Why are Procurement Best Practices Important in the Retail and CPG Industry?
Since the advent of the COVID-19 pandemic, the retail industry has experienced significant changes and continues to try and keep pace with the constantly evolving market with procurement best practices, market intelligence, and strategies. The various logistical and transport challenges, sudden surge in demand, and overwhelming need for omnichannel systems accompanied by delivery services during the pandemic put a major strain on the complex supply chain. Companies struggled to procure supply and match demand, suppliers struggled to produce at required speeds, lockdowns and other social, economic, and political challenges led to further issues for businesses, and consumers’ patterns and behaviors made an unexpected change. Chief procurement officers (CPOs) were unable to make sudden changes to their rigid and widespread supply chain, and without flexibility, could not overcome the various challenges impacting their industry and company. As the end of the COVID pandemic seems to be in sight, retailers should adopt efficient procurement best practices to ensure high customer satisfaction, improved profitability, and minimized risks.
What Procurement Best Practices Should Retailers Adopt in the Post-COVID Era?
Strategic Supplier Management: Maintaining a positive relationship with suppliers has always been a necessity. However, with the substantial changes in the retail and CPG market, companies must work to develop strong, transparent, and supportive partnerships. Strategic collaboration requires clear communication, predetermined goals, and well-organized systems in place. Some companies may require supplier diversification and prioritization, but CPOs must also focus procurement best practices such as formalizing evaluation and performance reviews, orientation, and communication with suppliers. Developing an in-depth understanding of each party’s goals, targets, vision, and mission, can lead to a more supportive, cooperative, and mutually beneficial partnership.
Risk Assessment: The COVID-19 pandemic brought to light many significant risks that were previously evaluated and addressed on an annual or bi-annual basis, leaving room for major challenges and errors. However, with the possibility of major natural disasters, economic and social crises, and political challenges in the limelight, companies must realize the crucial value of proper risk management. Creating a risk management team that conducts regular risk assessments, identifies all vulnerabilities within supply chain systems, technologies, logistics, and workforce falls among necessary procurement best practices to succeed in the post-COVID era for retail & CPG companies.
Reassess Costs: CPOs must work closely with other department teams, leaders, and stakeholders to clearly assess costs, identify problem areas, and develop collaborative strategies to target said issues. Doing this will reduce the chances of passing various costs along the supply chain, and help reduce supply chain costs as a whole, rather than targeting one department at a time. An overarching view of the supply chain also helps identify major risks, and identify better opportunities for cost-reduction. Retail supply chains are extremely cost-intensive, and applying procurement best practices can help tackle these issues and reduce costs as a whole.
Data & Analytics Transformation: The COVID-19 pandemic has brought to light the value and ability of applying procurement market intelligence, data and analytics to strategy development and making better decisions, while reducing the impact of various obstacles and challenges. Companies must continue to utilize this data efficiently in the post-COVID era and develop preemptive or forward-looking strategies that help stay a step ahead in a competitive market, meet consumers’ needs efficiently, and ensure customer satisfaction. This also helps identify and mitigate various risks, capitalize on potential opportunities for growth, help meet demand, and plan better procurement and sourcing.
End-to-End Visibility: Transparency, clarity, and visibility are crucial to the smooth running, and efficient expansion of any supply chain, making it increasingly necessary for businesses to help CPOs and other department leaders to develop effective strategies. Creating efficient communication systems, ensuring that all concerned departments can keep abreast of major developments, collaborating with suppliers, and inter-departmental data exchange are some ways of improving visibility. Among the most importance procurement best practices, end-to-end visibility helps companies spot issues in real-time, address various industry developments preemptively, and help departments capitalize on upcoming business opportunities.
Preparing for the post-COVID era has become a major focus for companies across industries, encouraging CPOs and stakeholders to attempt improving operations and internal systems to create a resilient supply chain. A renowned retail & CPG chain in the EMEA region had struggled to keep pace with the jarring impact of the widespread pandemic, and was concerned with recovering and growing in the upcoming post-COVID era. To understand the best approach, and efficiently address their concerns, the retailer chose to partner with SpendEdge, and review their supply chain, procurement, and sourcing operations. Our experts worked closely with the CPO and supply chain management team to identify various shortcomings and challenges within the company. After acquiring the relevant data, the experts provided them with crucial procurement best practices to successfully address their concerns, tackle their shortcomings, and enable growth. Creating a more transparent, communicative, collaborative, technology-based, and data-driven supply chain has helped the company create a more efficient omnichannel retail experience, and significantly improved customer loyalty and satisfaction.