COVID-19 Accelerates Transformation in Procurement
Just as the world is experiencing unprecedented disruption today, the financial crisis of 2008 was a turning point that triggered major changes in procurement operations. As revenue streams of multinational companies shrank and profit margins tightened, procurement became a critical function for protecting corporate reputation and profitability.
This wave of change led many organizations to outsource key procurement activities to reduce risk, control costs, and improve productivity. Others turned toward better data management and advanced analytics.
Now, as COVID-19 continues to disrupt global operations, we are witnessing another major shift in procurement. This time, automation and artificial intelligence (AI) are enabling organizations to survive uncertainty and ensure business continuity. Even amid today’s evolving challenges, businesses are building new capabilities and reimagining work processes to continually deliver value to customers, partners, and shareholders.
Empowering Procurement Leaders
Given the scale of the current situation, every organization—including those in service-driven economies—must recognize that traditional procurement models are no longer viable. Previous crises typically affected specific regions, allowing businesses to switch to suppliers in unaffected areas. However, the global nature of the COVID-19 pandemic means both B2B and B2C supply chains have been deeply impacted worldwide.
As a result, the priorities of procurement leaders and their teams have shifted rapidly—from routine sourcing and contract negotiation to close collaboration with business leaders to identify immediate needs and onboard new suppliers that can ensure both short-term and long-term business continuity.
Service-based companies such as telecommunications saw demand surge almost overnight as employees around the world transitioned to remote work. This sudden shift has created lasting impacts on how companies operate and how employees work. Organizations now need suppliers who can respond quickly to evolving needs and support new internal capabilities more effectively than ever before.
AI-driven Smart Sourcing, for example, enabled a Fortune 100 company to rapidly identify suppliers capable of designing and delivering multilingual remote-training programs across multiple regions. With a 75% faster supplier selection process and 46% cost reduction, the company secured critical continuity for its operations.
New Challenges That Procurement Must Face
– Remote collaboration with procurement teams, business stakeholders, and suppliers who may be quarantined or working from home will become more common.
– New methods of working must be established with global service suppliers who cannot operate on-site, especially since supplier networks across multiple countries face similar restrictions.
– Searching for new suppliers in unregulated sectors—for example, health and safety services needed to support affected employees.
– Implementing risk-mitigation plans to ensure minimal supply chain disruption, supported by alternative suppliers who can step in when primary suppliers are affected.
In these unprecedented times, many leaders are taking the opportunity to invest in new capabilities that provide immediate relief while also delivering long-term sustainable value. For instance, a global aerospace company successfully sourced a crisis-management service provider for COVID-19 in just nine business days—from identifying the risk to finalizing the contract. Traditional sourcing processes, which require weeks to complete, are no longer viable when suppliers must be onboarded almost immediately to maintain business continuity.
Growing Opportunities to Build Sustainable Capabilities
– Enhancing operational agility to quickly adapt to future disruptions.
– Deploying systems and processes that give all stakeholders real-time visibility and instant access to information.
– Streamlining workflows to support greater efficiency across the entire workforce.
– Strengthening cross-functional collaboration and communication throughout the organization.
– Building secure, reliable self-service business processes that can be executed from anywhere.
Disruption Accelerates Innovation
COVID-19 has highlighted the adaptability of both individuals and businesses. Social-distancing measures designed to limit the spread of the virus have driven people to change the way they work, communicate, and interact. Digital tools such as Everbridge, Zoom, and Dropbox have seen significant growth as business leaders, employees, partners, students, and communities embrace new technologies to stay connected and productive.
Procurement is no different. Methods that worked under “business as usual” conditions are no longer adequate for procurement teams aiming to operate effectively and achieve the right outcomes. Team members are motivated and ready for change—and they now expect automation and AI tools to offer user-friendly, intuitive experiences similar to the technologies they use in their personal lives.
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