Who better to bring balance, build resilience and solidify competitive advantages than Procurement and Supply Chain?
Will you and your organizations come out of this crisis stronger, weaker or just different? A question I’ve been thinking about personally and as it relates to my family and work. Of course, the crisis is still very much real, affecting many people and businesses with long lasting effects. Perhaps there are slight signs of a slowdown in certain parts of the world but who really knows how things will fare without a vaccine. Either way, we have to overcome this and look towards the new normal, which I believe can be a better one.
The pandemic is surely one of the greatest affecting the world and for many it has or will be a pivotal turning point. On the personal side, it may bring focus back to the things that really matter, be it family and friends or health and lifestyle. Or, it may send you down an entirely new path. On the business side, it may question the raison d’être and bring focus to finding the right balance between society, the environment and the economy. From certain perspectives, the pandemic presents businesses a rare opportunity to accelerate on digital transformation initiatives that have been dragging over the last few years. Not for the sake of digital transformation but rather to rapidly ensure more resiliency and hone in on or further develop competitive advantages.
Balancing the Imbalanced
Until recently it would have been fair to say that most businesses operated in an imbalanced manner with regard to society, the environment and the economy. With the main focus being on economic development, too often at the cost of society and the environment. Of course, there have been big strides made in recent years to balance this out but the big question is – What Happens Next?
This is a pivotal point. Will businesses go backwards due to necessity and survival or will they step up and push forward to go further and faster to achieve the right balance? I do hope it’s the latter and guess what, I believe Procurement is a key player in this. How and where an organization spends its money impacts not only the business but an entire supply chain of businesses, their employees and their communities. Where a business directs its spend can make the difference between an unsustainable imbalance and a sustainable balance to develop society, the environment and the economy equally. I strongly believe (and hope) we’ll see more and more organizations taking a stronger stance on this issue. Be it stronger support or stricter policies around supplier management for sustainability and diversity or more efforts to improve the communities involved in and around a business. Overall, Procurement organizations can influence entire ecosystems of suppliers to develop with this balance in mind.
Resiliency has always been an important business strength but naturally during times of crises, there is more focus on this. For Procurement and Supply Chain leaders, this is very much ingrained in their thinking, however, whether they have had the opportunity to develop / execute on a strategy to be more resilient is a different question. This is the opportunity to show real business value. Now is the time to show the business how Procurement can add value around supplier and supply chain risk management but also to ensure continuity of supply.
Building resiliency begins with suppliers but must involve collaboration with the business. How much information do you have on your suppliers? How well connected are you to your suppliers? Are you monitoring risk elements important to your business across your suppliers? How would you know if a supplier is in financial trouble? Do you have a mechanism to communicate and collaborate with suppliers in times of crisis? Do you have a clear view of supplier hierarchy to understand parent / child relationships? Do you know who your suppliers subcontract to? The list of questions that need answering is long. Needless to say that Procurement must accelerate on its plans to digitally connect to its suppliers to get better information, better assessment of risk (and performance) and overall infuse the multitude of Procurement and Supply Chain processes with better supplier information to improve decisions.
But building resiliency is also about showing commitment and support for your suppliers. During hard times, suppliers are likely to remember which customers supported them and which ones abandoned them. This is a time to forge stronger relationships.
Focus on Your Competitive Advantage
Lastly, the opportunity to establish or further develop a competitive advantage is too great to ignore. Some may ask, how can Procurement help here? Procurement does in fact have a lot to contribute in developing a competitive advantage. There isn’t an easy answer, however, as it really depends on the business and industry. Procurement has been known to accelerate innovation and speed-to-market. Essentially, Procurement is a gateway to probably the most significant source of innovation that any company has, its suppliers. By harnessing this rich resource companies can build great competitive advantages but they also need the people, processes and technology to take full advantage.
Technologies such as strategic sourcing, procure-to-pay or full source-to-pay that are instrumental in managing spend must empower versus limit. Often however, software solutions are designed in a way that forces organizations to compromise due to the limitations and restrictions presented. For those organizations that are ready to develop a competitive advantage (and many won’t be, as they still need to attain a level of maturity), technology must empower the skills and ideas that people have to be implemented and executed. Technology must empower creativity; this is how a competitive advantage is both born and executed.
Vishal Patel is the VP of Product Marketing at Ivalua, a leading provider of global Spend Management Cloud solutions