If history has taught us anything, it’s that major global crises have a habit of driving long-term change. The Covid-19 pandemic was no exception. It has highlighted the need for businesses to become more adaptable and agile, which includes rethinking their approach to procurement.
During the first few months of the pandemic, disruption to global supply chains was enormous. This forced some procurement teams into overdrive, as they had to quickly find new suppliers to accommodate waves of panic buying. Others experienced quite the opposite, as they faced huge pressure to dramatically reduce costs in the face of industry-wide lockdowns.
Although things started to settle down over the summer, Europe and other regions of the world now face a new wave of lockdowns. This has made it clearer than ever that procurement can't just focus on day-by-day survival, but must instead focus on the long-term balancing of their objectives. Cost control naturally remains a top priority, but supply chain continuity is just as important.
Covid-19 highlighted many pre-existing supply chain issues
The pandemic highlighted the pre-existing fact that many supply chains were seriously lacking in sustainability. For example, for decades the manufacturing sector has relied on outsourcing overseas in a race-to-the-bottom bid for cheap supplies and labour with little attention paid to the actual quality of end products.
Now, with businesses facing greater pressure to bring their supply chains closer to home and ensure transparency, they have to completely rethink their procurement processes. Matters grow even more complicated once we dive into the long tail of procurement. Time-consuming administrative processes, like long-tail invoice management and KYC and AML checks, soon become an enormous burden, especially for teams suddenly forced to work remotely.
Simplification is more important than ever
The age of unprecedented globalisation and soaring market competition has led to supply chains becoming incredibly complex to the point they become virtually impossible to manage effectively. This extends to internal processes too, such as invoicing and irregular purchases, which are much harder to address in a time when remote work must be a top priority. Thus, the simplification of long-tail supply chain management is more important than ever.
Simplification and automation are key for ensuring the continuity of long-tail supply chains and maintaining transparency over supplier portfolios. Just like direct procurement, long-tail procurement, or indirect procurement, also needs a strategic approach that takes advantage of smarter solutions.
Purchases do not have to be at the cost of compliance
Long-tail purchases during Covid-19 have been made with the best intent – to keep business running in the face of an existential threat. However, desperate times often call of desperate actions, thus many long-tail purchases have been made at the cost of compliance with internal policies.
Fortunately, it doesn’t have to be this way. Immediate long-tail purchases shouldn’t come at the cost of compliance. In fact, the contrary is possible. Smarter solutions make this possible for employees at any level by following a clearly defined process carried out under full compliance and in line with company policies. By automating long-tail procurement processes, businesses can utilise the agility of cloud-based solutions to make the organisation much more adaptable and reactive while improving compliance.
The long tail offers many hidden opportunities
Long-tail procurement typically accounts for around 20% of a company’s spend across many hundreds or even thousands of small purchases. Many of these are poorly managed, leaving money on the table or worse, compromising the integrity of the whole supply chain. But long-tail procurement is vital for operations and keep the business running on a daily basis. With the pandemic expected to last well into 2021, along with intermittent lockdowns and other restrictions, long-tail is a cost centre that cannot be ignored.