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Top 5 Procurement Tips for Planning Ahead
Due to a rapid increase in demand that triggered supply chain issues in some of the most important commodity categories, it is no longer always a reliable expectation to order something and receive it in a timely manner. For goods like personal protective equipment (PPE), technology hardware, and cleaning & sanitizing products, lead times are longer than in the past, and it appears this will be a lasting issue. Manufacturers are experiencing significant delays on raw materials, and those delays back up the entire supply chain. But no matter the reason for the delays, there are many goods and services that end users require to do their jobs, so it pays to plan early and anticipate their needs.
In the past, procurement leaders used historical data, predictive analytics, or program experts to plan out necessary product and service levels. But in this new era, our historic data may no longer be relevant, and budgets are in a state of flux. Due to the unknown future, procurement professionals may create shorter contracts with added flexibility to allow for adjustments to the overall terms if a pivot is required.
Over the last decade it has been a best practice for many governments and educational institutions to eliminate the reliance on warehouses because they require extra management staff and can create unnecessary waste, especially in comparison to an alternative like just-in-time (JIT) delivery that relies on technology and fast shipments from suppliers of exactly what is needed at the moment. But these assumptions only hold true when the supply chain is whole and unbroken. The COVID-19 pandemic proved how vulnerable the supply chain is on both a global and a local scale. The lesson here is not necessarily to stock up on everything, but it is worth having a surplus of emergency supplies on hand.
Budgeting is going to become increasingly important due to the anticipated revenue shortfalls created by the COVID-19 pandemic. These shortfalls will be more drastic for some governments than others, but all governments can benefit from cooperative contracts. By teaming up with other governments that have similar needs, cooperative purchasing gives governments added buying power and flexibility in addition to increased efficiency and cost savings.
Procurement cannot function properly in a vacuum. Success in the coming months and years will rely on the ability of procurement leaders to communicate with four groups: 1) existing suppliers 2) new suppliers 3) end users, and 4) other procurement leaders across the country. In general, governments all have the same goal, and the best way to achieve it is to communicate and work together early and often.
If you want more information about planning ahead, you can listen to episode 10 on the Decisions That Matter podcast, watch the most recent Buying Bunch video on Youtube, or subscribe to the Procurated YouTube channel for fresh content on related procurement topics.
Published on Jun 06, 2020