previously may have been a low priority.
Over the past year, speaking with a number senior procurement executives on how they are tackling a crisis unlike anything we have seen before, we have identified three key trends which are elevating procurement leaders from strategic sourcing experts to being an integral part of the business strategy, and earning them a place at the top table.
Building Resilience – Procurement leaders are working hard to increase their organisations’ abilities to respond to future challenges, through risk management in procurement decisions; tools to enhance centralised visibility; and controls and business-continuity planning for multiple ‘what-if’ scenarios. Companies must create better transparency to gain information about their next-tier suppliers and their upstream value chains.
Develop and secure suppliers– Managing and mitigating supply uncertainty is paramount for the future and successful procurement leaders will need to ensure they are strengthening their companies’ supply base. This will be done through identifying alternative sources of supply i.e. shifts to local suppliers and working closely together with suppliers to anticipate pitfalls, backlogs, and liquidity challenges.
Unlock funds intelligently – Most companies will face a severe cash crunch for the foreseeable future. Preserving cash responsibly will therefore be one of Procurement’s primary goals for the next 12 months. This will be done by embracing a zero-based mindset in managing all categories of third-party spend, optimising working capital and maximising employee productivity by increasing capacity with automation and applied intelligence.
The COVID-19 pandemic has tested even the very best procurement leaders. They have never previously been asked to play such a leading role in safeguarding their company’s financial viability and protecting a severely disrupted supply base, all whilst pivoting to a fundamentally different way of working.
I hope that CEOs will look to procurement leaders and truly embrace procurement as a key function in their own organisations as a way to gain the greatest value from the supplier base and to manage their supply chains with a focus on resilience and not just on cost.
If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact James Peskett via firstname.lastname@example.org for an initial confidential discussion.