The global threat, COVID-19, has left us no choice but to stay indoors for the majority of time in this calendar year. Yes, 2020 is a year that will remain a curse in our lives. We want it to end and let the New Year brings to us hopes of wellness and positivity.

The pandemic has resulted in making the scenarios critical than ever. Enterprises from every corner of the world are facing difficulties with their supply chain and procurement outsourcing operations. Although some companies anticipated such a situation well in advance, they fail to make a positive impact in their daily operations post the pandemic. Everybody got affected, in every sector.


Challenges That Are Presently Faced In Regards To Procurement Outsourcing

Optimizing the working capital and cash flow, ensuring suitable access to key materials, maintaining profitability, and mitigating the supply and demand risks, are the most crucial challenges being faced right now. How to manage these areas is a big point of concern. You cannot create a blueprint for the next couple of months. You have no idea how the scenario would behave the next moment. So, rather than creating a blueprint for the next few months, consider planning the activities for the next couple of days, at the best the next few weeks.

How can someone be prepared for such catastrophic disruptions? Who could have imagined such a situation arises out of nowhere? Everybody was unprepared. Only a select few predicted the scenario and tried to take some bold actions to prepare for a better future. How successful are they? Well, not much but still, the slightest ray of hope kept them alive. Standing at the present stage, a few of the enterprises are getting ready to take some initiatives to improve the overall shareholder valuation in the long run. In the process, GEP or Global eProcure solutions will certainly help.


What’s In Store For The Procurement Sector – Shortly?

Joining hands, the supply chain and procurement sectors are trying to make a comeback from the verge of a disastrous situation. They are trying to fight back against this massive pandemic that affected everyone, globally. So, is procurement outsourcing happening? No, none of these sectors are well-positioned, but there is an urge to lead the charge that can be noticed of late. We do not know whether success is written on the cards or not, the choices may well prove to create some kind of positive impact in the lives of leading multinationals. The supply chain leaders and procurement experts must focus on:


1. Supplier Risk Assessment

What is required presently is performing a detailed readiness assessment test of key suppliers. Once the leaders perform such an assessment test, it will allow them to observe the big picture – the risk involvement, the overall exposure, and the potential implications. Assessing these areas will allow them to identify the most viable actions that they may take to maintain the continuity of their business. In this regard, it must be noted that this process is not only applicable to the immediate supply partners; scrutinizing the upstream supply ecosystem is equally important.


2. Securing More Cash While Going For Rapid Level Cost-cutting

Cost for supply chain and purchase usually falls in between 50-80 percent of the total operational cost for the global manufacturers. Now, considering the present scenario, it is expected that the overall supply chain cost may face a certain rise. The cost of procurement outsourcing will be higher than usual. This will happen due to overtime labor costs and fast shipping to meet the commitments made to the customers.

All said it is also necessary for the leaders to strengthen the working capital while improving the overall cash flow process. This will result in providing better financial flexibility to the entire scenario to move forward and make a positive impact.


3. Prioritizing Structural And Sustainable Cost Advantage

On an immediate effect, most of the industries will consider cost-cutting to be the front runner in managing the scenario. However, cost-cutting may gain leverage in a short time, but it cannot provide sustainable results. Stabilizing the cost of procurement outsourcing needs to be done. But then, how to achieve structural cost advantages?

It all depends on the types of strategies being implemented by the leaders in regards to their supply chain and procurement team’s functional capability. Augmenting the S2P (Source to Pay) with B2P (Budget to Pay) is a viable option. If this initiative is taken, it will result in gaining financial discipline, cost control, and calculation on the budget availability before making a deal with external suppliers.


4. Accelerating The Supply Chain Systems

With the pandemic hitting strong all over, industries have been affected badly. Now with the situation slightly trying to stabilize, making hard choices will certainly be out of the question. After all, the primary target, considering the present stage, is to improvise the overall supply chain and gain the upper hand. What needs to be done must be done tactfully. Industry leaders must plan accordingly to ensure sustainable growth to the supply chain systems globally. Also, a proper blueprint must be crafted to secure the supply chain systems for the near future. The right steps need to be taken to strengthen the supply chain infrastructure and improvise on the partnership.

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