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How COVID-19 is Changing Your Procurement Processes

May 27, 2020 | 3 min read

Double exposure of US Coronavirus COVID-19 cases with stock market headline (March 18, 2020)

Procurement specialists are working round the clock to manage emergency procurement related to the COVID-19 pandemic. The challenges are many: supply shortages, limited transport and logistics and having to work remotely, often with limited access to technology. Shipping costs are rising due to government restrictions and contingency plans and staff are working overtime to fulfil orders. And what about the regular work in procurement? That doesn’t stop, the on-going tasks of managing sourcing projects, supplier negotiations and contract management have to continue. Despite all the disruption, the main focus is still on cost reduction to ensure the sustainability and longevity of businesses.

How the new environment is changing the way we work

Working from home is becoming the norm for procurement teams. The situation is evolving rapidly and the pressure on staff means more needs to be done in less time. Right now, business travel is severely limited and may be for some time. It seems that we may not ever return to a full 5-day-week in the office. The need for effective and stable software solutions is becoming more apparent. CPOs are playing a leading role in managing down costs while protecting their supply base and helping staff to become as productive as possible. Despite all the recent debates on managing climate change, sustainability and even supplier risk, the leading key procurement indicator (KPI) for most procurement professionals is still cost reduction.

Digital solutions for procurement

Teams need cloud-based real-time procurement solutions. What do they need most?

  • A system that is easy to learn and to use and that is available 24/7/365. This is even more relevant when working with distributed teams.

  • A trusted central repository of data and supplier information, project status and contract detail that is accessible to all accredited users. Making informed decisions using real time information has become critical to any company’s survival in this new business normal.

  • Sourcing software:

    • E-auction software should include features to run different types of on-line auctions – silent, reverse and Dutch auctions

    • Sourcing creation tools, templates and questionnaires for RFPs an RFQs

    • A tracking process for issuing and receiving bids and all related information and an audit function

  • A method of tracking, controlling and reporting expenditure and measuring cost savings

The best procurement software solutions available should be suitable for use in most industries without expensive and complex configuration needed.

Managing costs down

As companies deal with the increased costs of doing business, cost optimization has to be top of mind in every transaction whether dealing with indirect or direct spend. Sourcing activities using RFPs and RFQs can be automated right from a Request for Information (RFI) through all the stages including pre-qualification, issuing and receiving bids, evaluation and awarding the contract. Operational costs are reduced by managing the repetitive tasks electronically which cuts processing time. This allows skilled and qualified staff to attend to more complex activities. Running E-procurement software on a shared platform also makes tracking savings much easier.

E-Auctions, primarily Reverse Auctions are now coming into much wider use as it has been demonstrated that this method of sourcing can save upwards of 15% per event. This method allows suppliers to compete with each other in a transparent, real-time secure bidding environment. E-Auction software can manage the entire process of procurement from development of the specification through to negotiation and evaluation.

What is the next step?

The current situation where people are required to work remotely has worked well for companies that already had adopted automated procurement solutions. Other organizations that were considering how to migrate to e-sourcing platforms are struggling to catch up. Paper-based practices will not be sustainable in the future, we need to adopt more streamlined and flexible ways of working. Processing supplier quotes manually is time-consuming, inefficient and repetitive. Many low-level processes like these can be automated. Companies have the opportunity now for a digital re-fit - using a cloud-based software solution that is easy to implement and that will generate cost savings.

ProcurePort can help guide you through the current uncertainty and advise how to reduce costs and improve your procurement and supply chain resilience using our tried-and-tested software solutions.