Monitor Vendor Performance, Assess Risk, and Pivot to Optimize Supply Base
Beyond cash flow and liquidity, businesses must also take a closer look at the agility of their supply base during challenging times. A lack of current insight into supplier relationships, performance, and terms hinder procurement’s ability to execute effective contingency plans and drive immediate business impact.
Optimizing these processes becomes increasingly important when suppliers are feeling the effects of a crisis. Sourcing teams should be looking to determine which partners are strategic and which are not. In fact, increasing alignment and collaboration not only with other teams but also with the wider supplier community, is also hugely significant to managing the success of the supply base.
A recent article by Scout RFP, a Workday company, cites a Gartner study: “50% of procurement professionals believe that it is likely or highly likely that remote work will become the norm. Sourcing teams with collaboration technologies like team chat, videoconferencing, and document-sharing are able to update stakeholders and communicate with suppliers from anywhere.”
With these partners identified, sourcing leaders are able to strengthen their relationships and work with their suppliers to come to mutually beneficial solutions like renegotiated minimums or extended payment terms. The power of human connection in supplier relationships cannot be overstated, as having stronger relationships with suppliers typically results in better outcomes for their business. With real-time collaboration technology, sourcing teams can strengthen their relationships not only with the business, but with each other and their suppliers as well.
Quickly Implement Policy and Program Changes
Change happens fast, often with very little warning. An organization’s ability to move its two most valuable assets—people and money—to where they are most needed cannot be overstated in times of crisis. We live in a world where instant gratification is a prerequisite, yet many legacy finance systems can’t come close to supporting the needs of a rapidly changing business. They lack the agility and flexibility in their foundation and tools to quickly and easily support change—and in today’s world, that’s a huge disadvantage.
Organizations have to be ready not only to support their employees as circumstances change, but also to pivot and change direction in real time. If your architecture and processes are not built to do that, then you have a problem. For businesses bound by legacy system constraints, many of these changes—such as amending workflows, changing reporting dimensions, organizational structures, payroll, and general business reporting—require the intervention of the IT department. These potentially time-consuming, complex IT projects are both resource-sapping and frustrating.
For example, what happens if finance needs to quickly create a dimension to capture cost related to emergency spend? How quickly can that happen in legacy systems and processes, and more importantly, what is the impact on the business of not being able to execute on this in a matter of hours?
Beyond individual crises, business-as-usual dictates that finance requires more real-time data and the ability to build and maintain financial parameters. As the strategic guide to the rest of the business, finance needs to be empowered to easily create new dimensions within its system in order to analyze and report on these elements. Finance should also be able to establish new controls as well as maintain the existing controls and workflows for these new dimensions—without the need for IT. This is about changing the traditional paradigm and empowering finance with a system that is both intuitive and built for change—two cornerstones of financial transformation.
Discussing how his organization uses Workday to navigate organizational changes, Shome Mukherjee, financial applications manager at Netflix, says, “Everytime we have an original show or new original movie, we have to create a legal entity for that company and set up the banking and everything. Again, that takes literally minutes to set up and add to the consolidated framework we have.”
In times of challenge, organizations are finding new ways of operating with agility. This may be “fight or flight,” and it may be born out of necessity, but the ability to get the job done leads businesses, and in particular the finance function, to put agility at the top of the agenda.
In the next article, we take a closer look at how C-suite leaders are increasingly looking for deeper insights from a wider range of data sources to help them make better decisions and keep the organization aligned and informed.
Read the first article and the second article in this series.
Interested in learning more? Check out additional information on the changing world of finance.