Supply Chain Council of European Union | Scceu.org
Procurement

Inflation Drives Procurement Solutions Demand

As inflation continues to rise, companies are seeing cost increases in delivery services, software contracts and other goods and services across the board — and procurement teams find themselves under pressure to source new suppliers or negotiate new terms with the ones they have already.

“Increases are coming in, and the first place the phone rings now is the procurement team and it’s, ‘Hey, what can you do about this?’” Jo Seed, chief operating officer of LogicSource, told PYMNTS.

All of this adds up to a flurry of new projects and conversations to track — a daunting task do deal with manually in the best of times, let alone during a pandemic that’s forcing many teams to work remotely and straining supply chains in nearly every vertical.

LogicSource helps solve this and other problems with procurement services and technology. On Jan. 11, the company announced a range of enhancements to its OneMarket technology platform and the modules encompassing the Source-to-Contract lifecycle.

One new tool brings together in one place the contracts and communications that might otherwise be scattered across desk drawers, network folders, emails and phone calls. Another provides prebuilt templates for sourcing documents.

“Those are all things that are squarely aimed at making people who are underfunded, under-resourced and overworked more effective and give them easier access to the information they need to be able to manage their day,” Seed said.

Preventing ‘Office Supply Spend Creep’

Buyers also deal with other challenges. In large organizations with tens or thousands of locations, there are many people who can order office supplies, and the organization may find it’s spending millions of dollars on these goods.

Procurement teams work to consolidate that spend, negotiate a deal and have these orders go to an approved supplier, but that doesn’t always last.

“Typically what we’re finding is, in organizations that don’t have tools, technology and access to data, within weeks, days, someone somewhere in an office has picked up the phone to Home Depot, Office Depot, whichever the other supplier is, not ordering from that approved supplier and maybe over-ordering because they don’t realize that someone else somewhere in the organization has placed a buy and is about to send them those supplies,” Seed said.

LogicSource helps solve this “office supply spend creep” with services and technology. For example, it offers a tool that provides a near real-time view of organizational spending — including the names of the suppliers — and another tool that includes a catalog that guides buyers to the approved suppliers.

Managing a Meaningful Base of Spend

Procurement of goods and services that aren’t meant for resale can equate to 20% of an organization’s revenue. It often includes categories like marketing, IT, facilities, logistics, professional services, telecom and packaging.

“It’s a meaningful base of spend, and procurement being able to drive value against that is material to a company’s performance and financial results,” Seed said.

This is also the area where companies are least efficient about maximizing their spending dollars. They tend to give money, resources and technology to their teams of buyers procuring materials for the goods for resale while neglecting those who do the less glamorous work of procuring office supplies and maintenance contracts.

“We get excited about it because it’s what we do and we see bottom-line value that we can create by optimizing that,” Seed said. “But the reason it’s an inefficient area is because the teams that are kind of fighting in the trenches day in and day out generally are undervalued and under resourced.”

Seed noted that “supply chain” and “procurement” have become household words during the current rash of supply chain problems. Add to that the challenge of inflation, and these procurement professionals and solutions are becoming more top of mind.

“It is driving awareness of how procurement can help avoid these costs for their business unit customers.”

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