EVS: Thank you for speaking with us today, Vishal. Before we get into our questions, could you tell us about your background and what you are currently working on?
I lead the US insights and advisory practice across verticals. My team and I solve strategy, innovation, marketing, and supply chain problems for Fortune 1000 clients in the US. I personally lead advisory workshops for clients to enable process transformations in their functions. The exciting thing about my role is that I get to view trends across verticals, thus getting a big picture on how the economy is shaping, the problems that corporates face, and the best practices used when tackling them.
One can learn from one sector and apply the best practices to other sectors. Before this role, I ran the energy, chemicals, and industrials practice for about eight years. Before Evalueserve, I was a process engineer, designing and commissioning refineries and petrochemical plants across the US, Europe, China, and India. By education, I am a chemical engineer and an MBA in Finance.
Each year, we study the mega-trends and then fine-tune our strategy and solutions based on the trends. This year, we just completed that exercise and now incorporate the renewed solutions in our go-to-market plans. Drivers such as digital transformation, sustainability, and Covid recovery are leading the key trends and result in specific solution areas for many industries and functions.
EVS: What challenges are procurement teams facing today?
The short-term challenges for sourcing teams are closely related to Covid recovery. Supply chains that were kept dormant for most of last year are taking time to rev up, resulting in stockouts and shortages in specific pockets.
The mid-term challenge for sourcing teams is expected to be commodity and category inflation. The quantitative easing measures applied by many central banks, coupled with commodity demand increase due to recovery, are expected to lead to cost inflation across several categories. Procurement teams will need to anticipate that, forecast it in the relevant categories, plan for it, and manage it appropriately.
In the long-term, this function is poised to be disrupted through newer technologies and business models. Technologies such as block-chain and business models like Amazon B2B are just a few examples of what companies are experimenting with. The disruptions arising from these models have the potential to transform different parts of the sourcing value chain.
Sustainability continues to be the critical mega trend in this sector. Procurement functions are increasingly tasked and empowered to mitigate the Scope-3 emissions linked carbon footprint contributed by company’s supply chain. To this end, procurement departments need to compute the sustainability footprint of suppliers, carry out improved total cost of ownership (TCO) analysis in light of suppliers’ longer-term sustainability impact, and incorporate it in the sourcing score-card for suppliers.
EVS: How has COVID-19 affected or changed the procurement space?
Covid’s biggest impact was the volatility it brought to the supply chain, and hence, to sourcing. Demand across sectors and geographies was impacted differently, while the supply situation worsened for many categories, especially the ones sourced internationally. Sourcing departments had to quickly adapt, creatively think through the disruptions created, and effectively compete for resources and demands with other industries to secure supply for themselves.
As a direct result from Covid, there is expected to be increased attention to supply resilience through measures such as localized sourcing, diversified sourcing, and increased use of digital and automation to execute computations dynamically.
EVS: How does procurement intelligence help teams overcome these challenges?
Shifting demand in priorities, volatile sourcing and inflation, and the moving financial situation of suppliers have all become more manageable through a performance management and intelligence engine tracking geographies, regulations, categories, and suppliers. A platform that enables the dissemination of relevant nuggets of intelligence to the right stakeholders through decision tools is the key to combating overwhelming volumes of information. Thus, platforms that constitute decision support systems than mere information archival are biggest help to procurement leaders. Best-in-class procurement teams have attained ROI of 5-100X per annum from intelligence activities. Covid has further underlined the importance of continuing to stay on top of a shifting situation to make decisions based on dynamically changing situations.
EVS: What can procurement teams start doing now?
The answer largely depends on the maturity stage of a given procurement function. The foundation that we have seen missing in many of the less developed functions ranges from having solid fact-based category strategies to having at least a quarter or half-year out sourcing plans available. For more mature functions, this year will be about managing supplier volatility, upcoming inflation, and focusing on sourcing reliability. Across the board, all procurement functions need to have processes that prompt them to think like strategists and risk managers, so that they will not respond to the next black swan event with a knee-jerk reaction or quick-fix plan.
Each of these will require category managers and buyers to be constantly in-the-know of their markets and suppliers. For more mature sourcing functions, supply chain sustainability, and improving the procurement’s contribution to sustainability will be key topics that they need to start working on. Even the most mature category teams realize the need for an agile and intelligent platform, which can bring visibility to their suppliers and supply chains at a much faster pace.
EVS: What are you looking forward to next?
Ah… The spring break!
On a more serious note, some of the exciting work that we are working on for our larger clients includes: Robotic Process Automation (RPA) for spend management, AI based constant supplier risk monitoring, and benchmarking suppliers on newer areas such as their sustainability and innovation practices.
We want to bring technology to life and discover new ways of working. When it comes to our solutions for procurement functions, Generation Z’s way of thinking about sustainability is high on the agenda. Thus, not only will we be able to talk about which supplier is poised to provide better quality more economically, but also which one will be innovative and sustainable in the longer term.
Paired with our expertise across categories and markets in areas such as data centers, pharmaceuticals, oil & gas, industrials—Fortune 1000 companies trust us with some of the most forward-looking problems that they face in each of these verticals. We look forward to helping our clients figure out these solutions ahead of their competition.