It is not an exaggeration to say that COVID-19 brought global business and the world economy to an unprecedented standstill. While we witnessed communities adapting their behavior to survive the pandemic, we also saw many industries suffering from a sudden collapse in demand for their products and services.

Naturally, not every industry was affected in the same way. On one side of the spectrum were industries experiencing an overnight drop in demand (such as hospitality and transportation). On the other side were those facing an unexpected surge in demand (such as PPE manufacturing, medical supplies, healthcare, and public services). Even businesses positioned somewhere in the middle were forced to adjust their operations, production lines, or service models to align with rapidly changing consumer behavior (e.g., retail, financial services).

As with all major challenges, this crisis also created opportunities for forward-thinking organizations. At the heart of success is an organization’s ability to deliver quickly and reliably. Procurement and supply chain management sit at the center of this capability, and procurement teams must step forward as leaders and embrace innovation.

Why Procurement Matters

Procurement serves as a crucial bridge between third-party suppliers and internal business functions. When consumer demand becomes unpredictable, businesses inevitably turn to procurement for new product ideas that require different materials, services, or innovations from external partners. Likewise, when markets are disrupted, procurement must ensure supply continuity, and its ability to adapt rapidly becomes a critical driver of business success. The ability to secure and maintain supplier relationships faster than competitors is key to distinguishing market leaders from followers.

Embracing Innovation for Procurement Agility

During periods of accelerated business innovation, procurement does not need to invent everything from scratch. Instead, it can apply proven methods—executing them faster and more strategically.

– Category Management: When the business urgently needs materials or products, category management offers a tested framework that enables procurement to operate quickly and with confidence.

– Make-or-Buy Decisions: If required goods or services cannot be sourced quickly enough, procurement must consider whether internal production, non-traditional suppliers (such as universities), or even partnerships with competitors could be viable alternatives.

– Supplier Relationship Management (SRM): SRM helps facilitate constructive collaboration with key suppliers. Procurement must identify strategic suppliers and strengthen these relationships to unlock added value and innovation.

– Risk Assessment: Rapid sourcing during volatile periods requires frequent and close monitoring of supplier risks to ensure that vulnerable suppliers are managed or replaced before disruptions affect operations.

Aligning Digital Systems in a Unified Direction

Poor communication can destroy virtually anything—from relationships to profits. Misinterpretation and silence can cost individuals everything, and in business, the consequences can be severe.

Failed IT projects cost Fortune 500 companies USD 14 billion per year, largely due to communication failures. The remedy lies in aligning digital systems in a unified direction. Organizations succeed in digital alignment only when the right digital infrastructure is in place, such as integrated data systems and strong data-management strategies that support broader business goals.

To align digital systems between procurement and the wider business, procurement must first have a clear understanding of the organization’s goals and objectives. Once those goals are known, the next step is implementing the digital infrastructure needed to support them. Importantly, this infrastructure must also support procurement itself—procurement cannot overlook its own needs.

From compliance dashboards to automated tender platforms and reverse-auction software, procurement already has a powerful set of digital tools. But for digital alignment to succeed across the organization, procurement must be aligned with overall business priorities to maximize efficiency and cost savings. The question is: How?

Communication Breakdowns

The mission is to reclaim the USD 14 billion lost annually to failed projects—and improvement is needed across multiple areas. Much of the IT waste stems from poor communication between business units, procurement, and vendors. This leads to incorrect requirements and the purchase of IT infrastructure that adds limited value.

Failed IT infrastructure can also result from poor communication within teams. If employees do not understand why changes are necessary, they will not invest time in training, learning new systems, or complying with new digital requirements.

With communication as a guiding principle, the Chief Information Officer (CIO) should take four steps to ensure better collaboration between IT and procurement:

1. Align technology with business needs:
Gain a deeper understanding of procurement and financial objectives. Recognize the technological challenges they face. Because technology evolves rapidly, a problem considered unsolvable six months ago may now have a viable solution.

2. Establish shared business goals:
Ensure a clear understanding of the expected outcomes from a technology perspective. Do not allow digital alignment initiatives to become another piece of IT waste.

3. Apply joint expertise to find the best solution:
The best technical solution may not be the best procurement solution. Negotiation is essential to arrive at specifications suitable for competitive bidding.

4. Build a broader ecosystem:
Avoid siloed technologies and focus on complementary solutions that work together to deliver end-to-end outcomes.