Procurement Advice — 5 practical steps to combat COVID-19!
Getting practical procurement advice is difficult in the current scenario. Ever since the coronavirus (COVID-19) outbreak disrupted the global economy, both public and private sector organizations are looking at procurement to help steady the ship.
While private sector organizations are seeking procurement’s advice to reduce costs and improve cash-flows, public sector organizations are looking to spend more by engaging with local suppliers and small businesses to keep the economy afloat.
Suddenly, procurement teams find themselves under the spotlight, and a rapid response is expected from them. If you are part of the procurement team and are caught in a similar situation then here’s something interesting for you.
In this blog, we share with you 5 practical procurement advice that will help you and your organization combat COVID-19!
Read on to find out each of these in detail:
1. Analyze Your Contracts
The biggest issue with contracts is that there are hundreds or thousands of them. Therefore, it is difficult, time-consuming, and error-prone to look at each of those manually to identify risks. Limited availability of legal team members makes it even more challenging.
What’s more, a lack of standard process to identify and mitigate risk — especially with the 3rd party contracts. It makes the entire activity tedious and time-consuming.
How do you overcome these challenges? Here’s our procurement advice:
Artificial Intelligence (A.I.) and automation powered contract management solutions can help. Not only do they quickly review the entire contract and identify risks, but they also highlight if clauses such as Force Majeure can benefit only the buyer or both the buyer and supplier.
Other key benefits of using A.I. are around rebate analysis to maximize cost savings and to ease quicker contract negotiations and using electronic signatures to quickly turnaround the contract signing process.
2. Create New Ways of Working
With a majority of employees forced to work from home, procurement teams are caught in a fix. Archaic business rules and dependence on legacy bolt-on procurement modules on ERPs inhibit procurement professionals to quickly adapt to the new ways of working.
Our procurement advice is that the need of the hour calls for new business processes to be created to ensure business continuity.
Yet, most procurement teams are still using on-premise software, and even those who have moved to cloud-based software need help from in-house or 3rd party I.T. vendors to make work-flow changes as they need complex coding.
These changes are not only costly and time taking — to test and implement — but they also need organizations to re-train their end-users, which in turn adds to the effort and turnaround time.
Modern-day technology helps to speed up this process. Best-in-class solutions are equipped with drag and drop capabilities, which makes it easier and quicker to make work-flow changes.
This especially comes in handy when you need to create short-term alternatives by removing multiple levels of approvals from a procurement process to make it quicker, agile, and in line with the current-day work from home requirements. No longer do you need help from I.T. vendors to do changes for you.
In addition to work-flow changes, our procurement advice to organizations is that they can benefit a lot from in-built ‘Guide me’ features in their procurement technology.
This feature will help you and your procurement team to navigate through complex procurement processes, also giving you visibility into different stages of the procurement workflow.
3. Identify Supplier Risk
Ever since the pandemic hit, organizations across the globe have been on the edge. This is because of their dependence on a limited number of suppliers. Supplier risk and supplier performance are two main areas that procurement teams need to address foremost.
Given that organizations are in a rush to onboard new suppliers to fill in the gap. Hence, they are spending limited time on tracking. They also need to ensure compliance to policies.
This in turn can lead to risks emanating from sub-standard suppliers. Also, organizations need to quickly check and update key supplier performance indicators. What worked in a pre-COVID-19 era won’t work now!
While monitoring and updating KPIs is a must to drive supplier performance, organizations can mitigate supplier risk by integrating with third-party organizations like Dun and Bradstreet, , and others who have data on your supply chain.
Doing so will help you look for any red flags within your supplier network. It will alert you if any supplier is facing financial constraints. This will enable you to proactively take corrective measures and ensure limited or no disruptions to your supply chain.
4. Speed Up Sourcing
The current scenario demands procurement teams to look beyond their trusted pool of suppliers. They need to go out and look for new ones that will help fill the void.
The challenge is that typical sourcing events take up a lot of time. You need to find a way to speed up the entire process. If your organization follows a manual process, chances are your team will find it difficult to make concrete decisions.
They need to decide, whether to go for a full sourcing event or do a quick source — amid changing policy terms. With end-users not aware of the right decisions to make, maverick spending can be on the rise.
The way you can expedite this process is to push out the low-value activities to end-users while ensuring that all sourcing activities are run through systems that allow for rapid quote processes to be put together in a few minutes, while also allowing for real-time tracking.
These systems also enable suppliers to respond using mobile devices, and through emails. This in turn, reduces the turnaround time and system dependencies.
Another key procurement advice is to not just map out software-based processes but also internal organization processes. They can use tools to map out internal processes, and then change them on the fly.
This will help organizations to meet the demands of the current environment. Instead of having three levels of evaluation, you may only have two until the pandemic is around.
Finally, having guided systems help end-users to quickly execute sourcing events, without having to worry about knowing every policy. The system will throw up exceptions if there’s any breach but if not, users can quickly get their tasks done.
5. Automate AP Processes
Ever since people had to take-up work from home, the volume of emails has increased . Chances are that your accounts payable team is probably swamped with supplier emails.
Now, they might be processing all those emails manually — reviewing, extracting, and responding to each one. Therefore, it is highly likely that they are missing some critical emails.
Similar is the case with invoices. Usually, suppliers send invoices as attachments. The AP team has to download those invoices, review line item details, and process each one after reviewing all data points. This entire process is repetitive and time-consuming.
Not only does it invite errors but also creates fraud opportunities due to lack of visibility. It also impacts employee morale, which has already taken a hit ever since the pandemic started.
Luckily, there are now tools available in the market that can automate this entire process. Based on A.I., these tools can auto-sort AP inbox emails into categories as well as help in extracting key information from invoices, including exceptions.
These tools also raise alerts for frauds and duplicates, all this while freeing up employee bandwidth for strategic initiatives.
Conclusion:
There’s still a lot of uncertainty in the market and organizations are expecting procurement teams to help weather the storm.
In such a scenario, it augurs well for procurement professionals like you to focus your attention on critical tasks. This will help your organization achieve its objectives.
Our procurement advice will help you streamline your activities, guard against potential contractual and supplier risk, track supplier performance, execute quick sourcing events, and free up critical resources for strategic activities while ensuring costs are kept in check.
