Mitigating The Impacts of Procurement Organization Turnover on The Supply Chain

Beyond simply trade tensions and the COVID pandemic, we have seen an unusual compounding effect putting stress on supply chains: employee turnover in procurement has forced several buyers into a lurch and has made managing vendors a nightmare.

In times of the “Great Resignation”, having a solid plan to mitigate the impact of procurement organization turnover might be the best thing a procurement team can do to hedge operational risk.

Today, we’ll dive into the top three ways to mitigate the impact of losing employees in procurement.

Take stock of projected leaves via pulse checks with the team

In recent years, pulse checks have become increasingly popular for their ability to identify problems early and course-correct if there is ill will in the organization. As a general practice, pulse checks are an effective way to understand how team members are feeling and can alert you if someone is unhappy in their role. Moreover, having pulse checks, increases the trust amongst your team, making it more likely for team members to give you a heads up that they are searching for other jobs.

If you think that procurement organization turnover is affecting or likely to affect your supply chain, take the data from these pulse checks, and assess & evaluate the number of leaves projected in the next few months.

Because pulse checks are unique to each organization, you can schedule them whenever you want.

Remember, the shortest amount of notice that an employee leaving a position usually gives is two weeks. The notice period is even longer for some companies. Therefore, a monthly pulse check will allow you to track the employee movements, so you have more time to brace for impact.

However, for pulse checks to work effectively, you need to ensure that every team member has the resources to participate. Make sure that you take pulse checks seriously, and your team will follow your lead if you set a good example.

Establish a handoff system to give contacts to the right person

Supply chains that are successful and resilient have one thing in common – an efficient end-to-end journey with a defined set of touchpoints. The touchpoints in a supply chain are where the suppliers, the customers, wholesalers, and retailers connect.

For most companies, the processes at touchpoints are usually not written down, but are institutional knowledge and are well defined. That way, every member of the team will know which person to contact which:

  • Reduces lead times
  • Eliminates confusion and rework among the team
  • Allows every team member to plan ahead since the customer consumption can be projected
  • Creates a smooth flow between different touchpoints

An efficient handoff system is also key to improving communication, which is paramount in vendor relationship management or VRM. Plus, a smooth handoff system is crucial for building partnerships between the parties involved in the supply chain.

However, when someone leaves a procurement organization the wheels fall off. A missing link in the end-to-end journey can often result in confusion, longer lead times, and a bad experience. So to ensure that touchpoints and points of contact are properly established, make sure that you have a “next man up” type of policy in your procurement organization. Then, if someone leaves the company, you know another person can take on the existing supplier relationships. Moreover, when the backfill for the departing employee is hired, he or she can more easily take on the vendor relationships, learning from the person who was charged with temporarily taking on the original procurement professional’s contacts.

Leverage technology as a key tool to mitigate the impact

Another fantastic strategy to mitigate the impact of procurement organization turnover is using technology as a key tool. Traditionally, leveraging technology in the supply chain offered the following advantages:

  • Reducing human error, especially in payments
  • Controlling expenses
  • Reducing paperwork
  • Improving workflow and efficiency
  • Accelerating order and purchase
  • Monitoring performance

And nowadays we even see technology that leverages artificial intelligence to assess and mitigate risks!

But a new class of technology is emerging called vendor relationship management software (VRM) and supplier relationship management software (SRM), like Parq. This type of technology allows you to store all of your vendors in a repository so that you can keep track of exactly who you work with and your history of interactions with each supplier. Now, when an individual leaves the procurement organization, they don’t take with them the knowledge of what suppliers they worked with previously. And you no longer have to guess what suppliers did the job well. All of the information is stored within one central location. Furthermore, a lot of these platforms offer vendor discovery, allowing you to find vendors even when you are down in team members, effectively plugging a gap.

Summary

Several major disruptions worldwide have shaken the supply chain and its dynamics all over the world. The US-China trade friction and the Covid pandemic has shifted priorities and threatened the supply chains.

But the “Great Resignation” has compounded supply chain issues. Millions of employees are quitting their jobs and procurement is not immune to the effects of the resignation. No one knows how long the “Great Resignation” is going to continue, but labor shortages are not ending anytime in the near future.

Because of that, it’s imperative that you follow the tips shown here to make sure that your procurement organization and overall supply chain is prepared from a human capital perspective. Hopefully, this will be helpful in giving you a head start in mitigating the damaging effects of turnover on the procurement organization.

 

Author Bio: Walker Ryan is the Co-Founder and CEO of Parq, a company pioneering vendor relationship management in asset-intensive industries. He is excited to see how the supply chain will continue to evolve, especially with Covid acting as a catalyst for industry change.

 

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