As a procurement- and supply-related research, news and publishing platform, Spend Matters’ analysts and editors are well placed to hear from the market about what the business really needs from procurement in times of crisis.
Our analysts are running a series called Coronavirus Response which examines seven categories of solutions and example providers that professionals in procurement, finance and supply chain organisations should investigate to reduce, and even mitigate, coronavirus supply risk.
Here in Europe, we are talking to various senior execs about what they think procurement needs to focus on. We are hearing that, more than ever, Procurement is being relied upon to produce answers to some difficult questions under difficult circumstances. Procurement’s many strings are being plucked, sometimes for the first time, by people in the organisation looking for solutions, tapping into facets of procurement they haven’t used before. Yesterday we talked about process mining and business continuity.
Any crisis forces organisations to look more deeply, and probably for the first time in a long time, at their processes, risk management, analytics and sourcing backup plans. We expect there’s a lot of firefighting going on in the workplace right now, and the business needs help from Procurement to basically keep things running as smoothly as possible. Procurement is in a great position to do that, with its cross-functional way of working with the business units, whose needs it understands, and with its knowledge of the market. But to be that source of confidence, Procurement must first focus on getting itself organised.
Orchestrate all the activities you know you can control
We spoke to Pierre Laprée, CEO of procurement performance management firm Per Angusta, who believes that procurement’s first priority should be to orchestrate and control across as many bases as possible, and its second priority to use software to do that better and faster. “Software in itself is not the cure-all remedy that people might think,” he says, “but it can be a catalyst for Procurement’s actions, as long as the team is prioritising, planning and executing properly.” So his advice to procurement in a crisis is to:
Prioritise – it is important to assess opportunities and prioritise where you can have the greatest control, and therefore impact. Prioritising basic tasks doesn’t require cutting-edge technology, adequate technology will go a long way in helping you collaborate with the business, and make it easier to deal with your volume of activities. But if you haven’t applied careful thinking you won’t know what to prioritise, and you could end up executing the wrong opportunity. Start with prioritising what you need to do to obtain your goals, then use technology to help you deliver faster.
Plan – having a clear roadmap for your initiatives is imperative, but you must be agile enough to adjust actions as priorities change. This planning is critical, so that procurement can demonstrate to the CFO in times of financial difficulty that they’ve done their due diligence and prioritised accordingly, and explain the contribution they believe they can realistically make to the organisation in the weeks or months to come. This helps the CFO know how much to forecast or budget for. When you are in a storm you need the right navigation equipment and that’s where procurement comes in.
Execute – once you have your plan, the key is to follow it through and focus on execution, otherwise what you have is just ideas. In the current situation for procurement there are so many levers you can pull – don’t aim for just one. It’s important to identify all opportunities or ideas and prioritise them – sometimes that means making tough calls. Many procurement organisations don’t want to ask suppliers to extend payment terms for example, but that’s not the point. The point is, make a conscious decision about the things you can and can’t do because you have applied a thoughtful process. Make your call and ensure it gets executed.
Monitor – the plan won’t work unless you monitor closely the progress of the initiatives, to make sure nothing falls through the cracks. What Pierre’s customers are relaying is that having had a clearer view of their plan before the crisis, helps them decide what the plan should be for the crisis. Sometimes this means putting on ice all the activities that are not relevant at the moment, but it’s important to constantly monitor all the things that are, and keep them on track.
Collaborate – this becomes more vital than ever because you need to act quickly. The business cannot make it on its own, and procurement cannot make it without the business. So procurement needs tight alignment with business priorities, which takes you fully back to the beginning of the cycle – prioritise. The best thing you can do today is ensure your cost-reduction/containment/risk mitigation activities are all under control.
As a former procurement director and now CEO, Pierre has come to realise the only way to survive as procurement in a crisis is to have a structured approach, and to make sure you communicate that approach to the broader business and collaborate with them.
Procurement has a once in a lifetime opportunity to make people understand that as a function it can bring economic contribution and cost reduction in ways other than twisting suppliers’ arms. At times of cash tension procurement can prove its worth, whether that be in risk management or helping the company become a customer of choice, because in a time of crisis, being a customer of choice is the only way you will get anything delivered to you. To do that procurement needs to get organised, talk to all stakeholders, and educate them about what they are doing and how they are doing it.
“After all,” says Pierre, “this is a unique opportunity for Procurement to seize, and emerge after the crisis as a key contributor, thus creating the conditions to be recognised even more as trusted business partners.”