Navigating Uncertain Times with Order.co

The only thing that’s certain is change. But when change hits public markets or the global political scene, uncertainty can take a toll — even on well-established businesses. During times like this, a strong procurement partnership can make the difference between thriving amid challenges or struggling to survive.

Recently, Order.co’s VP of Marketing, Eric Hann, shared insights on the most important actions companies can take to maintain their position despite difficult circumstances. He also discussed software’s role in creating stability for businesses during such times. Read on to learn about the top priorities to address when things take a downturn and how Order.co helps organizations remain agile and resilient when facing uncertainty and market volatility.

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4 Types of external turbulence businesses must plan for

When large-scale procurement teams respond to difficult periods, they often focus on the aspects that have the most outsized impact on the company’s financial health: supply stability, cash flow, and price control. Let’s look more closely at the key factors teams address.

Supply chain disruptions

The supply chain is a delicate web that connects members of the international business environment. As such, changes to world markets often have immense impacts on global supply.

For instance, during the early days of the COVID-19 pandemic, stay-at-home orders and public health crises wreaked havoc on global supply levels. Even mature procurement functions with well-established vendor relationships found it impossible to source high-priority items.

According to Eric, “Large procurement functions have three to four levels of redundancy for mission-critical items — but may not for less-important supplies. Smaller shops may not have either.” Because of this, organizations with low headcounts or insufficient processes were forced to invest countless hours and extra resources in acquiring necessary goods, and they still ran the risk of coming up empty-handed.

Supply chain issues typically persist long past the events that cause them. But with better planning, businesses can soften the blow of a critical item getting backordered or ceasing production. While layers of redundancy (e.g., manually selecting three or four backup vendors for mission-critical items) work for larger organizations, companies of all sizes can use procurement software to reduce volatility in the supply chain.

Some organizations use group purchasing organizations (GPOs) to address these challenges. Though these organizations may maintain strong vendor relationships, GPOs require members to purchase within a set contract, potentially limiting access to the best vendor or pricing for a given company’s needs. A spend management platform like Order.co takes a vendor-agnostic approach to fulfillment, ensuring the best quality and terms are always within reach.

Financing instability

For established companies, the volatility caused by economic shifts, public health issues, and local or global events can directly impact financing and lead to investment losses. Smaller businesses may be more likely to face liquidity issues, resulting in inhibited growth, payment delays, or even the inability to meet loan obligations. Public events such as natural disasters or political unrest significantly impact markets, further exacerbating the effects of economic shifts.

“Whenever your buy and sell cycles are topsy-turvy,” explains Eric, “it creates situations where you need to smooth that out. Ideally, those ways shouldn’t cost you much to preserve margin.” Order.co’s Financial Offerings provide a ‘preferred advance’ to purchase necessary items at better rates and more flexibility than a traditional bank loan. Order.co can make purchases of up to $500,000 on behalf of buyers to help them meet their needs without the limitations of high interest rates or extensive underwriting, requiring just a simple fee and repayment schedule. “It gives you more financial optionality. You have more levers to control how your business spends money.”

Price fluctuations

Inflation is normal within an economic system. Over years or decades, the cost of goods increases — typically in step with the rise in other financial indicators like wages and employment rates. Cars, housing, commodities, and wages are common cost metrics for considering inflation. For instance, the average cost of a car in 2013 was just over $30,000. In 2023, that average climbed to over $48,000.

Unexpected events like natural disasters or social unrest often boost inflation because these factors affect production and logistics. Price increases may occur in specific sectors, such as power and food prices, or the economy may see the effects of inflation across the board. No matter the cause, inflation results in decreased purchasing power since individuals and companies must spend more on individual items.

Inflation also happens in response to other factors, such as increases in demand, production costs, or other costs, such as taxes. Lack of supply paired with inflation can lead to costly price spikes in the items companies need most. In prolonged periods of increasing costs, federal controllers may step in to control inflation through changes in interest rates.

Demand fluctuations

Changes in product demand can also create business instability. Demand changes include increases brought on by factors like supply chain issues or sudden virality as well as decreases due to economic changes. In any case, businesses must adapt their plans to meet demand without risking over- or under-investment in inventory or supply levels.

Certain types of industries are especially vulnerable to demand fluctuations. For instance, businesses with perishable goods, such as cannabis retailers, must closely monitor inventory levels to ensure they keep a steady supply without incurring spoilage if demand downshifts.

What internal challenges lead to operational turbulence?

Despite having little control over the above external business factors, organizations do have internal control over how they prepare for and respond to them.

The following three main challenges often stand in the way of companies’ ability to weather market storms:

Poor visibility: It can be difficult to make informed decisions in the face of change when you don’t have insight into organizational financial data. In times of uncertainty, having the best data as soon as possible allows the best decisions to be made. Eric notes that many organizations struggle to bridge the gap between data points across departments and systems, which leaves them unable to assess situations or plan ahead.

Procurement is often a significant blind spot for companies. This may be due to multiple factors, such as:

Poor financial processes for purchasing and tracking spend
Variances in spending or vendors between locations
Shadow spend occurring on credit cards and expense reports

Poor visibility often occurs because there are too many transactions and insufficient time to track them. The resources needed to track pricing and purchasing manually simply aren’t available to keep transactions from slipping through the cracks.

Lack of backup vendors: Relying on a single vendor for mission-critical or time-sensitive items is asking for trouble, even during more straightforward economic times. During turbulent market periods, failing to secure backup vendors can create chaos that threatens both operations and liquidity.

Fully mature procurement teams often have a failsafe for backstocked products or important items that might suffer from quality changes. They’ll typically keep three or four vendors in the wings to meet demand in case of issues. Smaller organizations may not have access to these arrangements, which sometimes puts them in a precarious position. Without product redundancy, buyers are at the mercy of the markets when price spikes (often artificial) occur.

Insufficient access to capital: Interest rates and fees often go up in times of turbulence. Federal bank measures to curb inflation usually begin by raising the prime lending rate. Institutional lenders tighten their lending criteria, loan offers become more conservative, and repayment terms are shortened, making it harder for businesses to smooth the financial path using financing.

How Order.co helps businesses navigate turbulence

Spend management software is ideal for helping procurement teams overcome the internal challenges caused by changes in external conditions. In fact, 60 percent of businesses are planning digital technology investments in 2023 to boost supply chain processes and data insights. Order.co is spend management software that helps companies navigate common issues in immediately helpful ways while addressing the most common challenges of supply chain and financial resilience.

Visibility and control

Centralization is an effective cure for spend visibility struggles because it removes the silos and barriers preventing finance teams from fully understanding their situation. Order.co offers centralized ordering and spend management for every purchase in the organization, no matter the department or location.

To combat the fact that manual spend management often occurs at month-end (after the damage is done), Order.co gives finance teams access to real-time data for understanding spending trends, analyzing them in the context of changing markets, and making better decisions in the moment.

The platform also allows companies to set spend guidelines, curate preferred products, and create dynamic spend controls by location, role, department, and more. This ensures every purchase follows established policies and gets recorded for future analysis and review.

Supply chain resilience

It’s particularly challenging for small and medium businesses to achieve supply chain resilience at scale. To avoid disruptions and delays from backorders, a procurement system like Order.co automates procurement for similar or exact replacements. This creates the same protection against backorders that large organizations build into their procurement functions.

Even better, this replacement can happen automatically down to the item level when our customers want it, without the need for a dedicated staff member to research and order replacement items. “AI to help you automatically source alternative items has been really advantageous in cases where businesses don’t have a strong vendor relationship [to alleviate backstock issues],” explains Eric.

Cost optimization

The best preparation for uncertainty is strong budgetary controls during times when conditions are favorable. Order.co helps businesses of all sizes understand and optimize spending, streamline product selection for better volume discounts, and identify opportunities for more efficiency.

SKU consolidation is a popular method for realizing procurement savings on high-volume items. The Order.co team and platform make it easy to identify frequently used items or those purchased across multiple locations. By adhering to a single item SKU for every purchase, vendors can offer better pricing. This approach also allows companies to optimize their inventory levels of these items to reduce the chance of backstocks or disruptions. Order.co ensures that items are of similar quality, making the end-user experience for these products virtually identical.

As an example, consider the personal protective gloves used in a healthcare setting. Doctors’ offices, hospitals, and other medical settings use a high volume of nitrile or latex gloves, and the quality of these products is important as it helps ensure the safety and sanitation of medical providers and patients.

Cost optimization for these gloves can help healthcare organizations take advantage of scale pricing, even when ordering across multiple locations. Similar products will be of the same or better quality than the original item, so workers can feel confident in the replacement item. Bulk purchasing of these items ensures a fresh box of properly fitting gloves is there when needed, reducing the impacts of supply chain disruptions.

Access to capital

Turbulence in the markets often translates to disturbances in the cash conversion cycle for organizations. This puts businesses in a tricky situation, trying to balance spending against changes in revenue or cycle timing. At a time when financing (like a business line of credit) is most needed, the costs and restrictions make it more difficult to successfully leverage borrowing.

Order.co offers flexible financing and terms for buyers without the drawbacks common to other forms of funding. Traditional commercial lenders often require organizations to maintain a minimum credit score or meet a set of financial ratios. These ratios examine the organization’s liquidity, profitability, and capital structure. For younger businesses and startups with fewer resources, these requirements limit access to capital for those that may need it most.

In some cases, traditional commercial lenders may require equity to loan money. This creates an additional barrier for companies unwilling to dilute their control of the company in exchange for financing.

Order.co Financial Offerings provides businesses with up to $500,000 in capital advance funds without the hurdles of traditional financing. With an Order.co preferred advance, buyers take advantage of better rates versus traditional borrowing, more flexibility to improve cash flow float, and fewer restrictions during the lending decision process. “There is no need to give away ownership through equity trade,” says Eric. As a vendor of record, Order.co facilitates the purchase of needed supplies and equipment while delivering favorable rates and repayment without the red tape.

Get Order.co for success in any business climate

Spend management is one of the most effective ways to increase the liquidity and resilience of a business. It enables better decision-making, creates stronger budgetary controls, and opens the door to new optimization opportunities.

If your organization could benefit from more effective planning and increased stability through any economic climate, request a demo of Order.co.

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