5 Ways to reimagine procurement to boost recovery
The procurement sector is dealing with the effects of sustained contractions amongst some of the world’s largest economies. Whilst procurement departments have been in crisis-management mode the time has come to move forward to boost recovery with forward-thinking strategies and by embracing change.
Procurement has helped businesses through global economic crises before, however, the landscape has changed significantly and procurement leaders need to find a different approach. Rather than simply focussing on financial recovery, procurement must reimagine its operations and ways of working at a fundamental level to achieve greater efficiency, reduce costs and be more attractive to investors.
The future of procurement
81% of procurement leaders strongly agree that procurement will need to reimagine its operations going forward to meet the needs of their industries and organisations. Procurement priorities for the future will revolve around addressing the challenges brought to the fore by evolving conditions such as:
- Remote working
- Supply chain disruption
- Volatility of demand.
How to overcome procurement challenges
The pressures of the rapidly changing global environment have created new challenges for procurement leaders to overcome. Significant issues and their solutions include:
- Build resilience in supply chains
Shutdowns have highlighted the problems inherent in complex global supply chains. Building relationships with diverse new suppliers and being willing to sacrifice short-term efficiencies can mean greater resilience in the supply chain.
- Use analytics and cross-department collaboration to respond effectively to market changes
By working more closely with sales and planning teams and by using data analytics to predict demand spikes, potential shortages, and supply disruptions, it is possible to anticipate and respond to unexpected shifts in the market more quickly.
- Change operational models
Procurement teams have had to adapt quickly to the challenges presented by the rapid shift towards remote and hybrid working. Utilising digital technologies, developing robust onboarding and collaboration strategies and a willingness to work flexibly will help procurement teams to adapt to new ways of working.
5 Ways to reimagine procurement to boost recovery
Procurement leaders should aim to move beyond a reactive approach to the significant changes and challenges that lay ahead. To be more responsive to changing markets procurement leaders must also be proactive in reimagining procurement priorities to boost recovery. Below we examine five ways procurement can reimagine its operations to function more effectively.
- Utilise zero-based budgeting to unlock resources
Zero-basing has been around for many years. However, digitisation and data analysis are enabling organisations to go deeper and unlock overlooked resources. By applying zero-basing to spend categories such as real estate costs, businesses can be more responsive to changes and recalibrate expenses more quickly, reducing costs and raising earnings.
- Accelerate the adoption of digital and data analytics
Digital solutions and data analytics capabilities are critical in increasing the effectiveness of procurement and 69% of leaders in procurement consider them to be extremely valuable going forward. Spend analytics was identified as offering the greatest potential to revolutionise procurement and offer insights into opportunities for value creation and decision making.
However, there is a significant skills gap when it comes to implementing these technologies. Procurement leaders should be focused on forward-thinking hiring for analytical skills as well as implementing training and programmes to empower employees across the organisation to use digital solutions.
- Adapt to new ways of working and build future-ready operating models
49% of procurement leaders have reported drops in productivity amongst their teams largely due to the lack of efficiency and loss of team morale caused by the shift to remote working. As hybrid and flexible working models are going nowhere, now is the time for procurement leaders to rethink their operating models and develop more robust strategies for future working. Putting in place remote onboarding and training procedures, leveraging technology, and allocating staffing more dynamically can dramatically improve morale, reduce costs, and attract top talent.
- Accelerate venture capital and unlock new partner opportunities
Until recently, procurement was a relatively overlooked area for investors, however, innovation and disruption in the sector have made it an increasingly attractive prospect. In 2020 31 venture capital deals were made in the European procurement space, raising 415 million euros, up from only one deal in 2010. Procurement leaders can stand out to investors and accelerate venture capital by embracing technology and collaborating with partners and suppliers to develop joint-innovation projects that offer both parties the chance to boost profits, reduce costs and attract capital.
- Redefine core capabilities
Weaknesses in procurement core capabilities and major structural issues, such as lead times, payment terms and claims that have been overlooked due to a lack of resources or insufficient knowledge bases have been exposed by recent issues. Leaders need to review core capabilities, establish best practices, define competencies needed to move forward and address recruitment needs to close skills gaps.
How can Morgan Law help?
With such a complicated recruitment climate for public and non-profit organisations, leaders need to find the right recruiting partner to navigate a potential high-level skills shortage.
At Morgan Law we take the time to develop a full understanding of your requirements, meeting with you to discuss challenges and offer advice on the availability of talent in the market and how to improve your existing practices.
Our established database of over 30,000 senior-level, highly-skilled professionals with significant experience in the public and not-for-profit sectors available on a permanent and contract basis enable us to deliver the highest quality recruitment solutions.