Procurement Strategies Shifting to Restore Growth Post-COVID-19, Reveals Ivalua Research
Ensuring supply chain continuity, identifying new revenue opportunities, and improving decision making are key focuses as firms recover from the pandemic
8 April, Redwood City, CA – Ivalua, a leading provider of global spend management cloud solutions, has announced the latest findings of a worldwide study of supply chain, procurement and finance business leaders on restoring growth. The study reveals how the disruption caused by COVID-19 has transformed procurement and supply chain strategy across the globe, exploring how procurement is helping organisations get back on their feet after the pandemic.
The research, conducted by Forrester Consulting and commissioned by Ivalua, found that procurement has become of growing importance to organisations, with 85% of respondents indicating that executive leadership recognises procurement’s role in revenue growth. Accordingly 50% are increasing investment due to COVID-19, with only 23% decreasing it. Procurement priorities have also become more strategic, as organisations focus on improving supply chain resilience and boosting growth. For almost two thirds of organisations, the pandemic has increased the priority of ensuring supply chain agility and continuity (65%), identifying new revenue opportunities (64%), and improving decision making (64%).
However, the research reveals that many organisations feel their procurement strategies are being hampered by outdated technology:
“For many organisations, procurement was crucial to keeping supplies flowing during the pandemic and minimising the impact on profitability. But at many, COVID-19 exposed weaknesses in outdated procurement processes, tools, and data that limited agility and impacted decision-making.” comments David Khuat-Duy, Corporate CEO at Ivalua. “Now is the time to digitalise procurement and use it as a growth driver. This means using data to find new revenue streams and unlock supplier-led innovation. If procurement leaders don’t overcome technology challenges now, they risk missing growth opportunities and ensuring resilience for the future.”
Inaccurate data leads to inventory management challenges
According to the study, inflexible procurement tools and poor data quality have created inventory challenges, as companies struggled to record stock levels and identify problems in their supply chains. This caused almost half (47%) of organisations to experience cancelled or lost orders, while others faced reduced revenue (45%) and reduced profit margins (44%).
Inventory challenges are also slowing cash flow. At least once a month, almost half (49%) of organisations said they were penalised by a third-party marketplace for missing Service Level Agreements (SLAs). At the same time, 47% experience overstock at a particular location monthly, adding to storage fees and incurring additional costs.
The road to restoring growth
To restore revenue growth, organisations are aiming to improve supply chain responsiveness and reliability (45%), reduce product costs (42%), and accelerate time to market for new products (40%).
To improve supplier-led innovation, the top strategies followed by procurement organisations include implementing technology to improve information sharing and communication (49%), technology to provide better visibility into the timeliness of payments (48%), and a structured framework or processes around supplier led innovation (47%).
“As organisations transform procurement strategies to focus on growth, they must take a more holistic approach. This means engaging all stakeholders from the offset, collaborating to identify new revenue opportunities, and choosing the right technology to support strategic objectives,” concludes David Khuat-Duy, Corporate CEO at Ivalua. “Smart procurement technology helps free capacity, improves quality of and access to insights, and enables scalable supplier collaboration. This gives organisations the control and visibility they need to help them on the road to recovery.”
The study results were first shared by guest speaker Duncan Jones, Vice President and Principal Analyst, Forrester in a recorded webcast hosted by Ivalua on April 7, 2021.
*The February 2021 study was conducted by Forrester Consulting on behalf of Ivalua and is based on a survey of 454 finance, procurement and supply chains decision makers throughout North America, Europe, and Asia Pacific.