Procurement’s momentum was not thwarted by the global pandemic. Instead, the crisis has provided yet another example of how critical the procurement function is to many enterprises, particularly those with global supply chains. In this business environment, many of an enterprise’s best opportunities and top priorities played to the strengths and expertise of its procurement department. For example, as top-line revenues stagnate or fall, cost containment, a major focus for any procurement department, gains in significance as a business lever for profitability. Strategies like extending supplier payment terms can provide valuable liquidity when other, traditional sources of cash dry up. In some cases, this strategy can be the difference between liquidity and bankruptcy.
“In response to our customers’ nearly uniform payment term extensions, my procurement leadership team has spent the past two months focused on how to best extend our supplier payment terms. This is our CEO’s top priority.” one VP of Procurement Operations at a mid-sized CPG company told last year.
This tried-and-true strategy has become a standard CPO tool since the Great Recession (2008-2010) when executive leaders pushed procurement teams to defend profit margins and balances sheets as sales tumbled and cash tightened. CPOs with well-run procurement departments responded admirably and helped set the stage for a very important decade in the profession’s overall development and expansion.
In many organizations, the procurement department has been thrust into a “hero” role within their enterprises. But while the needs of the larger enterprise have been very familiar, the situation has been entirely different with stay-at-home orders, social distancing advisories, and the vast majority of employees working from home. It has taken time for most business teams to adjust to the new, distributed workforce model.
“Our company was ill-prepared to work from home on a large scale. We didn’t have strategic alliances with IT and PPE suppliers and, as a result, had a difficult time sourcing the supplies necessary to effectively/quickly transition the workforce into a more agile/mobile team,” said the CPO of a Global Financial Services firm during one of our CPO Roundtables last years.
Almost two full years into the pandemic, businesses and teams alike have been resilient and have adjusted to the new style of work, with procurement teams developing more nuanced, strategic, and, most importantly, direct approaches to facilitate collaboration. The distributed workforce also highlighted the need for procurement teams to have and harness better tools to drive projects, improve visibility and execution, and enable multiple project members to collaborate and communicate.
The market for supply management technology has been very strong; the job market for procurement professionals has been stronger still. Many CPOs who appeared cautiously optimistic about 2021 had just hone through an intense year focused on ensuring business continuity, building resilience, and supporting the business in myriad ways.
We’ll be sharing their views on 2022 soon (when the results from our survey are published) — BTW, please take our survey if you can spare the time to let us know your views on 2022 (practitioners only please).
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