In the business world, short term goals in procurement, amongst all else, changed during the COVID-19 pandemic. And while some industries and businesses were left trying to find the best way to simply stay operational or secure strategic sourcing trends, other businesses were pushed into the spotlight, with some saying that digital transformation, especially within a B2B environment was accelerated 10 years into the future.
But we know this already, don’t we?
The story about “how we pivoted and built an amazing new business with new procurement technologies in place during lockdown” is already becoming old news and, as the world begins to turn once more, what is now becoming the focus is how business will evolve, specifically in procurement, in the post COVID-19 pandemic.
Driving Factors of Procurement to consider are:
- Remote/Home working (for many B2B industries) is here to stay. Why on earth would businesses chose to return to a model of working that costs more, is less productive, and gives the majority of employees a worse quality of life?
- Misleading starts to the originally planned lifting of restrictions have increased the vulnerability of certain industries & business owners to collapse.
- Increased personal hygiene and sanitization regulations will inevitably be in force for some time — in sectors such as Care, Health, Facilities, Food Production, Hospitality, and many others this represents additional cost & decreases the opportunity to obtain any sustainable procurement policy.
- Fundamental changes such as increased online ordering vs shopping in-store, more ‘click & collect’ and home delivery options, app-based ordering, and a decentralized, remote-based workforce are now also here to stay.
- End users are now making more decisions on what and where they buy from with more online choices and less visibility to allow Finance and Procurement teams to control this.
With these factors in mind, what three things should Procurement be considering after COVID-19?
1. Procurement technologies coming ‘downstream’ thanks to COVID-19.
As more and more business look to operate or return to operation with the new pandemic-driven factors listed above having a major impact, automation of manual processes that were once done in an office environment are now becoming an essential part of everyday business life.
- - Manually entering data from sheets of paper into a finance system.
- - Scanning contracts for end/termination dates.
- - Emailing/Calling line managers for approval of purchase orders and expenditure.
- - Matching invoices to purchases orders.
- - Collating multiple suppliers’ datasets to analyze total expenditure in a specific area.
- - Creating reports that accurately reflect a business’s performance metrics.
These tasks can now be automated via a wide range of software solutions such as procurement technologies, with many more start-ups developing all kinds of new businesses around software solutions that relate to the automation of these or similar procurement processes.
The key point here is that now any business can access software to automate and streamline their business processes for a fraction of the cost of expenditure solutions that, pre-pandemic, were aimed and priced for much larger businesses. This means that, as the technology becomes more affordable, smaller business employing staff to take care of manual financial processes will soon start to become a thing of the past with strategic sourcing trends becoming the new normal.
2. Price increases, service decreases. The question now is, what is Procurement?
For the businesses that did survive the pandemic, the cost of doing business got more expensive due to the factors listed already, combined with a whole range of others.
The Office of National Statistics states that rising prices in clothing, fuel, food, and recreational goods have led to a 2.1% overall increase in consumer pricing, with the largest upward contribution coming from transport (0.72 points).
This cost will inevitably be passed on to the customer and may very well take the form of increased delivery charges (if ordering products to be delivered to site etc.) as well as increases in the goods themselves. While suppliers may be quick to pass on procurement increases to their existing customers, the ‘new business’ teams within their competitors will be hungry to take on new clients. Allowing businesses the ability to deliver pricing and discount structures that could represent significant cost savings especially when benchmarking against newly increased pricing from current providers.
At the same time, service offerings such as dedicated account support, relationship management, timed and next day free deliveries and & even such things as account and & pricing reviews may become less frequent or available.
Again, any increase in expenditure or decrease in service (or both) can and should be countered by strategic procurement engaging in pricing, SLA, and supplier KPI reviews to ensure you, as the customer, do not suffer from suppliers passing on the overflow effects of the pandemic.
3. Sustainability & CSR in Procurement (again).
When “Corporate Social Responsibility” became a hot topic around 10 years ago, there was a general feeling of this concept being a marketing exercise or something to that effect. If you weren’t in the public sector, organizations that needed to tick a box by including it in tendering processes with their suppliers, could simply ignore it.
Moreover, you could settle your conscience in not saving the planet as becoming a carbon neutral organization meant higher costs at the time.
This time, it’s not going to go away…
With the pandemic appearing to be in its final stages now, issues such as reducing carbon emissions, sustainable procurement, purchasing from ethical sources, reducing waste and carbon emissions to help the increasingly worrying specter of global warming, simply cannot wait any longer.
With younger generations now coming through the workforce, there is more pressure now more than ever for businesses to really do something about their impact on the environment, in some cases to ensure that the corporate image the business conveys is one that other organizations feel comfortable working with or buying from - one that employees want to work for as it aligns with their own values.
Analytical tools such as Compleat Software’s Advanced Spend Analytics and other procurement technologies can identify savings in both money and carbon footprint. Consolidating suppliers, reducing deliveries, and, in some cases, even classifying carbon footprint by item. This allows a business to accurately report on procurement sustainability to support their CSR claims.
We must all work together to address this issue, and procurement can play an important role.