Businesses today are facing a plethora of challenges, from supply chain disruptions to inflation. Such challenges have created a landscape where economic uncertainty is threatening the survival of businesses.
Procurement teams must create short-term and long-term plans that are capable of reducing costs, creating more stable supply chains, and spearheading the development of the future procurement strategy of the business.
One of the key ways procurement is having a real impact is by establishing cross-functional collaboration between representatives from different key functions of the business and establishing a clear pathway to overcoming future challenges.
Having an in-depth understanding of should—or ideal potential—costs and embedded costs is imperative to drive cost savings and identify opportunities where costs can be reduced.
From laying a solid foundation to creating feasible solutions and establishing processes and functions that support antifragility, fighting economic volatility with procurement services must be a key driving factor in helping businesses thrive in volatile economic conditions.
Businesses are facing challenges emerging from all sides. This includes inflation, supply chain disruptions, and capacity constraints. While these challenges may not be new, the combination of these risks and the higher stakes these risks carry in a volatile economy is creating significant economic uncertainty in Belgium and around the world.
With new challenges and opportunities emerging at every turn, corporate antifragility must be the need of the hour for any organisation.
This is where procurement services and supply chains are making a significant impact by acting as facilitators between the organisation and its suppliers.
To capitalise on this potential, procurement teams must establish a broad set of actions that span different time frames including immediate actions to ensure that prices and supply chains are stable, medium-term actions to minimise costs and wastage, and long-term actions that aid companies in the creation of cross-functional teams as part of their future procurement strategy.
Creating a cross-functional team is perhaps the most impactful strategy available. It bolsters a company’s responsiveness, especially in a landscape where challenges are numerous and swift action is necessary for survival.
During times of economic crisis where inflation creates pressure, these teams have the ability to identify cost-saving opportunities, develop partnerships, and find alternative pathways to add value to the business.
Companies that are dedicated to building cross-functional teams can see improvements in their cost base, more efficient resource allocation, increased profit margins, and direct organisational alignment.
Failing to collaborate across functions can lead to massive consequences. Companies must build an infrastructure where immediate collaboration is possible and actions can be executed swiftly.
Teams made up of representatives across the value chain including procurement, finance, supply chain, operations, engineering, and planning—to name a few—must act within a united strategy to execute action plans that build antifragility and support the short and long-term objectives of the company.
Collaborative teams led by procurement leaders are more likely to develop more strategic plans that can alleviate current and future economic uncertainties, or at least insulate core functions from risk.
Procurement teams must use this as an opportunity to revamp procurement services and broaden their reach to achieve these lofty goals.
Should costs and embedded costs
Negotiation provides further opportunities to reduce inflation. Mechanisms such as should cost models that analyse current prices to understand the underlying costs of suppliers can help businesses create new opportunities.
An embedded cost analysis also offers more in-depth information about what drives cost and how to carry out better-informed negotiations.
This is where procurement can make an impact in the creation of antifragile businesses. By gaining access to these insights, procurement teams are able to obtain detailed information about supplier costs and identify if there are any overstated costs in the raw materials or other parts of the supply to negotiate better prices.
With the right teams, businesses are able to get ahead of rising costs and create an antifragile function that is capable of learning and thriving as a result of economic uncertainty.
Fighting economic volatility with procurement services
With economic instability taking hold around the globe and becoming a resounding issue for companies not just in Belgium but across the world, a secure procurement strategy, which includes inflation-defying actions has a direct, positive impact on businesses.
First and foremost, the right foundation must be created to establish cross-functional teams. Analytics is one of the key supporting functions of mitigating economic volatility and there must be a solid digital backbone that the business invests in consistently and upholds in order to initiate stronger decision-making, driven by diverse teams representing each function.
Aside from technology, businesses must also create a landscape where supply chains are capable of identifying risks and opportunities and establishing processes to reduce costs—ensuring continued optimisation, even during times of economic stability.
The next step is to deploy progressive solutions that are capable of minimising costs and setting targets by factoring in optimisation goals. End-to-end action plans must be implemented to mitigate risks that reach beyond any short-term actions and reset long-term value creation targets.
Finally, businesses must standardise these established cross-functional systems and processes into procurement operating models to ensure that any future uncertainties or economic volatilities can be overcome effectively.
Procurement services in Belgium can help businesses thrive during an economic crisis
Today, we are living in a world with increasing volatility and growing uncertainty.
Specific and targeted procurement services in Belgium can help businesses navigate through these challenges and provide significant value to any business if they are leveraged correctly and at the ideal time.
With procurement becoming a strategic partner in any business it is a part of, it is more vital than ever to invest in teams that can collaborate and work with other functions.
The ability for procurement to integrate—and even lead—these cross-functional teams will give organisations the facilities they need to make informed decisions that are impactful in both the short and long term.
Laying the right foundation and moving ahead with progressive action plans can create a favourable scenario in which businesses are capable of managing their supply chains to meet existing demands as well as preparing for future demands that may arise during an economic crisis.