Working from home during the pandemic has caused productivity and morale problems in procurement teams, a survey has found.
In a report by McKinsey and Company half of procurement leaders (49%) surveyed admitted productivity levels had fallen due to remote working setups, while 43% had seen a drop in team morale.
The decline was due to poor efficiency and team coordination, said the report.
While large-scale remote working is relatively new to procurement operations, the pandemic has accelerated the use of a flexible workforce model and organisations are looking to improve measures.
Firms have found that flexible allocation of resources could be the solution. A logistics company made 40-50% of the procurement team into strategic buyers, with the other half providing support in areas including big-data analysis, cost engineering, and negotiation.
This “agile procurement pool” model, coordinated virtually, is able to move staff between projects to provide support where needed, boosting efficiency and improving shared knowledge and best practices, as well as team morale and talent attraction.
McKinsey said procurement firms needed to rethink “process, digital, data, organisation, governance, capabilities, and culture” to become best-equipped for the post-pandemic environment.
The report identified four themes that will guide procurement in the new climate shaped by Covid. These included increased spending, joint partnerships with suppliers for innovative projects, changes to resolve gaps in capabilities, and more use of technology and digital analytics.
As firms have redirected expenses towards supply chain resilience and financial support for suppliers, half of organisations (48%) have cut cost-reduction targets, while 28% raised them.
This has pushed procurement to seek new savings opportunities, such as reassessing property costs as offices become redundant due to remote working, and use of customer service chatbots to cut contact centres.
The pandemic incentivised firms, such as automotive manufacturers, to collaborate more with suppliers to share innovative technology or parts – with nine in 10 (88%) using, or planning to start, joint-innovation programmes.
Weaknesses across procurement capabilities, such as negotiation execution, has increased due to pandemic impacts, according to 86% of respondents. As a result, procurement teams are undergoing changes such as new negotiation training to ensure professionals are prepared for virtual contract meetings.
The report used data from McKinsey and Company’s 2020 Reimagining Procurement for the Next Normal survey.
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