Pakistan is currently faced with a multifaceted crisis that is putting significant pressure on its economy. The country is experiencing an ongoing political crisis coupled with series of economic challenges that include a depreciating rupee, mounting inflation, devastating floods, shortage of energy, rising fuel prices, growing current account deficit, widening trade deficit, and a shortage of foreign currency reserves to name few. These challenges are making it extremely difficult for businesses in Pakistan to remain afloat, which is why many business owners and leaders are foreseeing that 2023 will be an extremely tough year for the country’s economy. Considering this, they are calling on political parties to come together and agree on a long-term “Charter of Economy” that should provide a clear economic direction for the country and help both businesses and the masses to understand where the country is heading economically.
To navigate this very complex economic situation and heightened political uncertainty, Pakistani businesses must begin to think and act both differently and creatively. It is crucial for them to start viewing procurement as more than just its traditional role and start utilizing it as a means of managing supply chain disruptions caused due to local and global factors. Procurement is a crucial function for businesses during turbulent economic times as it is responsible for managing the acquisition of goods and services for an organization. The procurement teams can also use a variety of non-conventional methods to address the challenges faced by businesses.
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Integrating agility into procurement allows businesses to be more flexible and responsive to changing market conditions. Agile procurement involves using iterative and incremental processes to manage procurement activities, which can enable organizations to quickly adapt to changes in demand or supply. This can be especially valuable during economic crises when businesses may need to quickly adjust their procurement strategies to stay competitive. Agile procurement enables organizations to identify and mitigate risks in a more efficient way, which can prevent business disruptions and ensure a more stable income. Additionally, agile procurement can also help businesses to identify new opportunities and pivot their strategies as market conditions change.
Procurement analytics can be particularly useful for challenging economic times as it allows organizations to gain a deeper understanding of their spending patterns and identify opportunities for cost savings. These insights can help organizations make more informed decisions about their procurement strategies and better manage their expenses. Some examples of procurement analytics that can be used during challenging economic times include analyzing an organization’s spending patterns to identify areas where cost savings can be made, tracking, and evaluating suppliers’ performance to identify any issues that may be impacting costs, identifying, and assessing potential risks in the supply chain that may impact costs.
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Procurement business partnering is another way to align procurement activities with the overall goals and objectives of the organization. It involves working closely with other departments and stakeholders within the company to gain a better understanding of the organization’s needs and identify opportunities for cost savings that align with the overall business strategy. By working together, procurement professionals and other departments can develop more effective procurement strategies that drive improved profitability. Procurement business partnering also includes collaboration on innovation, cost management, and new product or service introduction which helps the business to stay competitive and improve profitability. One of the key aspects of procurement business partnering is identifying areas where procurement can add value to the organization, such as identifying cost savings opportunities, mitigating supply chain risks, or improving supplier relationships. By aligning procurement activities with the overall goals and objectives of the business, procurement business partnering can help organizations to drive improved profitability.
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Procurement can also be leveraged in the reshoring or nearshoring strategy of the business as it involves bringing manufacturing and production processes closer to home, either by returning them to the home country or by moving them to a nearby country. By doing so, organizations can reduce their dependence on global supply chains, which can be vulnerable to disruptions caused by economic crises, natural disasters, or political instability. Procurement plays an important role in reshoring and nearshoring by identifying and managing the risks associated with global supply chains, negotiating better prices with suppliers, and developing more effective procurement strategies that align with the overall business strategy. By identifying and managing the risks associated with global supply chains, negotiating better prices with suppliers, and developing more effective procurement strategies that align with the overall business strategy, organizations can improve their resilience and achieve greater supply chain security.
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Procurement can play a significant role in improving business profitability through supplier-driven innovation. By identifying and engaging with suppliers that have the capability and willingness to innovate, procurement professionals can identify new opportunities for cost savings and revenue growth that align with the overall business strategy. One key aspect of leveraging procurement in supplier-driven innovation is establishing a collaborative relationship with suppliers. This can be achieved through regular communication, setting up supplier innovation programs, involving suppliers in the product development process, and creating a culture of trust and open communication. Procurement can also support supplier-driven innovation by identifying and implementing new technologies and tools, such as digital platforms and tools for collaboration, idea management, and real-time data analysis, that can help to facilitate collaboration between the organization and its suppliers. Additionally, procurement can also work with other departments and stakeholders within the organization to align supplier-driven innovation efforts with the overall business strategy. This can help to ensure that supplier-driven innovation efforts are aligned with the organization’s goals and objectives, which can ultimately lead to improved profitability.
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Supplier diversity programs initiated by procurement can also be helpful to businesses during difficult economic times by providing access to a diverse set of suppliers, reducing the risk of supply chain disruptions, and increasing innovation and competitiveness. These programs aim to increase the participation of small, minority, women-owned, and other underrepresented businesses, which can help businesses to reduce their dependence on a small number of suppliers and increase resilience during economic downturns. These programs can also help businesses to access new markets and customers, tap into new ideas and perspectives and build mutually beneficial relationships with diverse suppliers. By working closely with diverse suppliers, businesses can develop new products, services, and process improvements that can lead to cost savings and increased revenue.
Procurement plays a vital role in driving improved financial results through its impact on supply chain traceability and visibility. By implementing strategic procurement practices, organizations can gain a comprehensive understanding of their supply chain operations, from sourcing raw materials to delivering finished goods to customers. This allows for greater visibility into the entire supply chain, enabling businesses to identify and address any potential inefficiencies or bottlenecks that may be impacting financial performance. Additionally, procurement can help businesses to identify and manage risk in their supply chain, ensuring a steady and reliable flow of materials and products. Furthermore, procurement can also help businesses to negotiate better prices and terms with suppliers, reducing costs and increasing profitability.
Lastly, upskilling procurement professionals can equally be helpful make businesses ready for challenging economic conditions by equipping them with the knowledge, skills, and tools to effectively manage procurement processes, mitigate risks, and make data-driven decisions. This can include training in areas such as strategic sourcing, supply chain management, and risk management. Additionally, upskilling in new technologies and tools, such as digital platforms and data analytics, can also help to support procurement efforts and improve visibility into the supply chain.International qualifications such as CIPS (Chartered Institute of Procurement & Supply), ISM (Institute for Supply Management), and ASCM (Association for Supply Chain Management) are important in procurement’s capability building as they provide formal recognition of the knowledge, skills, and experience of procurement professionals. These qualifications are recognized globally, demonstrate a commitment to professional development, and can help to increase the credibility and reputation of procurement professionals.They provide a comprehensive curriculum that covers a wide range of topics, including risk management, strategic sourcing, data analytics etc. to help procurement professionals stay current with the latest trends, best practices and emerging technologies in the field ultimatelyhelpingto make businesses ready for challenging economic conditions.
In today’s VUCA (volatile, uncertain, complex, and ambiguous) world, CEOs must be able to adapt to rapidly changing market conditions and anticipate potential disruptions. Procurement, when leveraged effectively, can be a powerful weapon in helping CEOs navigate these challenges.
— Shahbaz is an accomplished Supply Chain professional with dual Charters from the Chartered Institute of Procurement & Supply (CIPS) & Chartered Institute of Logistics & Transport (CILT), United Kingdom. He possesses 18 years of experience in the Supply Chain space with leading telecom, FMCG & hospitality companies. Besides, he is part of the founding member team of CIPS Pakistan Branch & Islamabad Chapter, which is set up under the stewardship of CIPS, MENA to promote the Supply Chain profession in Pakistan. He also voluntarily delivers talks in Supply Chain at different universities on contemporary issues faced by Supply Chains.