Forty percent of companies surveyed in GEP’s The Business Costs of Supply Chain Disruption report claim they experienced measurable damage to their brand image because of pandemic-related supply chain disruptions. Another 36% of organizations survey claim cyberattacks on supply chains are a growing concern. In total, the report estimates revenue losses due to supply chain disruptions to be as high as $4 trillion.
Over this course of 2020, procurement became a primary topic of discussion in boardrooms, due in large part to the efforts of procurement leaders and their teams to ensure business continuity and mitigate the impact of the pandemic on their organizations. More than a year later and with a possible end to the pandemic on the horizon, it is time for procurement leaders to pivot and demonstrate how to best manage spending and supplier relations to build resilience and to restore growth.
Supplier relations: Innovation through collaboration
Manufacturing procurement and supply chain organizations are tasked with building and maintaining a resilient supply chain. To do this, procurement must be able to effectively manage costs, ensure continuity throughout the supply chain, and mitigate risks proactively and completely.
They should also focus on improving collaboration with suppliers, which could promote innovation and competitive advantage. At the executive level, attention is shifting in this direction. John Wookey, president of Intelligent Spend and Business Network at SAP, says “Every CPO is trying to think about how to make their suppliers a more integral part of their innovation strategy and get them more engaged in the process.”
Innovation is essential to the health and success of your business. How well your organization stands out from the competition and overcomes disruptions depends on its ability to keep pace with rapid developments in technology. The best way to stay relevant is to harness the full potential of the next-gen procurement and supply chain technologies.
Building a successful innovation strategy
Technology can be very helpful for enhancing procurement operations, but what works for one organization may not work for another.
Before deciding what sort of procurement technology to purchase, it is important to consider the specific needs of your business and possible solutions. From there, you can identify the technologies that will be most beneficial for your business and how to best implement them. This is especially important if your solution requires coordinated integration of multiple technologies or a phased approach. Investing time up front can save time and money in the long run.
Achieving a truly resilient supply chain requires a holistic approach. Every procurement strategy, process, action must build resilience throughout procurement operations and the supply chain. Organizations can get more out of their innovation strategies by considering the connections between procurement and supply chain operations, and focusing on solutions that will have cascading effects:
- Using analytic tools to improve insight into cost-drivers, compare scenarios for optimal supplier selections, and strengthen margins
- Increasing manufacturers’ ability to collaborate with stakeholders and suppliers, enabling them to launch products more efficiently, at the right price and quality, thereby driving revenue growth
- Increase visibility throughout manufacturing and delivery processes (internal activities, third-party sources) to manage risks and performance, promoting product success
- Strengthen order management and transparency to better identify potential supply disruptions and act quickly to ensure reliable supply of product
These are ambitious objectives and may seem hard for manufacturers to achieve on their own, but a comprehensive strategy and strong communication between procurement and supply chain can provide the necessary support.
Benefits of digital procurement
Digital procurement offers a range of benefits to nearly every aspect of a business. Through digital technologies and easy-to-use SaaS tools, digital procurement enriches day-to-day operations — automating repeatable tasks, boosting efficiency, reducing costs —while equipping stakeholders across the organization with real-time insights and advanced analytics.
The table below offers a wider view of the potential business impact from digital procurement.