Even in the best of times, procurement process can be daunting. Navigating through thousands of vendor contracts, NDAs and negotiations while always complying with many industry rules and at the same time attracting multiple stakeholders and decision makers, is not an easy task. When the COVID-19 pandemic took everyone by surprise in early 2020, making matters further complicated with unexpected changes like remote work. According to a recent survey by Gartner, “only 21% of respondents stated that they have a highly resilient network today, meaning good visibility and the agility to shift manufacturing, sourcing, and distribution activities around rapidly. It suggests that the increase in resilience will be a priority for many as they emerge from the current crisis. More than half expect to be strong in two to three years.”
This pandemic made us introspect our strategies for minimizing disruptions. Keeping this in mind below mentioned are the areas where procurement can expedite.
1. Efficient Vendor Selection
Choosing a vendor that complements the organization is very important. Stability & reliability are key characteristics of a good vendor. Company should analyse overall supply base risk factors and choose suppliers based on their financial strength and competitive advantage. Here is a list of conditions to keep in mind when selecting your vendors.
- Company reputation;
- Understanding of your business;
- Ability to meet your organizational standards;
- Implementation process, etc.
2. Vendor Management
Traffic management: Developing a network of efficient vendors & ensuring regular communication with them ensures quick action & establishment of cordial relationships. It includes vendor-led management, collaborative development to develop new processes, compliance management and payment of invoices. It empowers the organization to take appropriate cost control measures, reduce potential risk associated with vendors, ensure better service delivery and value for vendors over time.
3. Effective Reporting and Compliance
keeping a close track of all the procurement activities reduces the errors & increases visibility of the entire process. This activity ensures proper functioning of processes. Regular audits are also required at procurement departments to identify weaknesses in the area to ensure effective quality control to avoid fiscal regularities. You can also protect your business by establish compliance clauses in each contract can also help avoid risk or non-compliance with laws and regulations.
4. Digitalization of Procurement Processes
Traffic management:Digitization helps streamline the procurement process. This reduces the possibility of risks & delays in simple tasks like creating a request or an order. With the advent of new technologies such as blockchain and artificial intelligence, it will make automated transactions more accessible in procurement process, strategic sourcing far more predictive and manageable and a more proactive vendor management. Companies opting for procurement digitalisation can gain a competitive edge and the necessary agility to satisfy rapidly changing customer requirements.
These solutions will help you add value to your supply chain and drive competitive differentiation for your organizations, making decisions with the right balance of profitability, service, risk, and sustainability. At its core procurement also drives efficiency and automation with best of technologies like blockchain and AI to create capacity to innovate. The starting point is the formation of properly evaluated vender selection to facilitate effective management in fostering supplier collaboration and innovation and moving towards a comprehensive compliance process to mitigate the risk of fraud by using best of technology and innovation at hand.