Due to the Covid-19 pandemic, the global economy faced an ongoing crisis in the form of one of the worst recessions in decades. While government intervention has helped many businesses, the pandemic is bound to cause further disruption.
Almost every business, regardless of industry, has been adversely affected by the economic impact of Covid-19. However, while it’s easy to blame everything on today’s economic climate, doing so misses a fundamental point: most of the problems businesses now face can be traced much further back.
Simply put, the pandemic has exposed many of the pre-existing vulnerabilities in businesses – particularly a lack of adaptability to change. And in today’s technology-driven world, change is the only constant. Covid-19 has just accelerated the need to adopt transformative measures. But the need was already there, to begin with.
Here are some of the top challenges procurement teams have been facing:
#1. High pressure on global supply chains
The global economy has always been fragile to international trade wars, shifting regulations, and more. Just like these situations, the pandemic has led to enormous disruption across global supply chains. Only this time it has happened far more suddenly. But while there currently isn’t a lot that can be done to avoid limitations and restrictions on international trade, there are ways to minimise the disruption.
Businesses now face increasing political and economic pressure to boost domestic production and reduce the degree to which they rely on global supply chains. This requires new procurement practices, greater agility and, often, a larger portfolio of alternative suppliers.
#2. Difficulty onboarding new suppliers
COVID-19 has highlighted several trust and transparency issues when onboarding suppliers. With many organisations facing critical supply shortages, a part of their risk management is to turn to new and unproven suppliers. Moreover, the degree of urgency means there’s less time to take care of things like anti-money-laundering checks, know-your-customer (KYC) checks, or credit checks.
Of course, the pandemic hasn’t lessened the need for corporate social responsibility (CSR). It has, in fact, made it even more important. There’s now a greater need than ever to automate these checks, along with many other routine operations associated with supplier onboarding.
#3. Low adaptability of manual processes
One of the biggest causes of disruption in many businesses was the fact they had to send all their employees home. Although remote work is already well-established in many companies, others have had to grapple with the fact that working from home is far from convenient. The fact is, many people simply aren’t able to work as efficiently outside the office. For procurement and finance teams, this has led to late payments and poor vendor relations.
Over-reliance on manual processes and outdated IT infrastructure are some of the underlying causes. It already takes time for many finance teams to ensure invoices are processed and paid on time. When everyone has to carry out the same routines in a completely different environment with businesses facing financial instability, poor cash flow and delays are inevitable.
#4. Lack of time to focus on strategic suppliers
It has always been important to allocate resources so that companies can focus on what generates the most revenue and does so sustainably. When it comes to supplier management, that means focusing on building relationships with strategic suppliers. The pandemic has only highlighted that need. Yet that doesn’t diminish the role of long-tail suppliers – disruptions to which can lead to serious operational challenges.
To achieve a more agile business model, it’s imperative that procurement teams automate the procurement, onboarding, and management of their long-tail suppliers. This will free up time to focus on strengthening relationships with strategic suppliers, which is more important than ever, given the uncertain times ahead.
Mazepay helps resolve many of the pre-existing challenges highlighted during the pandemic by helping procurement teams become more agile and adaptable during uncertain times. Get in touch today to find out more.