Procurement Pivotal to Managing Disruptions Says SAP Research

Procurement Pivotal to Managing Disruptions Says SAP Research

Procurement Gains Strategic Seat at the Table

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By John Yuva, Senior Editor, SAPinsider

What keeps supply chain professionals up at night? According to research conducted by Regina Corso Consulting and released by SAP, 49% of supply chain professionals surveyed cited shortages and disruptions as their leading challenge, followed by sustainability (28%), and reducing costs and/or saving money (27%).

While many companies have been plagued by these challenges, 90% of respondents say procurement is taking a strategic seat at the table to help address them. Procurement has significant insight into supply chain dynamics that is extremely valuable to the business.

“Supply chain disruptions aren’t a new challenge, but they’ve been dramatically compounded and lasting due to ongoing shortages and delays caused by the pandemic,” said Etosha Thurman, Chief Marketing and Solutions Officer, Intelligent Spend and Business Network, SAP.

“To navigate these unpredictable circumstances, supply chain leaders must strategically leverage procurement to effectively manage supplier relationships, mitigate customer frustrations, control costs and ensure business resiliency.”

Procurement’s Organizational Reach

Where is procurement providing the most leadership? The influence procurement has within companies spans several areas.

According to the survey:

  • 50% cite procurement as helping alleviate supply chain challenges by improving transparency
  • 48% see better supplier relationships through procurement involvement
  • 45% believe procurement is strengthening organizational resiliency with supplier diversification
  • 33% point to improved trading partner liquidity with procurement’s help adapting payment terms
  • 22% credit procurement with helping to reskill talent to address higher-level business priorities

Historically, procurement was viewed through a more tactical lens. Today, with even slimmer product margins and higher shipping costs, procurement is the strategic gatekeeper for sourcing and supplier decision-making.

Procurement and Sustainable Supply Chains 

What is the next strategic focus for procurement professionals? To mitigate further risks from the effects of the pandemic and other disruptions, procurement is elevating supplier relationships to ensure visibility, transparency, and accountability throughout the supply chain. Sustainability is a central focus in these endeavors.

“If post-pandemic supply chains are to be resilient, they must be sustainable. It’s not enough to just track and extoll green virtues, sustainability must become part of the way that supply chains are run,” said Simon Ellis, Program VP, IDC.

“On the other end, the growth of e-commerce and consumer expectations for ‘next day’ delivery often runs counter to sustainable fulfillment and carbon footprint. There will have to be a rebalancing or rationalization about the way that people consume: ‘do I really need the product the next day?’”

To achieve a behavioral change in consumer buying, procurement and other supply chain partners must work together to educate consumers about the sustainable impacts of their habits. For example, 54% of research respondents believe consumers should allow more time for fulfillment, while 46% say consumers should buy more local goods and order items earlier.

Together, procurement, logistics, and retailers can show the value proposition of local buying and the reduction in carbon footprint achieved. The global focus on climate change means sustainability must become a greater strategic imperative for companies.

The good news is that 91% of respondents say their company has specific sustainability goals or objectives. And better still, procurement plays a significant role in achieving and surpassing sustainability metrics.

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