Top

Would you like to:

TALK TO SALES? JOIN OUR TEAM?

Moving Past COVID-19 – The Next 100 Days in Procurement

Posted by: 
 | Jun 2020

As the post-COVID world begins to take shape, procurement leaders must now turn their attention to ramping business back up, as strategically as possible. We’ve identified the five key priorities essential to this effort.

 

The COVID-19 crisis has caused unprecedented disruption across every function of virtually every major organisation in the world. But, few teams have been as acutely impacted as procurement.

In a field signified by complex global supply chains, volatile commodity markets and organisation-wide reach, teams and leaders alike have had to work tirelessly just to keep their businesses operational.

As such, it’s been a time of intense firefighting. Overarching goals like cost control and margin maximisation have had to take a back seat as products and channels, and the broader procurement ecosystem, are rapidly reshuffled in line with huge global supply and demand swings.

Fortunately, the most disruptive forces are now beginning to settle, and we are beginning to see loose signs of what a  ‘new normal’ might entail. Now, it’s time for procurement leaders to start thinking strategically again, and begin building and implementing concrete, long-term recovery plans.

The next 100 days, therefore, will be critical and The Smart Cube has identified five strategic priorities that all procurement leaders must consider to ensure their function and organisation emerge from this crisis in a strong, sustainable, and profitable position.

 

5 strategic priorities for the next 100 days

1. Assess and understand your new demand profile

One of the most valuable and important tasks for procurement leaders to undertake now, is revaluating and reassessing the demand context their organisation’s products or services will exist in.

The post-COVID world represents a new paradigm for all businesses. Customer behaviours will evolve, growth predictions for sectors will alter significantly, new supply and demand levers will emerge, and many of the fundamental rules that individual procurement functions have been built around will change as a result.

To succeed and drive value now, procurement strategies must be rebuilt from the ground up. That begins by reevaluating the core drivers that will influence accurate demand forecasts and establishing a new view of the demand context that surrounds your organisation.

 

2. Optimise your supply chains

Once you understand your new demand context, you’re naturally going to want to make appropriate changes to your supply chains as a result.

Major supply chain changes can be daunting for even the most mature and sophisticated procurement teams. But the current global supply climate has created one of the biggest opportunities to transform supply chains we’ve ever seen – and it shouldn’t be overlooked.

Virtually every major company in the world is now revaluating significant elements of its supply chain. Whether it’s rethinking the structure of supply chains, reassessing make versus buy or embedding processes to increase agility, it’s critical to ensure more tailored, flexible supply chains that can adapt more easily.

Forward-thinking procurement leaders will view and approach COVID recovery as a positive opportunity for supply chain optimisation – going beyond making the basic changes needed for recovery and optimising supply and logistics strategies.

 

3. Fortify your operating model

The sheer scope and scale of disruption caused by COVID-19 should lead many businesses to take a strong look at how they’re set up, and revaluate their approaches towards risk, agility and business continuity.

This crisis has served as a sobering reminder to many that at any point, major environmental and geopolitical hazards can bring even the most profitable organisations to their knees. With that in mind, procurement leaders must now shift their attention towards safeguarding business continuity and building more resilient operations.

Targeted intelligence and analytics will play a pivotal role in these new strategies, enabling procurement teams to make faster, better-informed decisions, and contribute to a new definition of business success – the ability to operate profitably in any and all conditions.

 

4. Rethink your category strategies

As you create long-term COVID recovery plans, it’s not just changes in your own industry you need to think about – you must also carefully assess the long-term impact the crisis will have on the categories you depend on.

Supply and demand levers, spend profiles and risk levels are all likely to have changed significantly in the first and second quarters of 2020. Many of the fundamental characteristics of even your best-known categories have changed, so the right course of action is to completely redevelop category playbooks and guidance.

By assessing your categories in-depth, from the ground up, you’ll also find untapped opportunities to accelerate sourcing and identify alternative suppliers. Now is the time to gather robust intelligence, challenge entrenched category assumptions, and create new strategies.

 

5. Improve supplier management

During this time of high uncertainty and disruption, your suppliers will have been impacted just as heavily as your own business. Some may have thrived in the turbulent conditions, but others will have fallen into far weaker positions in the market – and now you need to re-profile them based on new capability, reliability and risk levels.

Failure to understand the new risk profile of your supply base will have a significant impact on your operations. Clearly, that’s the last thing you want to expose yourself to in a time of recovery, so it’s worth diving deep into the post-COVID supplier landscape and putting robust risk assessments together.

Of course, this wide-scale re-analysis isn’t solely about minimising risk. It’s an opportunity to identify and explore alternatives, establish valuable new relationships and set your organisation on a path to long-term cost savings and profitability.

 

Drive change. Don’t let it drive you.

Every organisation and procurement team has a huge amount of work to do to regain strength and adapt to our ‘new normal’. But, over the next 100 days and beyond, the most successful procurement leaders will be those that seize this as an opportunity to drive change and optimise how their function operates.

By gathering the right intelligence, conducting the right analysis and asking the right questions now, you have the opportunity to build a robust, agile procurement strategy that minimises risk and safeguards business continuity, without sacrificing profitability.

 

The Smart Cube has developed a 100-day framework around these five key priorities, to assist procurement leaders in thinking about recovery strategically. Visit our new 100-day Resource Centre to access this framework, plus more useful insights and guidance.

  • Omer Abdullah

    Omer is a co-founder of the firm and leads The Smart Cube’s business across The Americas. He has more than 25 years of management consulting, global corporate and industry experience across North America, Europe and Asia.

    Prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA and a BBA from the University of East Asia