5 Insights to Drive Your Procurement Priorities
Just as there was no roadmap for navigating a crisis like COVID-19, there is no formula for the best way to come out of a pandemic, either. However, if anyone has proven that they are up to charting the way forward, it’s procurement professionals. As resourcing experts, procurement is known for finding strategic solutions that satisfy diverse stakeholder needs — and fast.
During the COVID-19 pandemic, organizations trusted procurement teams to rapidly source solutions to problems no one saw coming. This meant an abrupt shift in priorities from normal business operations to identifying and obtaining critical solutions that would allow businesses to keep their doors open, such as digital platforms to facilitate remote work, PPE to protect frontline workers and rapid COVID tests.
Though the vaccinated population is increasing, and the dust is beginning to settle from a turbulent 15-month sprint to get control of the virus, procurement teams are still facing heightened pressure to deliver. Now, the proven capacity to strategize, pivot and rethink has been shifted to supporting a new internal operations structure in an uncharted post-pandemic world.
Reflecting on a Year of Turbulence
Between December 2020 and January 2021, a survey was distributed to public procurement professionals across the U.S. to answer critical questions including: How did procurement teams react to the pandemic? How did they re-evaluate operations? And how did they realign priorities for 2021?
The findings illuminated key insights about the state of the industry and how leaders in the industry are shaping strategic priorities for the future. Each of the tips below will help organizations to identify the operational and strategic shifts necessary to satisfy new challenges, contexts and expectations in 2021 and beyond.
1. Reassess your Processes Post-Pivot
Despite a tumultuous 2020, companies in the U.S. are still prioritizing an accelerated approach to digital transformation. According to the procurement priorities survey, procurement is a prime example of where that transformation has already happened.
To support the rapid shift to remote work early in the crisis, procurement teams were tasked with implementing changes that typically take weeks or months in just a matter of days. Since then, procurement teams have undergone varying degrees of digital transformation in order to adapt, including significant increases in digital capabilities, adoption of business-processes and swift navigation of supply chain shortages.
However, these patchwork solutions were never meant to be permanent. The majority (44%) of survey respondents plan to reassess the temporary changes made during the pandemic once the crisis has lifted. This includes reactionary measures to ensure operations could continue through COVID-19, including proposal submissions, public bid openings and evaluations.
To maintain efficient operations in the future, organizations must take the time to properly evaluate digital processes and establish a path for evolution that allows for more streamlined and connected operations.
2. Prepare to Mitigate Supply Chain Challenges
In 2020, Texans Can Academies introduced new bidding software to streamline procurement. Their first RFP posted through the new platform was for a COVID-19 consultant to help plan their school reopening. Like many in her position, Chief Financial Officer Marian P. Hamlett said without an eProcurement platform, she “would have never known where to start. I was able to find and invite over 150 vendors to participate and we successfully found a contractor.”
For Texans Can, and many other organizations, implementing new technology mitigated one of the biggest challenges 34% of procurement professionals said they faced in 2020: finding new vendors in new categories as fast as possible. However, 65% of respondents reported that the biggest struggle by far was navigating pervasive supply chain shortages. Without existing relationships to draw on in certain key areas, such as acquiring the right PPE, procurement teams had to scramble to find workarounds.
Going into another year of unpredictability in global markets, industry should expect that supply chain challenges will continue. Procurement teams need to be prepared with fast and efficient digital tools that leverage commodity codes, tap into vendor communities, and help build those critical new relationships.
3. Plan for a Future of Hybrid Work
In our new reality, more people than ever before want a hybrid schedule that gives them the flexibility to work in the office and remotely. In fact, 46% of procurement professionals said that they now expect to work from home anywhere from 20% to 80% of the time.
Having team members dispersed across remote and office environments presents new challenges for productivity, communication and workplace culture. That’s why as collaboration processes and tools are once again established, a key discussion should be what is feasible over the long term.
Even for organizations planning a full return to the office like 47% of respondents, industry partners and vendors may not be. The pandemic has undeniably shifted preferences for work and communication toward digital. Vendors will not only expect, but in many cases require a digital option for submitting bid responses, renewing contracts and communicating with procurement teams. Given these shifting expectations, it will be critical to assess the capabilities and effectiveness of existing digital capabilities.
4. Understand How Stakeholder Expectations Have Changed
The exodus from paper-based processes has implications far beyond work environments. It also impacts expectations around speed and efficiency. In that regard, stakeholder expectations are on the rise and many procurement teams are still figuring out how to manage.
When asked if stakeholders expect faster results now than they did before COVID-19, 28% of procurement professionals strongly agreed. However, almost a third said they are unsure of how the pandemic has impacted those expectations. While the end may be in sight, the pandemic’s impacts are still very much an evolving reality.
These data reveal an important general insight: that procurement will need to incorporate stakeholder awareness as a key element in future strategies. It will be important to formally evaluate expectations and take the pulse of current sentiment to ensure processes and priorities resonate with each party involved in the strategic sourcing process.
5. Develop Concrete Cost-Cutting Strategies
COVID-19 forced mass layoffs and furloughs as companies downsized to stay afloat. In the first six months of the pandemic, more than 60 million Americans filed for unemployment insurance. Now, more than a year later, there are some indications that organizations are bouncing back but many are still feeling the financial strain of the pandemic.
It comes as no surprise that the top two procurement priorities for 2021 reported by survey respondents were cutting costs and reducing budget (28%) and increasing the speed and efficiency of processes (27%).
In order to deliver on those priorities and allow for savings in 2021, organizations are exploring innovative sourcing strategies, like the 54% who plan to use cooperative contracts to reduce overhead and deliver faster solutions. Exploring other approaches to strategic sourcing, such as piggyback contracts, creative purchasing vehicles and more efficient digital processes can greatly impact long-term cost-cutting efforts.
From Turbulence to Transformation
With a post-pandemic “new normal” on the horizon, understanding the approach other procurement teams are taking can help you stay competitive. By funnelling these insights into a smart procurement strategy and “future-proofed,” digitized processes, organizations can make strategic decisions that drive strong results in 2021 and beyond.