Procurement strategies shifting to restore growth post-COVID-19, reveals Ivalua research
Ensuring supply chain continuity, identifying new revenue opportunities, and improving decision making are key focuses as firms recover from the pandemic
REDWOOD CITY, Calif., April 8, 2021 /PRNewswire/ -- Ivalua, a leading provider of global spend management cloud solutions, has announced the latest findings of a worldwide study of supply chain, procurement and finance business leaders on restoring growth. The study reveals how the disruption caused by COVID-19 has transformed procurement strategies across the globe, exploring how procurement is helping organizations get back on their feet after the pandemic.
The research, conducted by Forrester Consulting and commissioned by Ivalua, found that procurement has become of growing importance to organizations, with 85% of respondents indicating that executive leadership recognizes procurement's role in revenue growth. Accordingly 50% are increasing investment due to COVID-19, with only 23% decreasing it. Procurement priorities have also become more strategic, as organizations focus on improving supply chain flexibility and boosting growth. For almost two thirds of organizations, the pandemic has increased the priority of ensuring supply chain agility and continuity (65%), identifying new revenue opportunities (64%), and improving decision making (64%).
However, the research reveals that many organizations feel their procurement strategies are being hampered by outdated technology:
- Organizations believe that overly dispersed (72%), unactionable data (70%), and a lack of embedded best practices (70%) are limiting overall value from technology solutions
- For organizations, top-line growth is being limited by procurement systems that are too rigid to support new ideas (75%); processes and systems that don't enable effective, scalable supplier collaboration (71%); and a lack of integration among source-to-pay systems (71%)
"For many organizations, procurement was crucial to keeping supplies flowing during the pandemic and minimizing the impact on profitability. But at many, COVID-19 exposed weaknesses in outdated procurement tools, data, and processes that limited agility and impacted decision-making," comments David Khuat-Duy, Corporate CEO at Ivalua. "Now is the time to digitalize 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."
Inaccurate data leads to inventory management challenges
According to the study, inflexible procurement tools and poor data quality have created inventory challenges, as companies struggled to record stock levels and identify problems in their supply chains. This caused almost half (47%) of organizations to experience cancelled or lost orders, while others faced reduced revenue (45%) and reduced profit margins (44%).
Inventory challenges are also slowing cash flow. At least once a month, almost half (49%) of organizations said they were penalized by a third-party marketplace for missing Service Level Agreements (SLAs). At the same time, 47% experience overstock at a particular location monthly, adding to storage fees and incurring additional costs.
The road to restoring growth
To restore revenue growth, organizations are aiming to improve supply chain responsiveness and reliability (45%), reduce product costs (42%), and accelerate time to market for new products (40%).
To improve supplier-led innovation, the top strategies followed by procurement organizations include implementing technology to improve information sharing and communication (49%), technology to provide better visibility into the timeliness of payments (48%), and a structured framework or processes around supplier led innovation (47%).
"As organizations transform procurement strategies to focus on growth, they must take a more holistic approach. This means engaging all stakeholders from the offset, collaborating to identify new revenue opportunities, and choosing the right technology to support strategic objectives," concludes David Khuat-Duy, Corporate CEO at Ivalua. "Smart procurement technology helps free capacity, improves quality of and access to insights, and enables scalable supplier collaboration. This gives organizations the control and visibility they need to help them on the road to recovery."
The study results were first shared by Duncan Jones, Vice President and Principal Analyst, Forrester in a recorded webcast hosted by Ivalua on April 7, 2021.
*The February 2021 study was conducted by Forrester Consulting on behalf of Ivalua and is based on a survey of 464 finance, procurement and supply chains decision makers throughout North America and Europe, as well as several in depth interviews.
About Ivalua
Ivalua is a leading provider of cloud-based Spend Management solutions. Our complete, unified platform empowers organizations to effectively manage all categories of spend and all suppliers, increasing profitability, lowering risk and improving employee productivity. Trusted by hundreds of the world's most admired brands and public sector leaders, and recognized as a leader by Gartner and other analysts, Ivalua maintains the industry's leading 98%+ customer retention rate. Learn more at www.ivalua.com.
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SOURCE Ivalua
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