Procurement Leaders looks at the impact of COVID19 and where executives will focus their attention after the crisis..

Companies are now placing great importance on spend management, supply continuity and supplier management – presenting a new opportunity for CPOs.

To seize it, procurement must position itself as the bridge between the buying organisation and the supply base. This requires CPOs to combine a
short-term, reactive mindset with a longer-term, strategic perspective.

This resource summarises the key findings from 20+ CPO roundtables, as well as a survey of more than 100 CPOs, to highlight how the pandemic has impacted procurement teams and where executives will focus their attention after the crisis.

The opportunity to add value

What’s changed?

Procurement teams are embracing the new spotlight placed on strategic spend management and sourcing critical supplies. The majority of CPOs are optimistic about achieving their goals and highlight the opportunity for procurement to emerge a stronger, more influential function.

CPO response:

Despite the sudden disruptions and challenges to manage cash flow, most CPOs are emphasising the value the function demonstrates during a downturn. Procurement teams see an opportunity to review their objectives and activities to deliver value beyond savings such as risk mitigation, continuity of operations, or innovation for growth. 57% have even accelerated certain procurement projects such as improving risk management, supplier-enabled innovation and sustainability initiatives. 

Accelerate stakeholder engagement

What’s changed?

Nothing unites people behind a shared objective as effectively as a crisis. Organisations have assembled cross-functional response teams to enable more agile decision-making and procurement teams are a key player.

CPO response

Even before Covid-19, CPOs recognised business partnering is a crucial enabler for the function to align with and help deliver on the organisation’s strategic objectives. Over the past few months, procurement teams have accelerated their collaborative efforts with internal stakeholders in three ways; improved communication, shared key performance indicators (KPIs) and agility enabled by greater trust.

Evolve supplier and partner relationships 

What’s changed?

Effective communication with suppliers has become more important than ever – both to help manage costs and ensure supply continuity. From moving resources to strengthening relationships and improving communications, supplier engagement and management processes have evolved rapidly.

CPO Response 

Five activities have shaped the evolution in procurement teams’ relationships with partners or critical suppliers: 

▪ Define or re-segment the supply base. 

▪ Improve communication and accelerate supplier support. 

▪ Offer support to more vulnerable suppliers. 

▪ Partner with suppliers to innovate for growth. 

▪ Spread the collaboration net wider than before

Fast track digitalisation efforts

What’s changed?

With the world shifting to a virtual landscape, procurement teams must accelerate digital transformation to keep up with the pace required by the business. 

CPO Response

Procurement teams should leverage data and technology in the following ways:

▪ Digitising processes to enable remote working

▪ Scaling up digital projects to support business continuity

▪ Automation of transactional activities to free staff for more strategic activities

▪ Purchasing third party data to enable faster decision making

Prioritise supplier risk management

What’s changed?

Carefully managing suppliers who are either critical to ongoing operations or have been heavily impacted by lockdown measures has been a key priority for most functions. However, Covid-19 has exposed the vulnerability of procurement teams that do not have full transparency of their supply chain beyond Tier -1.

CPO Response 

Procurement teams continue to employ a variety of methods to support and manage supplier risk:

Protect employees

What’s changed? 

Demand for facemasks, hand sanitiser and surgical gloves has reached historic highs, leaving suppliers struggling to keep pace with buyers’ requirements. As restrictions ease, organisations will continue to need PPE to ensure employees and suppliers can operate under safe conditions. Like with all spend management, procurement will need to balance the management of both supply and demand to keep PPE costs down.

CPO Response 

As organisations look to enter a new phase of operations and more premises return to work, procurement teams adopt new methods to continue the supply of PPE:

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