Procurement

10 + 1 strategies for procurement to forge its path in a crisis

Companies respond differently to crises depending on their past experiences and level of readiness for a disaster. Even when business continuity plans are in place it’s common for people to feel anxious and avoid making decisions. Do they employ fight or flight?

The 2020 pandemic has presented procurement with challenges that were impossible to foresee. It is still not possible to estimate how it will fully play out, even in the medium term. Disruptions to supply chains and supplier failures due to restricted access to finance are still happening. However, procurement people are resilient and can turn problems into opportunities.

So where are the opportunities to be found in times of crisis?

The first reaction to crisis is usually to set up a response team and focus on the areas that you can control. These could include assessing supply risk, reviewing open orders, and redirecting logistics. MTN, a leading emerging market telecom operator, decided that these defensive strategies were not enough.

MTN Group Executive and Chief Procurement Office, Dirk Karl, who heads up the Global Sourcing and Supply Chain division in Dubai, wanted them to be more pro-active and employ some “attack” strategies. To do this effectively, they teamed up with Sievo to ensure that the data on which they based their decisions was accurate and reliable.

Defend first and then attack

MTN’s number one response was to review, adapt and redirect their Capital Expenditure roll-out projects for the next year. Then, manufacturing delays and spares availability had to be managed, open Purchase Orders reviewed, while continually assessing and updating supplier risk.

The next step was the “attack” phase. MTN utilized a cross-functional team to uncover possible lines of action which would have the desired long-term effect. The team agreed that any initiative must be based on verified and complete spend data.    

 

“Never let a good crisis go to waste”

                                                                                                 Attributed to Winston Churchill

The team settled on ten lines of action:

  1. Redefine strategic priorities

MTN already had a robust strategic procurement road map including Capex projects, maintenance and support projects, and the planned sourcing of services. Now was the time to fast-track some initiatives, cancel some and hold back on others until 2022, based on the global economic landscape.  

  1. Keep benchmarking

Benchmarking is a necessary and continuing task that sometimes gets overlooked in times of crisis. This situation provided an opportunity to process and analyze historical data on commodity prices and essential services that would inform future decision-making. Such unprecedented times allow the capture of data which otherwise would not be gathered.

  1. Cement the Sales and Operational Planning (S&OP) process

The review of strategic priorities provided the perfect opportunity to build relationships with stakeholders. It provided the scope for reassessing upcoming projects and gain wide support for any changes in direction.

  1. Capitalize on crisis innovations

MTN routinely tracks the tech start-ups in its business sector. Some of the small developing companies are agile, innovative and ambitious. This time is ideal for identifying those that have products and services that are aligned with the requirements of mobile technology users.    

  1. Search talent pools

Most large companies are in a recruitment freeze and not currently hiring new talent. Due to the global economic slowdown and resulting retrenchments, talented people are now available on the job market. MTN’s advice is to tap into this resource now, in advance of the need to hire highly qualified staff. Get those talents on your radar and make sure you are on theirs!

  1. Peer-to-peer training

Training budgets have taken a hit this year. One way to upskill staff is to take advantage of the knowledge base within the organization. Experienced staff can transfer knowledge and coach others in technical applications and soft skills. This enhances the overall procurement and supply chain capabilities.

  1. Accelerate digital initiatives

Many strategic plans include moving an organization towards more digitalization of its processes. The 2020 hiatus allowed MTN to expedite the implementation of their new sourcing suite across their entire footprint.

  1. Target untapped categories

Sourcing calendars need to be adjusted, again, in part due to budget cuts or realignment of strategy. As a result, workloads may decrease which means it is the ideal time to attack some of the more tricky and neglected sourcing categories such as those in professional services, HR services, facilities management and marketing.

  1. Should-cost models

Procurement best practice tells you that should-cost models drive cost savings. With the help of Sievo’s analytic tools, MTN can drill down into asset costs and commodity price histories to support the pricing analytics carried out as part of their “Procurement Engineering” operations.  

  1. Identify consolidation opportunities

Back to the group sourcing calendar. Country, regional and global sourcing plans are fed into a calendar and advanced analytics are used to highlight possibilities for negotiation bundling. A dashboard highlights sourcing projects that could be combined even if they were planned with different timings. Proposed adjustments like this can be shared with stakeholders for their approval.

 

+ 1  Bonus tip: Brand your procurement initiatives            

This is not a new concept, but it deserves repeating as procurement tends to underutilize the power of branding. Branding is a great way to make a message clear for your team and stakeholders, to build interest and buy-in, and to make things more memorable.

If an initiative is big, requires input from multiple stakeholders or aims to create meaningful change (as they often do) – why not brand it with a logo and a slogan?

One of MTN’s has initiatives has been SiLiY “Spend it Like it’s Yours”. A way to remind procurement specialists that they’re expected to manage the budget under their control in the same way as they manage their personal spending. This means asking questions like “do we really need this item or service?” and importantly, “are we on the right track here?” Any purchase must be supported by the facts.

 

To recap: Different people react in various ways in a crisis. Procurement people can, working together, make a considerable difference, provided there is a plan. Defensive plans are vital, attack plans could put you ahead of the competition.

 

Based on MTN’s talk “Don’t follow the path, but leave a trail” at Sievo Friends. Click here to see the full presentation and find out more about MTN’s defend and attack strategies. 

 

 

All articles

Related articles

Sammeli Sammalkorpi

Procurement

Procurement needs less processes – as they are slow, boring and self-centered

I’ve discussed with a number of CPOs during the last months on how they have managed procurement during Covid-19. One recurring answer is along the lines of "we broke all of our processes and went to wild-west-mode.” Now, many say this with an...

Procurement Glossary

Procurement

Key Terms and Abbreviations in Procurement

Terms used in procurement can be quite complex and there are many concepts to familiarize oneself with. For this reason, we decided to make a list of key terms and abbreviations in procurement. The glossary provides an overview of the most common...

Never miss news from Sievo

Get updates

Never miss news from Sievo