Over the past few years, we have seen the ongoing effects from COVID-19, as well as rising costs, branch out into every area of our lives. The World Economic Forum has predicted that prolonged economic downturn will be one of the top severe global risks over the next two years, as well as a less impactful, but still pronounced, effect over the next decade. Inflation has also been listed as one of the top 5 currently manifesting threats, with survey participants believing that it will have the third-greatest impact on a global level this year.
In today's global marketplace, no company is immune from these worldwide threats. When tasked with providing value to the business and mitigating against today's economic conditions, what can procurement teams do to keep pushing forward.
Negotiate vendor contracts
Look at current contract terms with vendors and review to see if there is room for potential negotiation. Is there a competitor that has entered the market, or a new offer that has emerged, that's given you leverage to start a conversation about contracts?
If so, you might be able to get a longer-term contract at a lower cost, reduce services to cut out functionality you don't need, or drop down to a lower level of service.
Audit products and services being used internally
Contract negotiation should go hand-in-hand with performing an audit of the product and services currently being used at your organization. Can you identify potential waste or find alternatives that are a better fit? If possible, remove seats in software that aren't being used. If two teams are using similar tools, see where things can be unified. Is it possible for one tool to drop off, rolling over one team to the other tool?
Respond to budget constraints
Solidify internal processes
When the prospect of economic downturn turns into tightening your belt, look inward at your processes and where efficiencies can be made. This is your chance to solidify your internal procurement process. Is there a rogue team that tends to spend first and ask permission later? Buttoning up any loose processes and ensuring the procurement team is the first line of defense for your organization's budget is key.
Find efficiencies where possible
Figure out how your process could be streamlined, and where disparate parts might be able to be brought together in one place. Creating workflows for your procurement team and automating what you can will be kind to your budget and free up your team to take on bigger responsibilities, including negotiating with vendors and working on new relationships that might save you more money down the road.
Focus on holistic risk management
Make sure that you have guardrails in place for emergency spending or one-off purchases. While employees could have some authority over this type of spending in urgent situations, there should be safeguards set at the corporate level. That way, if a member of the team comes in needing something over a certain amount, the procurement team can step in, without sweating the small stuff.
Responding to budget constraints can also mean adding value to the organization. Especially because economic uncertainty is likely to be more of a long-term situation, identify how you can build value, either by leveraging a tool in a smarter way, finding new service opportunities, or making the most of the talent available to you.
Combat against inflation/rising costs
Move to a more competitive supplier
It's easy to see costs creep up when your vendor is the only one in town. If you're able to make a lateral move to a similar supplier that needs to compete with others in the space, you can work to get a market-friendly rate.
Consider outsourcing or moving certain deals elsewhere
While rising costs and economic downturn are prevalent in many areas, not just in the United States, it is possible to work with companies with lower inflation rates in other countries.
Form a plan for when inflation subsides
Not only should companies shore up resources to weather inflation, but there should also be a plan on the other side. As pressure from inflation reduces, where can procurement teams control costs? What's the process for seeking out suppliers?
Work all your levers
While this piece of advice extends across all areas, it's worth reiterating. Think about how your refinements are working all the levers you have at your disposal, such as inventory, supply, and demand.
Workday Delivers Quick ROI
Cost savings and spend management best practices need to work in tandem in the face of today's economic uncertainty. Workday allows procurement teams to do just that, providing a single system for the procure-to-pay process that encompasses spend on both good and services.
Business process controls, user profiles, and analytics are united in one system, streamlining your processes and saving time that would otherwise be spent switching between tools. With Workday, you'll be able to have a more holistic view of your organization-side spending trends.
We'll help you reduce "maverick" spending, identify potential savings through uncovered insights, strengthen your internal spend policies, and create consistent business-wide spend controls.
Workday's platform is user-friendly for high adoption and can even be extended to suppliers. Through the supplier portal, they're able to specify goods and services and maintain their personal data, as well as view their purchase orders (POs), view and create invoices, and more.
When you're ready to improve your ROI in all directions, contact our sales team.