With news of the US economy shrinking for a second straight quarter, recession fears are becoming all too real, and companies are preparing for the worst. As Sal Guatieri, Senior Economist at BMO Capital Markets, explains, “The economy has quickly lost steam in the face of four-decade high inflation, rapidly rising borrowing costs, and a general tightening in financial conditions.”
During the uncertain times that lie ahead, businesses will need to prioritize agility, making quick decisions and changing direction when required. In a LinkedIn poll, we asked procurement professionals how they thought their companies would change spending plans over the next three to six months, and the results were unequivocal: 55% expect their companies to significantly cut spending during this period, while a further 18% also expect to see smaller spending cuts at their organizations.
One area that has already been impacted by budget cuts is staffing. As Business Insider reports, a “wave of layoffs has swept across American business in 2022.” As they navigate their way through these turbulent times, many companies will be forced to do more with fewer employees, and will need to quickly tap into new expertise, often in areas they are unfamiliar with, to fill in any gaps. Procurement can help connect business functions with the best specialist external talent at affordable rates, but to do this, companies need to harness cutting-edge digital technology.
Automation fills in key gaps left by team reductions as AI takes over the repetitive manual work that is crucial for everyday operations but that team members no longer have the capacity to carry out, such as traditional RFPs, a slow cumbersome process. Digitalization drastically shortens the time required from scoping a sourcing need to awarding the work from months to days, or even hours, maximizing efficiency gains for the smaller teams many CPOs will find themselves leading.
While adopting new technology hasn’t always been straightforward, today’s digital technology can be implemented with ease. Digital transformation will not only allow procurement to do more with less people, but also empowers business stakeholders to quickly and easily identify the right suppliers for every need as they seek to meet the inevitable new challenges that lie ahead.
Learn more about how procurement can add more value to the business even with leaner teams.