The COVID-19 pandemic has changed our outlook in various ways. In a personal experience where one of my neighbors was infected by Covid-19, and we were put under quarantine. We were being provided with necessities at our doorstep by the building helping staff. From milk to groceries and vegetables – everything was sourced through various online portals to be delivered to us. It was an unusual experience where one was confined within the boundaries of one’s home and the supplies were made available through the help of technology and humans.
No one expected a pandemic in the first place. When it did happen, we humans adapted technology for our basic needs and in-turn got a chance to reflect on the supply chain functions. When the pandemic had just hit us and we were under strict lockdown, there were times when some things such as frozen yogurt and instant noodles went out of stock. On a lighter note, a grocery shop owner near my house would smirk at me whenever I asked him the availability of any of these items.
As a consumer, I could clearly understand that the shop owner was stocked out and his supply chain was severely hampered. While consumer woes were apparent and out in the open, businesses too were not far behind. Change is the only constant, and this was proved several times during the pandemic. Another aspect of businesses that changed (or was imperative to change) was the way procurement process was handled. Many of the suppliers that the organizations worked with, faced issues such as:
- Unavailability of raw material
- Delays in procuring raw material
- Being out of stock
- Delivery issues due to lockdown at several areas
The organizations that were impacted required a new outlook. Pivoting from the traditional procurement methods was the need of the hour. While technology has paved its way in almost all aspects of business, procurement was not far behind. The pandemic led organizations to focus on alternative procurement methods and use technology wherever possible. The ultimate purpose of technology is to make life easier, help organizations reflect on the existing manual process and automate it to become faster, cheaper, and more reliable.
According to an article in ‘McKinsey’ going digital and using analytics as a part of reimagining procurement was the next normal. “The rapid adoption of new ways of working that the pandemic necessitated, forced the companies to accelerate the shift to digitization. As remote work becomes the next normal, digitization became an important enabler of effective collaboration across functions.” The link for the article can be found here.
Digitization can be sought in procurement to gain insights over various aspects in the P2P (Procure-to-Pay) cycle such as:
- Price variation detection
In case a particular supplier ends up charging more for few items and there is huge variations while comparing it with previous transactions. Analytics on the data could point at lowering the price for these items, leading to potential savings for the business.
- Delays in fulfillment by some specific suppliers
During the pandemic, owing to the lockdowns and several logistic issues, suppliers were affected due to their geographical locations, which impacted the schedule leading to delivery failures.
- Spend categorization
Use of technology gives an analytical view to an organization to understand the categories, items, and suppliers, along with the corresponding spending. With analytics and an oversight mechanism, organizations can gain faster insights on the spending which could also lead to potential intervention and savings (if required).
- Performance of suppliers
An overview of the suppliers’ performance using historical data and current trends would be beneficial to an organization as it would provide insights for alternate suppliers, or have a good supplier relationship. Diversification of suppliers is also considered in some cases where master contracts were done by businesses to consolidate vendors.
- Real time insights
With the focus on gaining real-time insights of the supplier, using technology provided an added advantage for businesses to continuously monitor procurement transaction, intercept and act accordingly. This thought was validated in the article by IMD explaining the future of the supply chain in the Covid-19 era. “To maneuver choppy waters, navigators need visibility. In certain industries, such as microprocessor development or consumer technologies, advanced electronics manufacturers have already produced comprehensive dashboards that lay out the full status of production and shipment, down to the last detail. The dashboards refresh every 20 minutes, to provide real-time overview of the entire supply chain.” Click here on this link to read the complete blogpost.
The advent of technology in procurement was anyway gaining ground and the pandemic made it inevitable. Are you ready to transform the way procurement works? Are you looking for a tech-solution to handle the procurement concerns during the pandemic? ignioTM Cognitive Procurement provides the technological solution to all these questions. It helps in analyzing the procurement transactional data and brings out relevant and valuable insights for the organization.
