Procurement in Turnaround: Control, Credibility and Cost

In a turnaround environment, procurement is often pulled into the spotlight as a means of reducing cost or easing short-term pressure. That focus is understandable, but it risks narrowing the role procurement actually plays when a business is under stress.

In practice, procurement in a turnaround is less about price and more about control. When handled poorly, procurement activity can destabilise supply and undermine confidence. When handled well, it helps management teams stabilise operations, maintain options, and create the conditions for recovery.

That distinction is often overlooked.

Procurement behaviour sets the tone

Suppliers are rarely surprised by a turnaround. They see the indicators early through changes in payment behaviour, volatility in demand, and organisational disruption. By the time a formal turnaround process is underway, many suppliers have already formed a view on risk.

In that context, procurement behaviour sends a strong signal. Renegotiations, tenders, and changes in ordering patterns are interpreted not just commercially, but strategically. A rushed or overly aggressive approach can quickly erode trust and reduce optionality. A measured and structured approach, by contrast, reassures suppliers that the business remains in control, even if performance is under pressure.

This is why procurement in distress is never neutral. It either reinforces confidence or accelerates uncertainty.

Control before optimisation

One of the most common mistakes in turnaround situations is to pursue optimisation before control has been re-established.

There is typically a small group of suppliers without whom the business cannot operate effectively. These tend to be unglamorous but essential categories: logistics, IT and connectivity, facilities and maintenance, utilities, and core outsourced services. Disruption in these areas consumes management time, undermines customer confidence, and can quickly create knock-on issues elsewhere in the organisation.

Logistics is a useful illustration. While it may appear competitive, many businesses rely on a limited pool of carriers capable of meeting their operational requirements. It is a relatively small market in practice, and reputations travel quickly. Poorly handled procurement activity can narrow the field of viable suppliers at precisely the moment resilience is most important.

Establishing control over these critical relationships is therefore a priority. It creates stability, preserves optionality, and reduces the risk of operational distraction.

Cash is shaped by procurement decisions, not just prices

Cash remains an important consideration in any turnaround, but it is often influenced more by procurement structure and behaviour than by headline pricing.

Payment terms, deposits, prepayments, and contractual protections all affect liquidity. These mechanisms often shift quietly in distressed environments as suppliers reassess risk. Early payment may become routine. Credit limits may tighten. Additional protections may be introduced.

None of these necessarily appear as immediate cost increases, but all influence the financial profile of the business. In many cases, restoring discipline and clarity around existing arrangements delivers more benefit than renegotiating rates.

Crucially, cash improvement achieved at the expense of supplier confidence or service continuity is rarely sustainable. The objective is not to prioritise cash at all costs, but to ensure procurement decisions support a stable and credible operating model.

Flexibility reflects reality

Most operating cost contracts run for relatively short periods, typically one to five years. In a turnaround, that horizon matters because the future operating model is often uncertain.

Volumes may change. Site footprints may evolve. Service requirements may be reshaped as the business simplifies. Against that backdrop, rigid procurement commitments can become constraints rather than solutions.

Flexibility in contract structure, scale, and exit rights is therefore not a weakness. It is a recognition of uncertainty. Suppliers often understand this, particularly when discussions are transparent and grounded in operational reality.

From stabilisation to value creation

As a business moves out of acute distress and into a more stable transformation phase, the emphasis within procurement naturally shifts.

Once control has been re-established and supplier relationships stabilised, optimisation becomes more appropriate. At that point, longer-term contracting, supplier rationalisation, and performance management can deliver sustainable cost reductions. Those reductions translate into EBIT and, over time, into enterprise value.

The sequencing matters. Optimisation pursued before stability is established often proves fragile. Optimisation pursued once control and credibility are restored is more likely to endure.

A discipline defined by judgement

Procurement rarely features prominently in turnaround narratives. When it works well, it is largely invisible. Suppliers continue to deliver. Operations stabilise. Management attention remains focused on rebuilding the business rather than resolving supply issues.

When it fails, however, the impact is immediate and obvious. For that reason, procurement in a turnaround is less about tactical execution and more about judgement. Knowing when to hold steady, when to negotiate, and when to optimise matters more than the mechanics of any individual deal.

The most effective turnaround leaders recognise this balance. They treat procurement as a control discipline first, a commercial lever second, and a cost optimisation tool only when the timing is right. In doing so, procurement supports recovery rather than becoming another source of risk.