Tough times ahead
According to a recent article by Bloomberg, the US economy is starting to show signs of strain under the weight of the highest inflation for decades and climbing interest rates – raising the risk of a downturn. Many of the world’s top economists also see the storm clouds on the horizon. Ethan Harris, Head of Global Economics Research at Bank of America Corp., says: “We’re either going to have a weak economy or a recession.”
In an economic downturn, every business will need to prioritize agility – being able to make quick decisions, take immediate actions, and change direction when required. One of the main areas where this agility will be required is staffing. Companies will be forced to do more with fewer employees, which can slow down progress and hinder growth. With the global economy having enjoyed good times for the majority of the past decade, the impending slowdown will mean businesses having to meet unfamiliar and different challenges. Many will lack the capabilities within their internal teams to do so and will need to quickly tap into new expertise, often in areas they are unfamiliar with.
Using AI to sustainably eliminate the gaps
With staff cuts inevitable across most sectors, procurement will have a crucial role to play, connecting business functions with the best specialist external talent at affordable rates. However, companies need to harness cutting-edge digital technology to enable this. Advances in AI have made it possible for procurement to tackle more complex processes and categories of spend with leaner teams, while helping business stakeholders to find the right suppliers for their changing needs quickly and easily.
Automation fills in key gaps, as AI takes over the repetitive manual tasks that are crucial for everyday operations, but that team members no longer have the resource to executive efficiently such as traditional RFPs, a painstaking, antiquated process, with cumbersome steps. The new streamlined, modern experience drastically shortens the amount of time required from scoping a sourcing need to awarding the work from months to days, or even hours, maximizing efficiency gains for the inevitably, smaller teams many CPOs will find themselves leading.
Immediate cost savings
Of course, the benefits of automation extend beyond time savings. As storm clouds gather on the horizon and belts have to be tightened, thoughts inevitably turn to how companies can cut costs as quickly as possible. Innovative technology enables companies to generate immediate cost savings through precise scoping of specifications with AI-powered category expertise, while managing demand efficiently to prevent overbuying.
And opening up sourcing projects by increasing competition among both preferred suppliers and new alternatives not only ensures fairer, merit-based matching processes but also delivers significant cost savings of more than 20%.
Technology to free up talent
With sophisticated AI-powered technology, there is no future where a company’s best talent should be spending time on spreadsheets, email, or outdated legacy platforms that haven’t changed in 20 years. The value that people bring is based on a combination of contextual understanding, experiences, and emotional and raw intelligence. As companies think about maximizing the impact of their leaner teams, employees’ skills and capabilities should be reprioritized away from manual repetitive work toward more strategic initiatives that add wider business value.
In procurement, this means becoming relationship managers with business stakeholders and suppliers; consultants and trusted advisors with deep business understanding; or problem solvers who have the flexibility and innovative ideas to meet the new challenges a recession always throws up.
Time to act is now
Digitalization can no longer be put off. Adopting new technology has historically been daunting but modern digital solutions can be implemented and adopted with much simpler change management programs. This transformation will not only enable procurement to do more with less people within its own teams but also allows business stakeholders to quickly and easily identify the right suppliers to meet inevitable new challenges that lie ahead – a win-win combination. But procurement leaders must use these uncertain times as a catalyst to drive this long overdue digital transformation that will position their companies to successfully navigate the rocky road ahead, while laying the foundations to build long-term value.