As soon as the pandemic hit in early 2020, it was clear that global supplier management processes would need to transform abruptly and permanently.
If you’ve found your business’s sourcing and procurement ensnared in the pandemic panic, you’re hardly alone. Of nearly 200 executives responding to a recent Harvard Business Review Analytic Services study, 95% reported disruption of their strategic sourcing and supplier management processes due to the effects of the Covid-19 pandemic.
These processes were already overdue for an update. The overwhelming majority (92%) of global executives see the digital maturity of their current supplier management processes as less than best in class. One in eight said they still manage these processes with email and spreadsheets.
Still, as the old adage says, never let a crisis go to waste. Six of every 10 executives said the pandemic has led them to fast-track their plans to update and automate their processes, increasing resilience and reducing risk by improving automation and expanding digitized supplier management data.
To enhance collaboration, streamline processes, and provide anytime accessibility, sourcing and procurement leaders are turning to cloud-based sourcing and supplier management tools. The overwhelming majority of survey respondents believe cloud-based platforms are the most practical way forward.
Greater Access and Agility
Most legacy enterprise systems weren’t built to accommodate today’s demand for greater collaboration, organizational agility, and digital acceleration for sourcing and procurement.
“In the past, we didn’t have a standard system for driving early engagement,” says Brian Peters, senior director of procurement at Gilead Sciences. “We relied on networking in the hallway, walkarounds, and meetings to stay in touch with people. A lot of stuff falls through the cracks when communication and collaboration require a personal touch at every step.”
When processes and systems are built to accommodate physical and geographical separation, reconciling that personal touch with accessibility and agility can be exceptionally difficult. And for Gilead, a biopharmaceutical company working on anti-Covid-19 therapies, staying agile and operational during this pandemic had become even more significant.
“We have had to be much more agile in terms of making processes and systems accessible and usable for an employee population and a contractor population that [are] in different places physically,” Peters says.
Procurement, Peters says, should function as a marketplace powered by intuitive applications. Gilead is accelerating its adoption of tools that allow digital supplier management, competitive bidding, and requisitioning to improve real-time visibility into sourcing and procurement spending, improve operational efficiency, and streamline reporting and analytics.
Its next step will be to create a user experience that will put more of these tools directly into the hands of business leaders, enhancing and automating the early engagement with procurement professionals that will create more value for the entire enterprise as well as for its partners and customers.
Enterprise resilience—risk and crisis management, business continuity, recovery—goes beyond surviving a disaster. An organization’s capacity to anticipate and react to change is essential even through gradual or incremental change.
Procurement professionals see this resilience in strong, automated sourcing and supplier management processes that resist disruption, improve organizational agility, and ensure continuity of critical supplies and services.
At many organizations, the pandemic has accelerated automating procurement processes, digitizing more supplier information, expanding data analysis capabilities of their supplier bases, and introducing tools to improve collaboration inside and outside the organization.
And the full business increasingly sees the need to strengthen the supplier network through better collaboration tools.
At Cleveland-based KeyBank, executives want fuller visibility into their partners’ financial health and performance, information security, and better real-time data visualization to prepare for crises and perform during those crises.
“We have providers that have made good decisions for a number of years with strong financial health that find themselves in the wrong industry, potentially out of business, if the economy doesn’t improve,” says Adam Andolina, chief procurement officer at KeyBank. “What happens if things don’t get better? Which of our providers are not in a position to survive? How would that impact our business?”
Prepare Today for Unknowns Tomorrow
Global disruptions will continue to highlight the key role procurement and supplier management play in enterprise resilience—and guide investment and planning.
Procurement professionals can start with several steps to strengthen enterprise resilience:
- Improve visibility by moving from disjointed spreadsheets and email chains to centralized, streamlined cloud platforms.
- Manage and mitigate risks by understanding dependencies on outside partners and communicating with these vendors to prepare for the unexpected.
- Identify inefficiencies by reviewing and streamlining partner contracts.
- Accelerate automation of digital approaches to the supplier management and procurement processes.
Not every organization was prepared to manage procurement through the current disaster. But accelerating the digitization of strategic sourcing and procurement processes can help any organization stay ahead of the next one.
Click here to read the full study, “Managing Procurement Risk: Enterprise Agility for a Changing World,” featuring executive perspectives from Gilead Sciences, KeyBank, and LendingTree.