Half (50%) of firms plan to increase their investment in procurement as a result of Covid-19, according to research.
A study conducted by Ivalua and Forrester found procurement had become of growing importance to organisations, with less than a quarter (23%) of firms planning to decrease investment in the function.
Of the more than 450 finance, procurement and supply chains decision makers surveyed, 85% of respondents indicated that executive leadership at their firm recognised procurement’s role in revenue growth.
The study found that procurement priorities had also become more strategic, with firms looking to focus on improving supply chain resilience and growth.
Almost two-thirds of organisations said the pandemic had increased the priority of ensuring supply chain agility and continuity (65%), identifying new revenue opportunities (64%), and improving decision making (64%).
However, respondents added that inflexible procurement tools and poor data quality had created inventory challenges and firms struggled to record stock levels and identify problems in their supply chains. As a result, almost half (47%) of organisations experienced cancelled or lost orders, while others faced reduced revenue (45%) and reduced profit margins (44%).
Inventory challenges also slowed cash flow. Almost half (49%) of firms said they were penalised by a third-party marketplace for missing service level agreements and 47% experienced overstock at a particular location monthly, adding to storage fees and incurring additional costs.
David Khuat-Duy, corporate CEO at Ivalua, said: “For many organisations, procurement was crucial to keeping supplies flowing during the pandemic and minimising the impact on profitability. But at many, Covid-19 exposed weaknesses in outdated procurement processes, tools, and data that limited agility and impacted decision-making.
“Now is the time to digitalise procurement and use it as a growth driver. This means using data to find new revenue streams and unlock supplier-led innovation. If procurement leaders don’t overcome technology challenges now, they risk missing growth opportunities and ensuring resilience for the future.”
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