How Can Procurement Deliver Value and Continuity in Challenging Times?
Procurement departments are operating in a difficult environment. Supply chain disruptions are ongoing due to global events, and inflation continues to make it difficult to achieve core savings goals.
Thankfully, there are steps procurement teams can take to address these challenges.
Here, we'll identify the areas where improvements need to be made for procurement to maintain high levels of performance while navigating through turbulence in today's marketplace.
Assess the Current Impacts on Your Supply Chain
It is important to review the impacts of global events on your supply chain. This includes understanding any changes in the availability of raw materials, transportation disruptions, and production delays.
Understanding these issues can help you plan for alternative sources of supply or adjust timelines accordingly.
Currently, there are several common impacts on supply chains that procurement departments need to be aware of.
Natural Disasters
Natural disasters such as hurricanes, earthquakes, and wildfires can have a significant impact on supply chains. These events can disrupt transportation routes and cause production delays, leading to shortages and increased costs.
Extreme weather events are likely to increase in frequency as climate change continues to become more of a problem. Companies sourcing from regions prone to extreme events weather events must assess their risk exposure and line up alternative suppliers in the event of an emergency.
Geopolitical Tensions
Geopolitical tensions are also causing disruptions. For example, the ongoing war in Ukraine has led to supply disruptions across Europe and beyond.
There may also be changes looming in how international trade affects supply chains. According to the Center for Strategic and International Studies, developments within China, a major manufacturing hub, "have shifted perceptions regarding the implications of China’s growth for global prosperity and international stability. Western business leaders, many of whom have cultivated significant ties with Chinese partners, now see that such ventures, profitable as they may be, are far more risk-laden than originally believed."
Inflation
Finally, inflation is causing an increase in the cost of materials and labor. This can lead to higher internal costs, making it difficult to achieve savings targets.
To navigate through these challenges, procurement departments must have contingency plans in place to mitigate risk and ensure continuity of supply.
This may involve diversifying suppliers, identifying alternative transportation routes, and maintaining adequate inventory levels to buffer against disruptions. By taking a proactive approach and staying ahead of potential supply chain disruptions, procurement can deliver value and continuity in today's challenging marketplace.
Develop More Supportive Supplier Relationships
Procurement departments should also prioritize the development of more supportive supplier relationships. This involves building trust and understanding the needs of suppliers to create long-term partnerships that support mutual success.
It also requires taking a collaborative approach to problem-solving, including working with suppliers to develop solutions that are beneficial for both parties.
Leverage Technology to Improve Supply Chain Visibility
Technology can help procurement departments to gain better visibility into their supply chains. Predictive analytics, AI, and machine learning can be used to monitor trends in the market and anticipate potential issues. This allows procurement teams to identify problems early and take appropriate steps to address them before they become disruptive.
Procurement departments should also focus on creating a culture of innovation and ongoing improvement. This requires staying abreast of new technologies, proactively identifying opportunities to streamline processes, and deploying automation tools to increase efficiency.
Collaborate with Other Stakeholders to Maximize Value
In addition to these factors, procurement leaders must focus on developing their internal capabilities and processes to better manage procurement risks and deliver value to their organizations. This includes investing in training and development programs to build a more skilled and knowledgeable procurement workforce, but also collaborating with stakeholders in departments like finance and operations to address challenges.
By working together, leaders across the company can implement best practices to optimize procurement processes and leverage the latest digital technologies to drive efficiency and effectiveness.
Learn More at ProcureCon Indirect East
Inflation, supply chain issues, and economic disruptions will continue to be challenges for procurement teams.
To learn more about how you can approach the current procurement environment, don’t miss ProcureCon Indirect East, happening from September 11th through 13th at the JW Marriott Orlando Bonnet Creek Resort & Spa. Download the agenda and register today.