7 things we learnt about procurement in 2020

Richard Oates, Group Commercial Director

Richard Oates, Group Commercial Director

While 2020 may be a year we’d love to forget, there are some important lessons to be learnt as we all strive to build more resilient supply chains fit for the future – whatever challenges the procurement landscape throws up. Here, OfficeTeam’s Group Commercial Director, Richard Oates explores his key thoughts from the past 12 months, before considering what this could mean for the future of the value chain…

  1. We’re resilient to risks

A strong risk register helps plan for various possible scenarios, although very few businesses could have anticipated a global pandemic, just over 12 months ago.

Fast forward to 2021, however, and procurement teams’ navigation of Covid-19 has taught us how resilient, responsive and adaptable the profession can be, to changes in demand, marketplace uncertainty and logistical disruption. 

So, while we’d undoubtedly have rather had a less manic 2020, and are ready for some stability moving forward, we did learn a lot.

 

  1. The merits of supply chain consolidation

There was a time when organisations expanded their supplier network to mitigate risks, but for many businesses, things came full circle in 2020.

Supply chain consolidation, particularly in terms of reshoring, gave many procurement teams greater confidence surrounding continuity of supply, as well as tariffs – not least due to Brexit.

All things considered, Brexit didn’t dominate the supply chain conversation half as much as we would have expected last year. But because logistical challenges are sure to continue well into 2021, savvy procurement professionals have taken what steps they can to manage this adversity.

 

  1. The cost vs value debate rumbled on

As financial pressures rose and budgets became increasingly squeezed, a number of businesses quite rightly focused on lean procurement as a means of controlling costs. And we acknowledged the need for customers to be savvy with spend, which explains the launch of our SmartPrice range.

However, this industry-wide focus on price is not without its challenges, as product quality and service delivery can often become jeopardised as a result. In fact, global management consultancy Kearney suggested in its report The Future of Procurement, that “too much attention is paid to cost”.

A mindset shift is perhaps therefore required, as a McKinsey report highlights: “…lean management can become a strategic weapon; aligning purchasing more tightly to internal customers’ real interests, helping leaders rethink the end-to-end procurement process…, and transforming the effectiveness of strategic procurement activities.”

To derive true long-term value from the supply chain, deeper relationships between procurement teams and their suppliers are needed, which prioritise not just price, but environmental efficiencies, service reliability, proactivity, social value, and more.

 

  1. Procurement isn’t perceived as transactional

Linked undoubtedly to the above point, procurement gained a more important and deserved seat at the boardroom table in 2020, with business leaders acknowledging that this is not a transactional role, but one that is integral to business continuity, workforce productivity and customer satisfaction – among many other things.

Procurement teams also spread their attention across the wider value chain too, to encompass wider B2B services including technology as a service, customer experience, marketing and business process outsourcing.

 

  1. A growing dependence on technology

The savvy use of technology became acutely important during 2020, not only to help simplify, systemise and streamline processes, but to uncover actionable data that will empower procurement professionals to make informed, value-orientated decisions moving forwards.

However, there is still a long way to go. A report by global management consultancy Bain & Company highlighted, for example, that: “80% of procurement professionals believe they need to do more to take advantage of the latest digital solutions.”

At OfficeTeam, we’ve therefore taken our renowned e-commerce platform SmartPad and made it even more intuitive, easy to use and flexible – with self-serve options available for homeworkers, for instance. An article on Industry Week stated that platforms should “…do the heavy lifting” and we couldn’t agree more.

 

  1. Covid forced innovation

Some organisations have an in-built appetite for innovation, irrespective of the external landscape they find themselves in, whereas others are more traditional in their approach – not least in this industry. But Covid forced a change in this respect which – while challenging – should be welcomed, on reflection. The launch of SmartPad for homeworkers, mentioned above, is just one of many examples of innovation, from OfficeTeam.

A fresh approach to leadership has also been hailed as crucial throughout the business landscape on the whole – not just procurement. With teams working disparately, managers had to develop newfound ways of communicating, maintaining camaraderie, and protecting best practice.

The distance between colleagues has been difficult at times – not least because of the financial impact of rising expenses claims! But we’ve all learnt that we can work effectively, wherever we may be, which means ‘the way we’ve always done things’ isn’t necessarily fit for purpose, any more.

 

  1. Environmental priorities will return

For some organisations, a need to focus only on short-term, ‘needs must’ decisions, saw environmental concerns take more of a back seat than we’d have probably all liked, in 2020. In fact, the Chartered Institute of Procurement and Supply published an article which said that: “…six in 10 UK businesses lowered investment in sustainability initiatives, following the Covid-19 outbreak.”

However, for reasons linked to being lean as well as better managing carbon emissions, efficient logistics will surely come to the fore once more, this year.

The ‘cost’ of e-commerce purchases and home deliveries – across the business and consumer landscape – was widely reported on in 2020, for instance. In fact, an article in The Independent illustrated that Britons bought a projected 145 million extra presents online due to Covid-19, and the carbon impact of extra deliveries would result in over 86,000 tonnes of additional CO2 emissions.

We also cannot forget that the UK has pledged to eradicate its climate change impact by 2050, and we all have a part to play in achieving this bold ambition.

If you found this blog useful, register for our upcoming roundtable at 10:00 on January 26th – What’s keeping procurement leaders up at night?

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