Supporting Procurement During a Recession: How You Can Prepare Your Team
Reading the news, it’s hard not to feel anxious about what seems like an impending recession from the daily headlines. In fact, “69% of Americans are worried about a possible recession by the end of 2023” (Bankrate).
However, economists are reeling as unemployment is at its lowest point in 50 years, while food, energy, and home prices are soaring (Fast Company). Businesses are cutting costs, but the Bureau of Economic Analysis states that as of January 2023, we are not in a recession. In fact we had GDP growth!
Procurement has already survived the hectic times of COVID, and many people in the industry are feeling economic anxiety for what’s to come. So, how can you prepare your procurement team for an impending recession? Let’s find out!
Is procurement heading for a recession?
While the answer is certainly not crystal clear, there are signs that we might be heading towards a “rolling recession.”
In our recent webinar with SIG, Amanda Prochaska, the Chief Wonder Officer at Wonder Services, defined a rolling recession as a recession that affects certain industries (such as the technology industry), while the economy will remain unaffected.
As a procurement professional, this means if an industry or sector is in a rolling recession in one of your areas of spend – how should you react to it? Prochaska encourages teams to have a forward thinking approach:
“Procurement has the opportunity to focus not on the spend with a supplier over the last 24 months, but what’s the activity that I can predict in the marketplace to secure a better price, better value, and better supply.”
By using Arkestro, you can stay ahead of the game by receiving real-time recommendations to make the best purchasing decisions for your business.
Procurement teams have learned a lot in the past several years. What once previously worked may no longer be a reality. But one thing is for certain, using the following tips, could lead to procurement’s time to shine!
Tip #1: Ensure workflows, processes and policies are in place
There is nothing harder than losing key members of any team, let alone your procurement team. Head-count reductions, retirements, and resignations can continually plague your team, forcing them to do more with less.
In the Gartner® report, Three Steps to Optimize Procurement Technology During an Economic Downturn, one key to success when facing a recession, is to ensure your workflows and configurations are updated to reflect processes going forward. By doing this, you can:
- Stay closely aligned with business partners in sourcing, procurement, and finance on any changes
- Identify gaps in support coverage from your procurement team
- Simplify approval processes like PO workflows to become more efficient
- Build ideal-case process models for the technology you already have
The goal is ensure that your procurement team and processes remain robust in the event that any staffing shortages occur.
Worried that your small procurement team won’t be up to the challenge? In our webinar with SIG, Arkestro CSO and Founder, Edmund Zagorin stated:
“We’ve worked with teams that are as small as one or two procurement professionals that manage over a billion dollars of spend themselves. They are not making an impact across all of the managed spend, but you would be surprised, given the data that’s out there and with the ability to leverage automation, how much a small procurement team can really deliver.”
Tip #2: Adopt automation technology
Procurement technology continues to evolve to the needs of businesses, but many people still struggle to adapt automation technology.
The goal of Artificial Intelligence (AI) and Machine Learning backed technology like Arkestro, is to take the mundane tasks off your team’s plates, so they can focus on having deeper conversations with suppliers, review their category strategy or other more important projects.
Gartner® states, “Technology adoption is not always a smooth curve, and during strong economic times, sub-optimal adoption is often acceptable. Strong adoption of technology is possible…” and can be achieved by:
- Educating users on the best practices for using the technology
- Identifying overlooked functionality to increase efficiency
- Creating KPIs to measure usage and process compliance
- Making it fun for end users by gamifying and rewarding those who use the technology
Automation software, like Arkestro, will reduce your team’s pain points and lead to overall efficiency. Zagorin talks about how Arkestro’s Predictive Procurement can:
“…get procurement involved earlier, which creates intrinsic value. If you can get a sense of what your stakeholders want before they ask you. If you can get a sense of what your suppliers are going to quote before they give you an offer, that can provide massive outsized value.”
Simply put, Arkestro can:
- Ingest information from across your company’s systems
- Reveal insights that simulate procurement activities before they begin
- Drive action by proposing outcomes often to multiple parties simultaneously
- Obtain optimal results via recommendations through email or embedded within systems you are already using
Tip #3: Motivate your team
This tip might seem obvious, but it is often missed by procurement leaders. Your team is likely feeling economic anxiety reading the same headlines that you are. Many of them feel overwhelmed or burnt out.
So, what can you do to keep your procurement team motivated? In our webinar with SIG, Amanda Prochaska said, “Leaders should ask what they can do better and go ahead and do it. Place a system like Arkestro into place so they can work more effectively.”
Other methods to motivate your procurement team can include:
- Recognize employee achievements
- Set realistic goals and be transparent
- Offer learning and development opportunities
- Provide and ask for constructive feedback
One final piece of advice from Arkestro CSO and Founder, Edmund Zagorin is, “If you look at the research that’s been done around incentives in the workforce, the number one, non-financial incentive that people want – is flexibility.”
Your more seasoned employees can probably sit out of those long meetings that aren’t going to create an impact. Try giving them a challenging project and set goals that you’d like them to meet.
Never let a good crisis go to waste
Whether we are heading for a full-blown economic recession, or might only be experiencing industry-specific rolling recessions, there is plenty you can do ahead of time to prepare. The tips outlined above should help you do just that, and are applicable to any economic downturn we might face in the future.
Despite what might seem like the current impending doom, procurement teams should have all the tools to face things head on. Zagorin ends with this bit of advice for procurement professionals:
“Procurement as a profession is often seen as counter-centrical, which means it makes more of an impact to a business when the economy ain’t doing great. Wherever you’re at in your procurement career – there are a lot of opportunities that 2023 has for you. Just because you might be personally feeling economically anxious, that doesn’t mean your work hasn’t become more valuable.”
Looking for more resources? View our webinar with SIG, Is procurement ready for the recession? and enjoy a complimentary copy of the Gartner report, Three Steps to Optimize Procurement Technology During and Economic Downturn.
We’d love to show you how Arkestro can help prepare your procurement team for a recession! Feel free to reach out to us anytime.