Data will be key for stronger supply chains in 2021
Corporations of all sizes rely on suppliers to provide specialist products and services. 2020 was a year of huge change, with many smaller businesses either reducing trading or having to stop production at times due to restrictions throughout the pandemic.
To ensure business continuity, many companies have had to rapidly rethink their supply chains and how they source different products and services. As we look to the rest of 2021, one way businesses can get ahead is by understanding the importance of effective data analytics in improving the resilience of their supply chain and, ultimately, the profitability of their business.
Modern data analytics platforms can provide procurement departments with a comprehensive picture of their supply chain, helping them understand who their suppliers are; where they are located; how important are they to the business; how at risk they are and, most importantly, what the business can do to help and secure them within their supply chain.
"Insufficient data and clunky supplier payments processes mean that businesses of all sizes are losing money and putting their supply chains at risk"
Anna Porra, Commercial Strategy Director, Barclaycard Payments
Data analytics can help improve businesses’ payments processes, which can play a pivotal role in the survival of many smaller suppliers. Even before the pandemic, the FSB estimated that 50,000 small firms went out of business each year because of late payments. Further research also suggests 62% of small businesses have experienced an increase in late payments as a result of Covid-19, meaning many more are feeling the pinch. Paying suppliers on time and with their preferred method of payment, can improve working practices and allow businesses to take advantage of any savings available.
At Barclaycard Payments we have a service that combines accounts payable data points with third-party data , to help customers develop the right payment solutions for different suppliers – thanks to proprietary logic and algorithms, and an automated decision engine.
Barclaycard Payment Intelligence (BPI) helps businesses catalogue their suppliers based on the number and value of transactions as well as their size, location and industry, and whether or not early payment is likely to generate savings. For companies with thousands of suppliers on their books – big and small – this can offer a significant time and cost saving for key decision makers.
Insufficient data and clunky supplier payments processes mean that businesses of all sizes are losing money and putting their supply chains at risk. By embracing the latest technology and data analytics, companies can maintain vital supplier relationships, futureproof their operations and ultimately support smaller businesses through difficult times.
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.