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Why strategic partnerships can drive profits in a difficult environment
BY ANTHONY HANLEY, VICE PRESIDENT, GLOBAL SUSTAINABLE SUPPLY CHAIN COMPLIANCE AT ALCUMUS
The last two years have been something of a perfect storm for supply chains. The disruption caused by the pandemic and the Russia-Ukraine conflict has been played out against a backdrop of increasing scrutiny on supply chains.
Consumer and regulatory pressure have moved ESG compliance further up the corporate food chain. Eradicating risk from human rights transgressions or poor environmental stewardship aren’t just the right thing to do – they’re strategic imperatives for growth. Suddenly, everyone’s interested in how organisations buy.
Naturally, there’s urgency at board level that has trickled down to procurement. It’s influencing buying strategy. Supplier selection cannot be just about price and availability; it must be about people, planet, and profit. But for procurement leaders operating in chastened economic times, delivering on core function has their team struggling just to keep up with existing demands.
Vetting and qualifying suppliers for risk and compliance with fast-evolving legislation, and introducing new ESG standards, is a layer of complexity too far out of reach. And expecting already stretched procurement teams to perform such a mammoth undertaking across the supplier base is unrealistic. In the absence of concerted focus and strategy, it exposes the business to further risks and reputational damage.
Like any other essential business undertaking, supplier compliance needs strategy and direction to be effective. You’ve got a procurement team that wants to move the business forward but in absence of a way to scale they become encumbered by administrative tasks that include constantly chasing insurance gaps and onboarding suppliers. Consider the high value functions that your team can uniquely build competency against which add true value to the business. What else would you prioritise if you knew supplier compliance was consistently managed and risks were surfaced proactively on an ongoing basis? This can only happen if you remove the administrative burden of supplier prequalification and ongoing management. Doing so has significant benefits to the organisation and to the bottom line.
Take advantage of expertise… and tech
The advantage of strategic partnerships (finding a skilled partner in business processes) is cut and dried. Organisations have been doing it for years after all. In fields that are either emerging or evolving – such as compliance – that expertise is neatly dovetailed with technological capacities that are especially well–suited to the job in hand. In an increasingly digitised world, that’s critical.
In essence, you are filling two gaps with one peg – one is the sector-specific knowledge the partner brings and the other is the technology that brings trusted data and insights to your fingertips – identifying risks and powering key business decisions. According to McKinsey this type of digital outsourcing is growing fast and is manifesting itself simply as tech outsourcing.
Either way, the benefits to your organisation are manifold. Leveraging expertise and technology to outsource evolving and labour-intensive processes like compliance makes good business sense. Aside from ensuring risk is managed and monitored continuously, it allows you to divert internal resource to other parts of the business – and at a fraction of the cost of hiring a team to do so internally.