Top five procurement risks in a post-Covid world
Working remotely after the new normal means facing a variety of procurement risks. With that comes concerns about visibility, security, and flexibility today and in the future. As a result, adopting cloud automation is necessary to stay productive during business interruptions and support remote work.
Cloud automation provides a secure and collaborative environment where team members gain real-time access to relevant financial updates to guide decisions about vendors, production, and profitability. Discover the top six procurement risks in the new normal and how procurement automation solutions help organizations eliminate them.
Enhance visibility
Understanding current supply, demand, and pricing are crucial to procurement securing the most viable vendors and contracts. In a volatile and unpredictable global marketplace, the ability to make fast changes can mean the difference between being in the red and being in the black. In addition, enhancing the visibility of the supply network enables the procurement team to search for risks and capacity constraints.
Cloud automation provides real-time visibility to put crucial changes at the forefront before losses are incurred. As a result, the C-suite and the procurement team gain instant access to financial data to renegotiate contracts, quickly vet new vendors, and ensure production moves forward to stay ahead of the curve and eliminate potential procurement risks, such as late supplies or price gouging.
Supply diversification
Building strong supplier relationships is a top priority for the procurement team to ensure timely deliveries and fair pricing. However, relying on only one or two suppliers can cause production interruptions if their companies have issues, especially after a new normal. Therefore, supply diversification is critical to ensure uninterrupted supply and production at all times.
Automation solutions save time and resources by instantly organizing crucial procurement data. In minutes, the procurement team can quickly assess vendors' financial health and reliability to make necessary adjustments. In addition, this data can be used to strengthen vendor relationships and negotiate the best possible terms based on order and payment history. Access to crucial data about suppliers helps prevent procurement risks such as late deliveries, delivery interruptions, and overpaying for supplies.
Understand the new consumer
After a new normal, consumers behave differently, and responsive companies are the ones that continue to be profitable. As consumer demand shifts, certain items are prioritized, and others are far less important anymore. Understanding consumer behavior changes in real-time is crucial to remain relevant in a constantly changing marketplace. Two of the most significant procurement risks are failing to purchase necessary items for production or buying too much of something that is no longer needed.
Manual processes require intensive human labor, making them subject to inevitable errors. Additionally, reporting takes weeks or months, meaning critical data is withheld until the reports are completed. Automation instantly puts financial facts at the team's fingertips for meaningful collaboration and discussion to make more educated decisions about suppliers. Companies use financial and procurement data to analyze the target audience and get closer to customers by comprehending their evolving expectations and needs.
Reassess and rebalance stock
As consumer demand changes, checking stock levels is another top priority to stay ahead of supply and demand. In addition, thinking about category strategies per global supply chain planning in a new normal is critical to the bottom line. Now is the time to focus on diversifying the supply base and storing essential items to avoid future business interruptions.
Multi-sourcing enables organizations to keep up with evolving production changes based on current consumer consumption patterns. Automation streamlines the organization and procurement processes to empower the team to vet vendors in hours rather than days, supporting multi-sourcing to stay on schedule with production and avoid potential losses due to supply interruptions.
Specification flexibility
The procurement team is always mindful of the need to adhere to certain specifications for production, understanding that some items are more flexible than others. Being flexible and considering other viable options helps ward off the risk of unnecessary business interruptions.
Keeping that in mind, 68 percent of organizations have taken over three months to recover from supply chain disruptions caused by the pandemic. Understanding the top five procurement risks in a new normal is imperative to ensure smooth production processes, regardless of the changing market and evolving consumer needs. Automation helps procurement stay ahead of supply issues to make quick changes as required.
Procurement teams made a significant impact since the pandemic, with 82 percent of business representatives stating their hard work paid off. In addition, over 50 percent of those polled indicated procurement's impact was "game-changing" or "significant."
After a new normal, staying ahead of potential procurement risks is more important than ever. Cloud automation supports remote work, collaboration, and real-time access to pertinent data to guide procurement decision-making in the best direction based on facts rather than speculation.
