COVID-19: Top 3 Smart Tools for Procurement Teams in 2020
Currently, the entire world is facing a dangerous crisis like the Covid-19. Therefore procurement teams can use smart procurement tools to fight these challenges and ensure business continuity.
The ongoing pandemic has plunged the world into an unprecedented reality. Therefore, rapid action-plans have become the need of the hour to deliver tangible business outcomes. The current situation demands procurement to be more of a centre of excellence rather than a standalone function.
With over 65% CPOs focusing on Digital Transformation in 2020, it is important to look at long-term objectives. Similarly, While you might be looking at adopting on-point solutions to address immediate concerns, a road-map for the entire Source-to-Pay suite should be on the charts.
Current State of Procurement
Supply chain Disruptions
In a study conducted by the Institute for Supply Management, almost 75% of the 628 businesses surveyed had experienced supply chain disruptions due to the COVID-19 outbreak.
Additionally, In the same survey, 57% of respondents said they were facing longer lead times for orders with suppliers in China.
It has raised concerns about the robustness of global supply chains and the viability of business continuity plans. While many organizations confidently rely on suppliers across multiple countries, nobody prepares for a multi-country disruption.
Many businesses resorted to panic buying or made last-minute purchases to ensure business continuity. This helped them to deal with demand fluctuations, as well.
Without the right sourcing tools and lack of spend visibility, this can create a significant dent on your balance sheets. In addition, the scale of maverick spend might surprise you when the storm settles down.
Managing risks across cost, quality, and delivery across market fluctuations and potential frauds can be challenging. With many suppliers declaring non-performance, choosing between genuine and fraudulent claims has become a significant issue for organizations.
The legal teams rushing back to contracts to thoroughly read for risk assessment, Force Majeure clauses, and the terms for the agreed contract compounds this issue.
With the current pandemic, contractual disputes arise. Meanwhile, many organizations have declared Force Majeure to protect themselves from coming losses. Since, the clause is expressed worldwide by lawyers in different capacities and dealing with different situations.
Although, some contracts may cover pandemics such as this due to their broad language and inclusive writing. However, on the other hand, if contract authors are specific and do not include pandemic or similar situations, negotiations may not favor them.
3 Smart Procurement Tools to respond to immediate challenges
The 3 smart procurement tools are :-
- A comprehensive Supplier Management tool can manage detailed information about suppliers, including buyers, organization location-specific data that can help organizations easily identify and analyze supplier base across geography by tier, category, etc.
- It can leverage it to collect supply chain parameters on an ad-hoc or ongoing basis to identify supply chain risks. Buyers can configure scorecards and quickly gather information about suppliers. They can analyze supply chain risk based on various parameters.
- Thus, you can retrieve a list of suppliers at a high-risk level because of the ongoing COVID-19 crisis. In addition, you can strategize to opt for other suppliers to ensure business continuity.
- A quick Sourcing software must be used to conduct a quick sourcing event to identify new suppliers and build a resilient supply chain to combat a pandemic. The understanding of inventory levels is very critical. It helps everyone to understand which products are required to be resourced.
- By using an efficient Procurement solution, users can gain visibility on the available inventory for products. Therefore, users can decide on which products to be sourced.
Contract Risk Management
- Authoring contracts clearly defines what constitutes a Force Majeure event. Consequently, this equips teams with a vantage point in case of future disputes. One immediate strategy for mitigating contractual risk exposure is to rapidly identify existing contractual terms with Force Majeure clauses.
- These clauses provide flexibility to terminate, defer, or renegotiate those commitments, to prevent downside risk. To avoid perusing thousands of pages of the contract, utilizing AI-Powered Contract Management solutions will empower your team a leveraged position.
A Word to the Wise
By Leveraging its historical association with AI and powered by 500+ strong R&D workforce, Zycus has successfully deployed AI-powered BOTs under the umbrella brand Merlin AI Suite to tackle two of the most complex areas related to procurement, Invoice Management, and Contract Management.
The new generation of cloud-based procurement technology has made 100% paper-less procurement and supply chain processes a reality. Most importantly, it has given organizations the ability to remotely enable buyers and suppliers to transact efficiently on a 24/7 basis.
However, businesses are now becoming flexible, agile, and open to taking risks in light of recent pandemic. Therefore, it’s high time we plunged into those long-driven out projects and took up the digital initiative forward.