How to Achieve Procurement Success in a Challenging Market
Key Actions for Succeeding Under Pressure
Building Strong Supplier Relationships:
Robust supplier relationships are crucial: Strong supplier relationships are built on trust, collaboration, and mutual benefit, increasing stability even in rough times.
Reliability and Resilience: Choose suppliers who demonstrate reliability and resilience, especially in adverse conditions. Going with the cheapest source may not pay off in the long run if they’re not reliable.
Communication: Establish clear and consistent communication channels to foster trust and collaboration.
Innovation Collaboration: Work with suppliers on innovative win-win solutions. You could even come away with a unique business model.
Climate and Security Considerations: Add climate and security factors when vetting new suppliers.
Consistency: High personnel turn-over rates in procurement can cause major disruptions in any business. In a post-covid world, turnover can be an ongoing challenge. Alternatively, if turnover has been an issue, outsourcing your procurement process could be a good fit for your business needs.
Leveraging Technology and Data Analytics:
Technology and data are important for any procurement process. The stronger your tech and data management are, the greater your edge will be in the marketplace.
Data Analytics: Use data analytics to make informed decisions, predict trends, and identify risks. There are apps and systems available for a range of prices. Plan for inevitable updates.
Visibility and Transparency: Enhance supply chain visibility, shipment tracking, and transparency to monitor climate impacts and security threats effectively. This is a costly option, but could be worth it depending on your particular business.
Cost Management and Optimization:
Cost-Saving Opportunities: Identify and capitalize on cost-saving opportunities with strategic sourcing and category management through the life cycle of your products. Streamline procurement processes, like minimizing the total number of orders you place, to reduce waste and improve efficiency.
Sustainable and Environmentally Friendly Practices: As a long-term strategy, invest in sustainable procurement practices that can lead to long-term savings and compliance with environmental regulations.
Regulatory Compliance, Risk Management, and Security:
Regulatory Adherence: Stay updated with regulatory requirements and ensure compliance to avoid disruptions.
Risk Management Frameworks: Implement robust risk management policies and processes, also known as a Risk Management Framework (RMF), to identify, assess, and mitigate risks. Strengthen cybersecurity and physical security measures to protect procurement operations from threats as much as you can. Incorporate these measures into your risk management framework.
Regular Audits: Conduct regular audits and assessments to ensure ongoing compliance and address any issues promptly.
Developing Procurement Talent and Skills and/or Hire an Experienced Service:
A skilled and adaptable procurement team is essential:
Collaboration: Encourage collaboration and knowledge sharing through clear communication channels.
Continuous Learning for Employees: Continuous learning and professional development involved in procurement activities is an investment in time and money that could pay large dividends over time.
Achieving procurement success in a challenging market requires a blend of strategic planning, strong supplier relationships, technological integration, and effective cost management. Embracing flexibility, sustainability, and security considerations will bolster your business’ resilience for long-term success.