Procurement planning: how 2020 can help optimise 2021

Procurement planning: how 2020 can help optimise 2021

As we move forward into a new year - from one you may be keen to leave behind - it’s always worth stopping a moment to look back. Take stock. Reflect. As you think about your procurement planning for the year ahead, we outlined some resources to help you on your journey.

2020 might have thrown challenges our way that none of us expected, but in the most acutely stressful moments our best lessons are often learned.

Successful organisations have the business of reflection nailed. Learning from mistakes, or simply just reviewing what worked, and what did not, is key to optimising performance moving forward.

You could argue that the whole process of getting ahead begins with a large dose of looking back.

Then, once you’ve taken the time to look back and recognise the wins and losses of 2020, it’s now time to rewrite the script.

Putting together a strategy for 2021 requires reflection, analysis and planning - in that order

Reflection: what 2020 taught us

We may not have chosen it, but the last year provided a comprehensive test of our capabilities in a way that simply can’t be engineered. Companies which have emerged from the crisis to this point, will have, by necessity, already adapted to succeed based on lessons learned.

Supply chain disruption has been a common issue this year, with some suppliers struggling to fulfil orders, whilst others ceased trading. For procurement teams affected, this has meant a steep learning curve in supply chain resilience - but the processes of consolidation, education and knowledge are never wasted and form a great basis to any future procurement plan.

2020 also saw an unprecedented move towards remote working as much of the workforce spent many months working from home.  In fact, by April, Microsoft’s CEO suggested they’d already seen “two years of digital transformation in two months”.  We reflected this in our blog about finding the balance with home working and home life. Using technology to enable work to continue from any location is a great part of any crisis plan and something most companies will have mastered earlier on this year. Understanding that working from home is likely to continue to be a driving factor this coming year is also critical for 2021 planning.

Agility was key to coping with crises in 2020, but the related efficiencies of a more agile process will carry you through for years to come. So if you haven’t dipped your toe in the world of automation with the use of AI and machine learning, or taken a look at the concepts of lean methodology, then these innovations are worth serious research and investment this year, due to their potential to drive significant savings and further streamline and improve processes.

Analyse to optimise

So - reflection complete: now, drill down into your spend analysis. Visibility of spend over the last year will give you a better idea of where costs can be cut and processes tightened up. This is a good opportunity to review how easy it is to gain oversight of spend at all levels. Could your organisation benefit from a source-to-pay platform which enhances visibility at all stages of the procurement process and further strengthens your supply chain with rigorous supplier management - or does your traditional procure-to-pay solution work well for your company? Recognising that the better you’re able to analyse spend, the more you’re able to optimise processes, is key to great planning.

Take a microscope to your tail spend. Our research in partnership with CIPS last year shows that companies who use technology to actively manage their tail spend can save up to 10% of overall costs. Sometimes the little things have the biggest impact.

If you’re interested in finding out more about how best to optimise your procurement for 2021, then check out:

Planning for success

Once the spend analysis is done, it’s time to action points raised and target addressable areas. Perhaps now is the time for digitisation of some processes, or to invest in more automation. Or do you need to target areas of supplier weakness to build up a more resilient supply chain? If you’re investing in technology or changing processes as part of your plan, have you considered how to get your SLT on board?

No one solution fits all, but going into the new year with your eyes open, fresh with the understanding gained from 2020’s challenges puts any organisation in a good position. We may have had one of the toughest years in recent history but knowledge is power and experience the most valuable asset you own.

And if you’re looking to adopt more innovation to help streamline your operations, check out these two helpful blogs from last year:

In conclusion

Lessons from yesterday can only help you plan better for tomorrow.  Procurious’ excellent article recommends we begin the year, aiming for a “permanent state of beta” - that is, constantly challenging the status quo with disruptive thinking. Twelve months ago, that would have been a big mindset shift for most, but by now we’ve all had plenty of practise. It’s exactly what we’ve been forced to do throughout the many twists and turns of this year.

Turns out we may have 2020 to thank for something.