Beyond Covid-19 – Procurement’s Time to Shine

Beyond Covid-19 | A Survey conducted by WBR Insights Asia and Coupa Procurement reveals APAC procurement leaders are gaining seats at the executive decision-making table.

During this pandemic, many have been using words like “cope” and “adapt”, more than “shine”. That’s understandable. Procurement people around the world have been trudging through the realisation that existing processes and tools were not designed for what this global crisis has brought on.

But procurement people have been shining. They’ve been helping to maintain business operations by containing costs. They’ve been managing suppliers (or finding new ones) amidst supply chain disruptions. They’ve been managing purchasing, approvals and contracts (or dealing with the cancellations thereof) when everyone was suddenly working remotely, and digital solutions needed to be found and implemented quite rapidly.

Working with WBR Insights, Coupa asked more than 50 Asia-Pacific senior procurement and supply chain management professionals across 11 industries how they have been coping and what strategies they believe will help them come out of this crisis stronger. The results echoed Coupa’s observations amongst  Australian and New Zealand customers.

Here are 4 reasons why surviving through this crisis has been an opportunity for procurement to shine, which will continue in 2021 and even beyond Covid-19.

 1. Procurement is helping control what can be controlled

Revenue growth took a back seat as companies focused on what they could control. Almost 75 per cent of respondents reported increased expectation on procurement to control costs and create new value with suppliers and said that cost containment will top the list of ways procurement can continue to add value to the business.

That’s why more than half of respondents (56 per cent) are considering implementing new spend analytics capabilities and 44 per cent would like tighter integration of systems to manage spend.

2. Supply chain visibility and risk are critical in times of business stress

More than half (56 per cent) of respondents said that maintaining supply chain resilience has been their top concern during the pandemic.

For those experiencing cross border supply chain disruptions, respondents said they need to find alternative local suppliers (65 per cent) and increase the number of suppliers in critical categories (60 per cent).

Some organisations have found workarounds to existing, long-held procedures to get the goods or services the organisation needed. For some that included finding alternatives to their existing supply chain and rapidly on-boarding new suppliers, making the necessary changes to keep the business operating, or even to get the PPOE they required to keep employees safe.

This has brought certain third-party supplier risks to the forefront, including:

• Potential risks inherent in rapidly on-boarding new suppliers without proper vetting (70 per cent)
• Working with existing suppliers that might now have cash flow or solvency problems (65 per cent)
• Lack of knowledge about existing fourth- and fifth-party supplier risk (55 per cent)

It makes perfect sense, then, that more than 60 per cent of respondents are considering acquiring new tools for supplier risk and performance evaluation. The top procurement strategy required to align with board and senior management objectives going forward, has been identified as the ability to ensure visibility into contracts and entitlements (63 per cent).

3. The relationships that you build can contribute directly to effective business operations

Throughout this pandemic, we have seen time and again that relationships matter when it comes to who gets the product or the deal in times of short or delayed supply. Many customers have told us about instances where relationships have won out over higher bids.

Procurement professionals have also stated their roles have changed from a focus on driving negotiations to get to the best price, to one of partnership and collaboration.

The WBR study has told us that procurement leaders have been working closely with government agencies to minimise cross border supply chain disruptions (60 per cent) and partnering more closely with tier 2 and tier 3 suppliers (27 per cent).

We expect this partnership approach to continue in 2021 and beyond.

4. Procurement can add more strategic value than ever before 

The strategic value that procurement can provide is easier to recognise when aligned with business survival and success in the face of a global crisis.

With some (34 percent) citing better relationships with the CFO and the C-Suite, 56 per cent of respondents said that the procurement role has been viewed as more strategic and adding value beyond just savings, and that they’ve been given a seat at the executive decision making table.

Doing more with less has never been more important. Liquidity and cost containment will remain a whole-of-business-priority, redefining the procurement role as one of operational and strategic relevance.

No one wanted it to occur under these circumstances, but procurement is now a primary focus of attention at your company. It’s time to show everyone what you can do.

Don’t revert to outdated, manual procedures as your company finds its new normal. Shine a light on the gaps in processes, technologies and visibility that this pandemic has identified. Discuss the role business spend management will continue to play and the tools needed to do so.

Businesses need to have the right systems in place help drive value, reduce risk, provide real-time visibility on spend, adjust with flexibility, onboard suppliers with consistency, de-risk transitions with third parties and make sure complying with spend policies is easy and digitised.

My call to action for procurement professionals is to use this crisis and what we have learned, to leave a positive legacy within the organisations we support. We can drive true digital change with tangible, measurable ROIs.

2021 will be all about putting learnings into practice. Cost containment, supplier risk management and digitisation are now necessities, not nice-to-haves.