“By acting now to accelerate their transformations, companies will be rewarded”
COVID-19 has had a seismic impact on organisations across industries, bringing huge disruption to business continuity and supply chain operations, writes Alex Saric, Smart Procurement Expert at Ivalua.
Many have had to adjust their working practices, adopt new safety measures and put processes in place to allow employees to work from home where possible. However, for many organisations, the pandemic has exposed serious issues in their ability to use technology to respond to the crisis.
This is particularly true for those in the procurement department, where digitalisation has generally lagged other departments. According to research, two thirds of procurement and supply chain professionals still rely on manual, paper based processes for tasks such as invoicing and processing POs.
This reliance is hindering their ability to mitigate the impact of COVID-19 on the business and the wider supply chain. Without digitalisation in procurement, organisations struggle to see what is happening with their suppliers, quickly leaving them in the dark as to their true vulnerability. This prevents them from being able to make effective decisions, manage suppliers and tackle the effects on the business.
No Data no Vision
Procurement is on the front lines of the fight to ensure business continuity, but the dearth of digital technology and skills is hindering their effectiveness.
This has made digital transformation vital, as organisations that are more digitally mature will be able to quickly adapt to this new normal. As a result, we’re seeing that COVID-19 has become a catalyst for digitally transforming procurement. New research from Ivalua shows that seven in ten (70%) UK organisations say COVID-19 has increased the need for digital transformation in procurement.
The study of 200 UK procurement, supply chain and finance professionals found organisations believe that greater digitalisation (84%) and better digital skills (83%) will enable them to more effectively mitigate the impact of COVID-19 on the business. Currently, the biggest issues include over-dependence on a limited set of suppliers (35%), an inability to identify alternative suppliers (30%), a lack of understanding of suppliers’ risk exposure (28%), and a lack of visibility into sub-tier suppliers (18%).
This inability to see into the supply chain could have significant consequences for businesses, causing supply shortages if a supplier was to fail, or even putting companies at risk of non-compliance as government rules and regulations regarding trade and travel change in response to the pandemic.
Turning Challenge into Opportunity
While the virus has presented new risks for organisations, the slow rate of procurement digitalisation has been an issue for some time. In many ways, COVID-19 has exposed gaps that were already present in organisations’ ability to respond to a rapidly evolving market and global environment. Real, long-term change and transformation is required. Organisations shouldn’t be relying on quick fixes to get online collaboration up and running. Changes need to be permanent, with organisations investing in long-term procurement digitalisation.
This will allow organisations to create a 360-degree view of what is happening in the supply chain in near real-time, enabling them to make informed decisions about how to mitigate the impact of the pandemic on the supply chain. For example, as organisations find themselves having to rapidly onboard new suppliers to ensure supply continuity, the ability to do so quickly is mission critical. Digitising the onboarding process enables suppliers to self-register, without filling in any paper forms.
Not only will a more comprehensive transformation help companies adjust to the current situation by giving remote workers the tools to be more productive and increasing supply chain visibility, it will also allow for greater collaboration with suppliers. Overall, this will give procurement teams the chance to add value to the business, work with suppliers to identify new areas to innovate, and advise the C-suite on supply chain risks such as environmental impact.
Additionally, digitalisation will boost productivity at a time where organisations need to be as agile as possible. For example, digitising processes allows for the automation of time-consuming administrative tasks such as processing POs and approving invoices. For employees, this means more time can be spent planning, contributing to business-critical tasks and communicating with the wider business.
Now or Never
The discrepancy between more and less digitally mature organisations will be amplified the longer the lockdown continues. Those that do not take steps to permanently transform procurement risk being left in the dust by competitors and at the mercy of global events – unable to manage risk, drive efficiency, or work with suppliers to find areas to save and innovate effectively. Instead, organisations need a smart approach to procurement that brings together internal, 3rd party and supply chain data to effectively mitigate the impact of COVID-19, and the next crisis.
By acting now to accelerate their transformations, companies will be rewarded with dramatically improved supplier visibility and management capabilities, the ability to spot risks ahead of time and make firm decisions. We can expect to see organisations accelerate their plans to digitally transform procurement. This will greatly benefit them as COVID-19 continues to affect the way supply chains operate, laying the foundations to manage risk and stay ahead of the competition for years to come.