Disasters like Pandemics and Hurricanes Can Stretch a Procurement Team to the Breaking Point. Do You Have the Resources You Need to Weather What’s Next?
During the COVID-19 pandemic, businesses of all sizes had to quickly adjust to rapidly changing market conditions. Not only did revenues quickly decline for many operators, but changes in the supply chain made keeping remaining revenues difficult. While some products drastically increased in price, others became completely unavailable. The need to purchase items like PPE and sanitization products, many of which faced extraordinarily high demand, complicated the situation.
Is your business ready for the next procurement crisis? If you are not sure, working with a procurement services company might be the answer. Procurement companies provide resources when they are needed most, whether you’re facing a global pandemic like COVID-19 or a more localized natural disaster. Here are the ways working with a GPO can help your operation get through the next procurement crisis:
Supply Chain Stability
As we have seen in 2020, times of crisis can produce many challenges with supply chains. From securing deliveries from distributors to manufacturers procuring raw materials for production, every link in the supply chain is at risk of breaking. Working with a procurement services company will help you identify risks ahead of time and keep your supply chain stable. GPOs have category managers constantly working to get products you need to run your business and plan ahead. By building long-term relationships with manufacturer and distributor partners, they also work hard to mitigate pricing fluctuations that result from crises. Because of the scale a GPO offers, they can work strategically with suppliers to improve the continuity of the supply chain.
Breadth of Portfolio
When supply chains break down, there is an increased likelihood that the products you normally purchase will not be available. Distributors will work to get you substitute items, but these substitutes may not be contracted and will carry a higher net price. By aggregating buying power from many businesses, GPOs have purchasing programs with a wide range of manufacturers, making it more likely that a contracted substitute is available. This will limit an unexpected financial hit from product substitution during a crisis.
Sourcing New Products
Dire global situations like 2020’s pandemic will bring the need for your operation to purchase new products; face masks, disposable gloves, and partitions were suddenly needed by operators due to COVID-19. Not only were these products needed by restaurants, but businesses of all types, creating high demand. A procurement services company will have the purchasing scale and partnerships to secure these new products in a competitive marketplace.
No matter how much a business prepares for a crisis, you may still need some extra help. GPOs offer other procurement services that you may need to help your operation survive. Here are a few examples:
- Audit Services – While your supply chain may still be intact, the prices you get from your suppliers might not have as much security. Regularly auditing prices implemented by both manufacturers and distributors, especially when there are periods of significant fluctuation, can help catch overcharges; this can save your business thousands of dollars in working capital. When a crisis hits, this extra working capital can be the difference between staying afloat and closing your doors.
- Operational Consulting – Shifting circumstances in the market can create the need to quickly adjust your product offerings. Culinary Solutions consulting can help you adjust your menu and operations to meet new market needs. Not only will they review your menu items, they can help to optimize the products and processes your operations uses to create these offerings. This guidance will help your business adapt during a crisis.
- Purchasing Optimization – With the breadth and depth of programs available through GPOs, there can be many product options to supply your business. Specialized account managers can help you find the right products for your operation. Optimizing your purchasing can help you lower your cost of goods sold several percent, which will help you weather a rapidly changing marketplace.
As COVID-19 proved, knowing what’s coming around the next corner is impossible. However, with the right procurement support in place, you can be confident that your procurement team will be ready for the next pandemic.