COVID-19 Demands Digital Supply Chain Expedience
COVID-19 just shifted the evolution of procurement into overdrive, and rightly so. Procurement’s traditional responsibilities around cost control, price negotiation, and contract compliance are eclipsed by the pandemic’s life and death demands. Yet managing risk remains more crucial than ever.
With real-time, intelligent data from across the company, including changing workforce requirements, organizations don’t have to sacrifice company values or policies for the sake of expedience. Speaking during a breakout session of the recent virtual SAP Ariba Live event, Chris Haydon, president of procurement solutions at SAP, summarized how the concept of “intelligent spend” addressed modern business demands.
“Procurement and supply chain leaders are…challenged with strategic, higher-value goals such as securing a supply chain, guarding against financial and reputational risk inside supply chains, and doing all this while moving the actual power of the purchase to the point of need and to the people who need to do it,” said Haydon. “Intelligent spend management is…driving our strategy on how we develop an interconnected, integrated, and networked suite of solutions to help companies deliver the outcomes they need.”
Experts predict pandemic impact
Procurement teams in every industry are heads down with business continuity plans and mitigating supply chain risk. The pandemic is also a wake-up call for many companies that the next phase of digitalization could be dawning, as they realize the value of collaborative cloud-based platforms and connected intelligence. Recent expert predictions about the business impact of COVID-19 reflected these themes.
Gartner IT researchers said the top three trends in business will be remote working, increasing reliance on digital channels and platforms, and data and analytics for faster and better decision-making. Based on a recent CXO survey, IDC analysts predicted enterprise collaboration platforms will benefit most from the epidemic, with 76 percent of surveyed industrial users choosing to adopt such platforms, followed by cloud computing, robotics, AI, big data, and 5G. At Forrester, one analyst looked ahead to “a new channel normal, one that is more agile, responsive, and cross-functional than before in response to this fast-moving crisis. For those who don’t adapt, it could hasten their decline.”
Finding hospital beds fast
Haydon echoed those analysts’ trends during his presentation, bringing them to bear on procurement. He said that organizations need to reshape how they connect with trading partners “for deeper collaboration into supply chains that unlocks the power of community intelligence.”
Two mid-sized companies recently experienced the power of having a strong collaborative procurement platform. After receiving an urgent request for hospital beds from a contractor who was building a temporary facility outside of New York City for COVID-19 patients, the chief digital officer at Ram Tool Construction Supply contacted SAP for help. A quick search in SAP Ariba Discovery revealed that Joerns Healthcare could fulfill an order for 500 hospital beds. The SAP salesperson placed a few calls, sent a few texts to connect the two companies, and found the new source for beds in less than 30 minutes.
Digital platforms are also especially relevant to companies that are retooling operations to quickly churn out products for communities in dire need, such as face masks, hand gloves, disinfectant, and ventilators. Whether mandated or opportunistic, companies that deviate from established production capabilities need to make an equally swift pivot to find new suppliers of goods, and in some cases, workers.
Procurement gets creative and empathetic with suppliers
Chief procurement officers in every industry are heads down with finding new sources of supply. This was why SAP opened up access to SAP Ariba Discovery, allowing buyers worldwide to post their immediate sourcing needs and suppliers to respond with no fees.
But the sourcing process is not the only priority. In another video interview, Haydon said that companies also need to understand what their suppliers were experiencing. He mentioned Qualtrics Supply Continuity Pulse, which is designed to help procurement and supply chain leaders assess how confident their suppliers are in meeting demands over time. With a better understanding of what’s affecting their suppliers, buyers can offer to help, potentially heading off problems down the road.
“What I’m hearing from CPOs is, how do we link the digital assets and all the greatness that’s not just SAP Ariba, but broader procurement, the broader supply chain, the broader SAP…to fulfill our business and also meet our customer’s needs,” said Haydon.
It’s too early to predict how COVID-19 will or won’t ignite the next phase of digitalization. What’s clear is that organizations have never been more interdependent on each other, and business will never be the same.