What has Pandemic Caused?
Pandemic has created turbulence and chaos across industry, demand shrinkage (for few industries it is almost nil), loss of revenue, lower profitability, lower morale of employees, massive layoffs, business lockouts/bankruptcy, uncertainty of future, it’s like reset, for many it is standing at the starting point, we have lost gains of decades in revenue, market share and customer connect. Many organizations face bleak future, as the days unfold more and more issues cropping up, labor and skill shortage causing interruption in restarting projects, longer lead times in shipment of materials both domestic and international, additional time at custom clearance and increased scrutiny at every check post. No forecasting model is able to predict how customers will behave, what they will buy, how their choices will change. Practically, no one knows how the industry will revive, when will it revive and how sustainable revival will be. When will we see new normal and how will it be different from old definition of normal?
Rising above the rest
Across industries/organizations, one of the functions which is being looked upon during these challenging and turbulent times is Procurement/Supply Chain. Since the beginning of the pandemic, Procurement professionals are super busy, irrespective of whether they are in direct or indirect procurement their skills and times are in high demand. Professionals are working 24/7 to meet organizational requirements. Working from their home office they are delivering exceptional results. Right from coordinating with Legal (for advice on claims and force majeure clauses), Finance (settling for liability and dues both to and from vendors), Ethics and Compliance (for more vigil on transactions and avoid any shortcuts), Quality (ensuring no deviation from standards), Inbound Logistics (assuring raw material receipt on time and in full) and definitely with business Partners for assuring timely and reliable supplies of products and services. Procurement professionals have fired all cylinders to bring the best value for the organization.
Backbone in times of crisis
In these turbulent times, business leaders have entrusted their highest level of praise and confidence in Procurement professionals who are significantly contributing to generate value. Challenging times bring the best in every one of us, if necessity is the mother of invention then imagination is the father of creativity and every occasion is a blessing in disguise, it teaches needed lessons, we could have not learnt otherwise. Who else can learn and adopt better than Procurement function? These times are giving an unprecedented opportunity for reviews, prospect to review specifications, are they right fit, if they are not gold plated but we are using fit for purpose specifications. Are we optimizing demand lever, right and timely demand, taking full advantage of economies of scale, reviewing what would be the requirement when business returns to new normal and leaving no margin for any value leakage with back-end preparation to scale up in times of need? And yes, finally have we negotiated hard to squeeze the last drop, it is also an opportunity to reset price at right level, however, one needs to ensure that we do not crush it to an extent that survival of the supplier becomes a question mark, always need to remember good suppliers are strength and backbone of an organization thus, always working for a win-win solution to create long term sustainability and relationship, supplier should always be willing to invest and take risk for our businesses.
Cost-saving to value creator
The way Procurement community has responded to this pandemic in a very short span of time appears to be a roller coaster ride of learn (to adapt to changes), unlearn (some of the basic standard formulae/practice) and relearn (what to do in times of uncertainty and crisis). Procurement teams have exhibited balance, demonstrating care to the society by responding in a considerate way to the challenge of call of the duty and being human in sync with the organizational policies, generated cash by negotiating both new and existing contracts (whether it is reviewing payment terms, revising specifications, aligning demand or revisiting cost models) with win-win outcomes for both (organization and suppliers) and maintained continuity of business operations with adequate support to the suppliers. As a function we have lived to the high expectations of the business and created sustainable value. Demonstration of professionalism and acting as a strong pillar of support in current challenging times have created a distinct place for Procurement function in the boardrooms and will see an emergence of new Procurement leadership and participation in new normal.
What does the future hold?
Currently the future looks to be an unchartered landscape; no one knows how the future will unfold. In past, we adopted and applied transformational tools like machine learning, artificial intelligence and internet of things to digitalize the whole supply chain, however current need of the hour will be to restore the normal, once new normal is established we can then adapt to appropriate technologies and digital tools for making supply chains more efficient, more effective and more productive. In new normal, the focus would be to continue maximizing usage of touchless technologies and driving simplification, digitalization and automation.
There has never been a more challenging time to demonstrate value and contribute to the organization, Pandemic is a lifetime opportunity for Procurement professionals to reflect their true value and influence and emerge as superheroes of the organization.