Is your business ready for the next procurement crisis?

During the Covid-19 pandemic, businesses of all sizes had to quickly adjust to rapidly changing market conditions. Not only did revenue streams quickly decline for many businesses, but keeping remaining revenues going became difficult due to changes across the supply chain. While some products drastically increased in price, others became completely unavailable. This was complicated by the need to purchase new items like PPE, hand sanitiser and social distancing products, many of which faced unpredictably high demand.

Is your business ready for the next procurement crisis? If you’re unsure, working with a group procurement organisation (GPO) might be the answer.

Supply chain stability

As we have seen in 2020, times of crisis can produce many challenges for supply chains. From maintaining delivery schedules through to raw material availability for manufacturers, every link in the supply chain is subject to breaking. GPOs have category management teams dedicated to making sure that you can continue to get the products you need to run your business. By building long-term relationships with manufacturer and distributor partners, they also work hard to mitigate pricing fluctuations as a result of crises. Because of the scale a GPO offers, they can work strategically with suppliers to ensure continuity of supply – whilst never compromising on quality. 

Breadth of portfolio

When supply chains break down, the products you normally purchase may become unavailable – often at short notice. Distributors will work to get you substitute items, but these substitutes may not be contracted and will likely carry a higher net price. By aggregating buying power from many businesses, GPOs have relationships with a wide range of manufacturers, increasing the likelihood that a contracted substitute is available. This will limit an unexpected financial hit from product substitutions.

Agility is the name of the game

In times of crisis, the market moves at pace and your procurement team needs to be able to react to changes. As demand increases, and supply tightens, prices can increase exponentially. The scale of a GPO means they are able to work closely with supply partners to mitigate these increases, helping you to source what you need, when you need it and at the best market cost.

Take Covid-19 as an example, many businesses were forced to start purchasing products they had never even looked at before - think masks, gloves and hand sanitising gel. Here at Foodbuy, we have real skin in the game as our diverse portfolio of clients and channels means there are very few products or services we don’t already buy.

Data is king

If you don’t already have one, make sure you invest in an eProcurement or Procure-to-Pay (P2P) system this year. Throughout 2020, many procurement teams struggled to get visibility and control across their entire portfolio. By implementing a simple but intuitive system, you can use data and insights to inform the decision-making process across your supply chain. Not only will it tell you what you’re spending, where and how much, but it also helps you to forecast better with your supplier partners and mitigate the likelihood of any supply shortages.

By working with Foodbuy, you can immediately gain access to the foodservice and hospitality industry’s leading system, Epsys.

Control the “controllables”

During a crisis, it’s often all hands-on deck for procurement teams, but it’s important you don’t lose sight of the issue at hand – and more importantly, what your supply chain can do to help. As procurement professionals, we come into our own when we’re negotiating, creating new revenue streams and optimising purchasing, but the main concern for clients and customers is business and supply chain continuity. No unwelcome surprises.

Looking ahead, expect more companies to embrace traceability technologies like blockchain and forensic science to understand the intricacies of their supply in more detail than ever before.

Ongoing Support

No matter how much a business prepares for a crisis, you may still need some extra help. GPOs offer other procurement services that you may need to help your operation survive:

  • Free and no obligation supply chain audits – while your supply chain may still be intact, your supplier pricing might not have as much security. Regularly auditing pricing implemented by both manufacturers and distributors can help you catch overcharges early in the business cycle, saving money straight to your bottom line. When a crisis hits, this additional margin control can be the difference between staying afloat and closing your doors.
  • Procurement and category expertise - shifting circumstances in the market can create the need to quickly adjust your product offerings. Thanks to our culinary heritage, our food procurement experts can help you adjust your menu and operations to meet new market needs. Not only will they review your menu items, they can help to optimise the products and processes your operations uses
  • Purchasing optimisation - with the breadth and depth of programs available through a GPO, you can be sure to find the right products for your business. Specialist account management teams work hand in hand with your teams to unearth savings opportunities

We are here to help

If you need any help across your supply chain, feel free to contact us here or message Charlie Hudson via LinkedIn.