The current global pandemic has had a huge impact on all aspects of life, and procurement is no exception. Procurement is the process of obtaining goods and services from external suppliers, and it is an essential part of the business world. In order to survive in this challenging environment, firms need to adjust their approaches to procurement. This article outlines what we can expect for the future of procurement in the post-COVID19 world.
The Benefits of Digitalization in Procurement
The digital revolution has been transforming procurement for some time, even before the pandemic began. The ability to analyze market data and find new suppliers quickly, as well as improved transparency between parties, has changed the way businesses conduct procurement. However, the pandemic has accelerated the digital transformation of the sector, with an increased focus on automation and digitalization. This has meant higher efficiency and cost savings for companies, allowing them to operate with fewer resources.
Digitalization is also improving communication between buyers and suppliers. For example, easy-to-use platforms enable efficient communication and collaboration, allowing relationships to be maintained even in remote situations. This means that even if physical interaction is limited, firms can still keep contracts running and reach agreements quickly.
In addition, digitalization has enabled companies to streamline their procurement processes. FactWise helps reduce paperwork and manual processes by eliminating the need for reliance on emails for collaboration and Excel for analysis, allowing companies to focus on more strategic tasks. This can help to reduce costs and improve efficiency, as well as provide better visibility into the procurement process.
The Impact of Social Distancing on Procurement
Social distancing has had a major impact on procurement. The inability to travel has removed the ability for buyers to physically inspect goods and services from suppliers. Visiting suppliers is a large part of the procurement process, but this is now greatly reduced due to the pandemic. This means that buyers must now rely on digital communication when dealing with suppliers.
Furthermore, as governments enforce social distancing measures, it has become increasingly difficult for companies to conduct face-to-face negotiations with suppliers. This means that procurement teams have had to shift towards achieving agreements through alternative methods such as digital meetings and electronic signatures.
The lack of physical contact has also caused a shift in the way that buyers and suppliers interact. Buyers are now more reliant on digital communication to build relationships with suppliers, and to ensure that they are getting the best value for their money. Additionally, buyers must now be more diligent in their research of suppliers, as they are unable to physically inspect the goods and services they are purchasing.
The Role of Third-Party Suppliers in the Post-COVID19 World
Third-party suppliers play an important role in the purchasing process, as they can help negotiate better prices and offer a wider range of products and services. As buyers adjust to the post-COVID19 world, it is likely that there will be an increased reliance on third-party suppliers as they can provide additional resources that are not available in-house. However, firms must use caution when selecting third-party suppliers, as there is a higher risk of fraud and low-quality goods or services.
It is important for buyers to thoroughly vet potential third-party suppliers to ensure that they are reliable and trustworthy. This includes conducting background checks, verifying references, and obtaining proof of insurance. Additionally, buyers should ensure that the third-party supplier is compliant with all applicable laws and regulations. By taking the necessary steps to ensure that the third-party supplier is reliable and trustworthy, buyers can reduce the risk of fraud and low-quality goods or services.
FactWise Source-to-Pay is an end-to-end cloud-based procurement solution that features a unique supplier selection algorithm that not only helps prioritize preferred vendors but also enables new supplier discovery so that teams can expand their supplier network with pre-vetted, well-rated suppliers across categories, and onboard unlimited suppliers easily via our intuitive self-serve portal. FactWise can be used for internal and third-party teams to collaborate efficiently and effectively. Internal teams and leaders can maintain oversight, work with, and gain insight into the outsourced team’s operations, and outsourced teams can negotiate better rates by bundling clients’ requirements and leveraging economies of scale. Supplier networks can be grown significantly, and supplier management can be improved easily.
The Opportunities for Optimizing Spend in the Post-COVID19 World
The post-COVID19 world has opened up new opportunities for cost optimization in procurement. Companies have shifted their strategies towards automation and digitalization in order to reduce labor costs, as well as bargaining for better prices with suppliers due to economic uncertainty. Additionally, firms can reduce risk by diversifying their supply chains, as well as utilizing more data-driven approaches such as predictive analytics. FactWise empowers procurement organizations with dynamic, holistic supplier performance analytics across key supplier metrics like price, on-time delivery, quality etc. and robust RfX analytics, so that buyers have a high degree of decision intelligence.
In conclusion, the post-COVID19 world has shifted the landscape of procurement significantly. Companies must adjust their strategies to take advantage of digital tools and opportunities for optimizing spending. By doing so, they can create resilient procurement processes that will allow them to continue to thrive despite changing circumstances.
At FactWise, we are committed to building truly distinctive procurement software solutions that delight users and provide sustainable positive impact to the organizations we serve. We do this by providing transparency and insights to leaders (31% increase in governance), streamlining and automating processes to improve efficiency (20% increase in efficiency), and driving bottom-line impact by unlocking savings potential (25% cost reduction for direct spend).