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Causes and responses for the crisis in procurement

RFP
Procurement or storage room4 Procurement Challenges to Expect During the COVID-19 Pandemic
Insider Monkey, Mar 21, 2020

“The COVID-19 pandemic will have serious, lasting effects on the global supply chain for months or even years …

A silver lining is that global supply chain disruptions like a pandemic virus force businesses to look critically at their procurement process. Your process, people and paperwork will likely all be affected by the current situation. In a Johns Hopkins University interview, business operations professor Goker Aydin said, ‘A resilient supply chain must be able to detect early warning signs of a disruption and it must respond by shifting production to alternative sources.’”

Chris Maldonado-Martinez “Organizational resistance, a lack of critical skills, data-related issues and organizational complexities have contributed to keep procurement systems stagnant as their organizations expanded around them.”

Chris Maldonado-Martinez

Manager, Business Consulting, Grant Thornton LLP
Grant Thornton’s ViewProcurement teams have recently been in emergency response mode, challenged to find new options as shutdowns and delays spread across suppliers worldwide. The US Army even launched a procurement contest to find better and cheaper ventilators.

The pricing, sourcing, timing and labor issues listed in the article above have forced procurement systems to make quick changes – and those quick changes have exposed gaps in many systems. These gaps have evolved over time, according to a Hackett Group study recently reported in Supply Management. The study highlighted that organizational resistance, a lack of critical skills, data-related issues and organizational complexities have contributed to keep procurement systems stagnant as their organizations expanded around them. Over time, procurement systems have often been left untouched as organizations grew, creating complex infrastructure and messy data across enterprises. Complex enterprise infrastructures often lead to messy or incomplete master data about suppliers, items, locations and other key procurement factors.

In today’s climate, businesses might want quick cures for emerging issues. Fortunately, many procurement systems let businesses automate standard processes and consolidate data, so that buyers can stop transacting and turn their time to developing or revising procurement options and other value-added opportunities. For instance, procurement teams can establish new suppliers to diversify their network and mitigate disruptions, or further integrate current high-volume suppliers to deepen relationships and reduce administrative overhead. These and other opportunities can help increase process efficiencies, minimize rework, reduce risk and increase cost savings.

In the long term, the latest systems can help procurement teams become enterprise business partners that focus on spend analytics and master data management. Plus, with a modern procurement system and insightful analytical skills, businesses can be better prepared to quickly shift procurement options in the future.