Russia’s invasion of Ukraine had a powerful and immediate effect on firms the world over, but none more so than on those based in the country itself, suddenly at risk of being cut off from both suppliers and customers.
Procurement workers quickly found themselves at the forefront of efforts to stem the impact on businesses and, in a broad but very real sense, to support the country’s economic survival. There are signs the war has accelerated the growth and refinement of procurement in Ukraine; previously a relatively immature and non-formal practice.
Sixty percent of procurement professionals in the country feel they have improved their function in some way since the start of the war, according to research by IPSM (the International Procurement & Supply Management) – a Ukrainian company that helps businesses embrace more transparent and effective practices. Soft skills won out as half of the country’s procurement professionals said they relied on their personal skills and flexibility to survive the past year, while 42% point to supplier management, and 39% relied on negotiation skills.
In contrast, more technical techniques scored lower as just three in 10 said they had drawn on risk management processes, and only 17% deployed category management techniques. As for technology, 14% have made greater use of automation, while 23% are making this a focus for the future.
For many organisations, there is a sense of trying to continue operating as best as possible in the current conditions. Most procurement employees (59%) have continued working with their former suppliers, while 46% said savings are not the main aim for their team or the wider management, and 45% of responders said they would prioritise improving supplier management in future.
Procurement bringing change for the better
In a country where the procurement profession is not fully mature, and with high-risk priorities ongoing, trends that suggest investments in upskilling are encouraging. A medium-sized, regional agricultural company that took part in the survey anonymously discussed the benefits of implementing more efficient procurement processes.
The business started to look into developing a dedicated function in 2021, which led to the introduction of a procurement team, which now makes recommendations based on market research around the best supplier for a particular request. This then goes to a tender committee that decides to accept or reject the suggestion.
The system has led to a drop in the number of ad hoc or ‘emergency’ purchases from 50% in 2021 to just 15%, despite the onset of the war. It has also changed the buying culture: employees now make use of competitive bidding and compare prices, and have started working together to make team decisions. Better planning, such as buying items in advance of when they are required, has helped make the process more efficient and cost-effective. In one category, this has seen savings of around 50%.
Other companies have made better use of technology. With the global semiconductor shortage also contributing to market volatility for tech, IT company SoftServe deployed a supplier portal to help manage its procurement operations. The portal includes a supplier code of conduct and eligibility criteria, to which potential suppliers must adhere, as well as the Coupa system to help manage transactions and relationships. Using the portal has helped SoftServe better control its relationships, ensuring it only works with suppliers that meet the company’s requirements. The Coupa system has provided a single channel for communication with suppliers, making it much easier to manage them.
“We were able to relieve the workload of employees, who can now focus on the strategic role of procurement in the company, and reduce the risks associated with suppliers,” says Vasyl Bychynskyy, vice-president of IT asset management. “It also allowed us to optimise the supplier selection process.” A further benefit is providing SoftServe with greater access to supplier analytics, which will allow for more informed decision-making in future.
Reinforcing skills and best practice
Ride-hailing service Uklon is also targeting better use of automation. It has moved from an informal, decentralised system where each department handled its own needs, to building an entirely new and consistent system from scratch. “There were no uniform rules, and each department made purchases as it saw fit,” says Uklon procurement manager Oleksandr Chumak. The company documented all existing procedures, and devised a new process based on Jira and ServiceDesk services. “We digitised the database of counterparties, contracts and procurement histories, and consolidated it into a single system,” explains Chumak. “Previously, some of the documents were paper-based, while others were scattered across different departments. It was difficult to find a document quickly without having to ask two or three people.”
Next, procurement worked closely with a number of departments to fine-tune the system and identify any issues. It recorded videos and delivered presentations to communicate the changes to staff and help them become familiar with the new way of working and understand the reasons for processes. “We stopped accepting procurement requests from departments via email, messengers or any other means,” adds Chumak. “From now on, orders would only be accepted through the automated application system.”
This journey had always been the plan for Uklon, someday; but a nice to have was upgraded to a necessity when it became clear war was imminent. “We managed to do it in four months, as the war temporarily put many business processes on hold,” explains Chumak, adding that a sharp drop in procurement activity freed up time to work on automation. Having such a system has meant it’s now easier to keep track of what the company is spending and with whom, allowing it to react more quickly to the rapidly changing situation.
The emotional cost of war
Unsurprisingly, the war has also impacted those working in procurement in other ways. It has taken its toll on the mental health of people in the profession, with 55% admitting they have faced burnout in some form during 2022, while 26% said they constantly experience professional burnout, and 81% felt they are working at the limit of their emotional capabilities.
Many Ukrainian procurement professionals have realised they need to improve their own skillset to cope with the challenges they are facing, which include inflation as well as the direct consequences of the war. Encouragingly, 80% of those surveyed said they feel the need to acquire new knowledge, and 65% of managers said they understand the need to invest in training their teams. Although only 16% were able to attend courses in 2022, it’s likely this will increase to further enhance the skills of Ukraine’s procurement sector.