As central and local governments around the world take steps toward reopening economic activity, businesses, law firms and other organizations are facing unique recovery circumstances:
- Unexpected new financial and operational debts and obligations.
- Trickling cash flows causing reductions to staff and budgets.
- Uncharted market and competitive landscapes.
The start of the pandemic was swift and concrete; the period we are entering will have unfamiliar twists and turns. Now is the time to plan for post-pandemic business recovery, which is why our spend management team has created a new recovery guide.
Spend Management Approach to Business Resilience is a compact report that will help leaders and decision-makers identify and leverage opportunities, while navigating the new financial and operational environment ahead.
It’s becoming clear that getting to normal will take longer than most of us wanted. In addition, organizations of all kinds, from law firms to businesses to universities, are discovering that a return to the way things were may be impossible and ill-advised. One of the silver linings of this dark cloud is the opportunity to examine new ways to manage and operate.
Operating with new constraints
The COVID recovery will be particularly difficult, not only because of its unprecedented scope and complexity, but that it compels every organization to do more with less. Recoveries are always constrained by resource limitations, but this one includes new health and safety mandates and other considerations that will be burdensome at best.
Organizations will need to apply every financial and operational tool available to them, including spend management tactics and strategies as we discuss in the report:
- Three steps every business can and should take including enterprise-wide spending discipline, review and evaluation of all spend categories and supplier relationships, and contract negotiation for optimal terms and conditions.
- Ideas for reviewing every spend category for savings opportunities. (While focused on indirect costs, the principles also apply to direct costs.)
- 12 crucial considerations for contract renewals and negotiations. We call them the “Doable Dozen” and this checklist is divided into two categories: the fine print, which has now gone up in size, and pricing, delivery and payment.
- New priorities and requirements for navigating an altered business landscape, moving from the phased reopening we are now entering to the 2020-21 outlook to the desired post-pandemic state.
- The skills and capabilities organizations will need for the next recovery phases, including efficiency, agility, readiness and discipline.
- The value of spend management principles and tactics, like access to vital market and vendor data, just-in-time resources, close monitoring of trends and changes, and ongoing vigilance.
In short, looking at total procurement costs with a clear, 360-degree view will be vital to resilience and sustainability. Access to real-time internal data in comparison to market and vendor intelligence will play a crucial role in this process.
Acting today while planning for tomorrow
The ability to act swiftly and decisively today while keeping an eye on the horizon is the mark of a good leadership team. The New York Times recently reported on the concerns of the US Federal Reserve:
“The sharp economic decline already underway could create longer-lasting fallout. Among their worries: Lockdowns meant to contain the pandemic are weighing on emerging market economies, leaving United States companies more indebted, spurring consumer caution and heightening financial vulnerabilities.”
Commercial property insurer FM Global just published its annual index, the 2020 FM Global Resilience Index, which is viewed as the definitive ranking of the business environments of nearly 130 countries. While this year includes the pandemic, the index always serves as a reminder of conventional risks that threaten operations, like hurricanes, fire, cyber attacks and political upheaval.
The top-10 nations or regions in the 2020 index are:
- Central United States
- Eastern United States
China and the US are divided into multiple regions.
Going from that macro view back down to a micro view, we invite you to view the report for more spend management information, and to plan for the following:
- Employees and teams to take the lead on critical business activities with backup resources to fill gaps and take over when internal staff are not available.
- A critical review and assessment of systems, data, processes and facilities to support existing and new operational needs, including new workplace supplies like face masks and hand sanitizer for employees.
- Social distancing procedures and policies to integrate ongoing remote workers and employees returning onsite.
With revenue down, controlling costs and making sound investments will be key to fund and finesse your organization’s way through the next phase of the pandemic recovery for post-pandemic sustainability and success.