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Procurement plays an important role in the success of any business regardless of its size. It also provides valuable insights into a business’ decision-making processes relating to the cost of purchases and strategic investments by the company.
In this era of COVID-19, managing procurement risks and costs must be a priority for organizations to adjust to the new economic reality. The pandemic has also altered how supply chains work and the demand for better supplier transparency is now a crucial aspect of procurement.
While cross-border logistics is still a challenge, the lasting impact of COVID is the availability of staff. Despite most restrictions now having been lifted, recruiting staff has become hugely problematic as through the pandemic period many unskilled workers have left the cities for the low-cost lifestyle in the outskirts and have not come back.
Also in some Asian markets, the attraction of online delivery, be it food or groceries, has further reduced the pool of available people. This has led to continued failure to meet demand, both in manufacturing and across the supply chain.
Supply reliability and risks are always a major challenge in the procurement process. The major risks to be considered include market risks, potential frauds, cost, quality, and delivery or fulfillment. In addition to these common risks, there are also compliance risks like anti-corruption and policy adherence.
One of the most important, and often overlooked, sources of potential value within the procurement function is risk mitigation. The inflow of goods and services, and the complex supply chain that produces them, carry a hefty amount of risk. These factors include:
All these risks can have a significant impact on the bottom line and building competitive advantages. They are best managed with centralized, efficient, and transparent data along with strong supply chain management systems.
The three key principles to overcoming these risks and ensuring the success of procurement are: to remain in compliance with laws and social rules, commit to business ethics, and ensure competitive supply.
As businesses are entering the digital era where those who are reluctant to change will likely fall behind, digital transformation has become a necessity in the procurement process. Supply, sourcing, and compliance risks are best managed with the use of centralized, efficient, and transparent data as well as having digitized supply chain management systems to support the business.
The re-engineering of human resources roles and focus of roles within the supply chain has shifted towards sourcing and buying through online channels during the pandemic. Moving forward, we can expect this to be the standard approach to the procurement models ahead.
Taking DKSH as an example, we started digitizing the procurement processes five years ago by developing an in-house e-Procurement platform to manage procurement activities for our markets in the Indochina region. This platform also allows suppliers to bid online in real-time, increase collaboration, and monitor vendor and procurement performances.
The system helped to reduce paperwork, replaced print documentation, shortened the purchasing lead time, and centralized the key processes. As all transactions are carried out and monitored digitally, this increases transparency and allows better audit trails.
The reality is that COVID-19 has changed the business world, and this means organizations must step up their supply chain reliability, sourcing, and procurement functions to face these challenges.
To help businesses build these new capabilities, DKSH has started to offer procurement services in Indochina that provide the following advantages:
Reach out to us to learn more about how your investment in a digitized procurement solution can help you prepare and minimize business disruption, ensure continuity, and improve decision-making for your business.
Phuong Pham has more than eight years of experience in procurement management for various industries in Indochina. Currently, Phuong is the Director, Procurement Management at DKSH Vietnam, specializing in designing and structuring the right mix of e-platforms, vendor management, governance, sourcing, process centralization, and procurement strategies.