Procurement teams have long needed to cope with change, manage challenges and solve urgent problems. But the impact of the pandemic was especially severe. Has it led to fresh insights?
Over the course of a decade, a typical business can expect to lose almost 45% of one year’s profits to disruption. Those findings, which come from the McKinsey Global Institute, help put the COVID-19 pandemic into a wider context. While it has had a devastating impact on both human life and the economy, the pandemic is also one of many challenges businesses have had to contend with.
During the past 18 months or so of adjusting, many procurement teams have been at the forefront of keeping businesses going. From sourcing new supplies to downsizing office space, their work has been more vital and more visible than ever.
Ideally, businesses will have started to think more strategically about the role of their procurement function and regard it as more than a cost-cutting tool. At the same time, procurement professionals need to make the most of every opportunity to demonstrate the business value they can create. At the heart of this situation lies the need for effective communication.
“What's the outcome you're really trying to achieve?”Emma Botfield, Managing Director for UK & Ireland, RS Components
“Communication is important when managing change,” Emma Botfield, Managing Director for UK & Ireland at RS Components, says. “You have to be really clear on your purpose, the why and what it means for individuals, and what is the greater good. What’s the outcome you’re really trying to achieve?”
Procurement in a time of change
So how well has the profession coped with all these demands and all this pressure? According to Botfield, “excellently”. That’s because agility and resilience have always been central to the procurement profession, she says.
“There has been a sharper focus and greater understanding of the importance of this category for keeping businesses running. Not just keeping businesses running, but keeping the country running.”
For business leaders, the challenges of the pandemic have brought about a “realisation”, Botfield continues, that maintenance, repairs and operations (MRO) procurement plays a critical role in the whole value chain, and that the interdependencies between stakeholders are both strategically and operationally important.
“I don’t think there’s going to be a long-term effect for procurement teams, whereby suddenly we’ve got a seat at the table because of the pandemic.”Hannah Bodilly, Global Trustee of the Chartered Institute of Procurement & Supply
Hannah Bodilly, Global Trustee of the Chartered Institute of Procurement & Supply (CIPS) agrees that many procurement people have been thrust centre-stage, but is a little sceptical that the sector’s new-found boardroom position is set to stay. “I don’t think there’s going to be a long-term effect for procurement teams, whereby suddenly we’ve got a seat at the table because of the pandemic,” she says. “It might be like that at the moment because we’re still going through supply difficulties and so we’re called on more.”
Procurement teams must make themselves more valuable and more available than ever if they are to keep their place in the boardroom, says Bodilly. “I guess we just have to strike while the iron is hot and make use of that new visibility to get as far as we can,” she adds.
Procurement’s future role
The past three or more decades in procurement have revolved around the just-in-time model, which was found to be unsuited to the kind of extraordinary pressure exerted by the pandemic.
“MRO procurement has always been a complex category,” Botfield says. “It’s now even more difficult because of pressures like reduced operational budgets.” That’s a point that was demonstrated in the 2020 Indirect Procurement Report, where 56% of procurement professionals said reduced operational budgets were their biggest pressure.
“But now I think we’re moving to a just-in-case supply chain model because of some of the fragility we’ve seen,” says Botfield. Preparing for future disruptions makes sense, of course – as the McKinsey data suggests, there will be crises to come in the future and businesses need to anticipate how they’ll respond. Ensuring that procurement teams are well represented in crisis planning is vital, Bodilly says. Not just because of the skillset they offer, but also because of the networks they are able to access.
“As professionals, we’ve got an amazing network all over the world,” says Bodilly. Tapping into that network can be invaluable. That’s why her advice to more junior members of the profession is to “get networking”.
“Join your local committee or go to the local events, read the trade press – just get networked,” she says.
Botfield sees a role for digital tools in opening up better relationships. “There’s been a really noticeable change in the way that people are working with and adopting new technologies and digital tools,” she says. “Customers are working with their suppliers as partners, rather than that transactional customer/supplier relationship.”
Using digital technologies to take away some of the mundane, repetitive tasks could make higher-value aspects of a procurement person’s job more achievable, Botfield concludes. This includes helping to build more resilience into a business. “I think with the acceleration in the adoption of technology digitisation we can be more effective, more resilient in our business processes. Rather than going on an MRO procurement hamster wheel, we can look for solutions with partners.”