Restrictions related to the COVID-19 pandemic appear to be lifting, and some people are resting easier. Nevertheless, many organizations faced upheavals and disruptions that have left systems and processes tattered and, in many cases, broken. Moving ahead, managers can try to revert to the old ways of doing things ... or they can embrace change, learn how to solve procurement challenges, and adjust procurement strategies and processes to tackle the new realities.
Procurement Challenges Haven’t Changed
Much has changed in the procurement world, but the challenges procurement managers and organizations face look much the same as they did before the pandemic. Below are some of procurement’s most difficult issues.
1. Upward Pressure on Material and Services Costs
Pandemic-related shutdowns left many companies with heavy losses and added costs, and global inflation continues to add to the pressures on prices. As a result, companies are attempting to recoup their losses and fight inflation via upward price adjustments. Therefore, any contract renewal should be carefully examined as vendors revisit terms and conditions to recover lost ground.
2. Long or Lengthening Delivery Lead Times
Global supply chains were hit hard during the pandemic. Although conditions are beginning to return to normal, lengthy lead times remain an ongoing challenge for procurement departments.
3. Vendors Shipping Out-of-Spec Materials
Having and following clear procedures with vendors regarding quantity, specifications, delivery schedules, and packaging will continue to be a crucial operating requirement for most procurement organizations.
4. Failing to Follow Proper Procedures
Due to pandemic-related sourcing and delivery difficulties, individuals and organizations resorted to workarounds to fulfill procurement commitments. As things return to normal, efficient operations mean reviewing, rewriting, and enforcing new and existing procedures.
5. Lack of In-Depth Industry and Market Data
Basing actions on comprehensive and valid market data and information is a critical element of any effective procurement strategy. Unfortunately, most procurement departments lack sufficient pricing data and industry benchmarking information on which to base important decisions. Strategic Resource Management maintains deep industry, pricing, and purchasing data, which is available to clients learning how to solve procurement challenges.
Prepare for Post-Pandemic Realities
Looking ahead, the environment for procurement organizations may be very different than it was in the recent past. For example, companies are currently evaluating the complexities of their supply chains and the validity of maintaining low levels of just-in-time inventories. As companies assess recent challenges, significant changes are likely to take place across the procurement landscape.
For example, securing nearby sources for materials and making adjustments to order quantities and delivery schedules may dramatically alter procurement processes and procedures. To manage these and other adjustments, companies are enlisting Strategic Resource Management to help identify the most critical areas for improvement, develop new methods, and assist with contract review and negotiations. To develop approaches on how to solve procurement challenges, companies are taking the following actions.
1. Analyzing Every Step of the Supply Chain
Based on reviews of supply change vulnerabilities, companies are revising policies and procedures to improve the reliability of vendor supplies. In addition, organizations are developing methods to monitor supply chain performance, identify problems early, and ensure proper functioning.
2. Increasing Use of Automation and Data Analysis
Employing manual analysis and using limited data results in poor decisions and inaccurate forecasts. Accessing extensive market databases such as those offered by SRM gives organizations a solid competitive edge.
3. Strengthening Internal and External Communications
Ensuring the smooth and timely flow of information both with vendors and within an organization reduces errors and improves efficiencies.
4. Evaluating all Purchase Contracts Including Revisions and Adjustments
Evaluating contract renewals is critical for learning how to solve procurement challenges. Because of this, companies are seeking assistance with contract review and negotiations, industry benchmarking, and project management.
5. Enlisting the Help of SRM Consultants
The team at Strategic Resource Management is available to help procurement organizations evaluate and negotiate contracts, complete industry benchmarking, and support creating or revising procurement strategies.
One of today’s top procurement priorities is addressing the challenges and disruptions that arose during the COVID-19 pandemic. With our years of procurement experience, extensive library of industry data, and in-depth marketplace and negotiating knowledge, SRM can partner with your company to face and overcome current challenges and those that are just around the corner. Connect with us today to schedule a free consultation to discuss how we can assist your team in solving procurement challenges.