At the beginning of December, the world’s largest procurement networking and supply chain community Procurious published the 10 trends that will shape procurement in 2022 and beyond. We couldn’t miss the opportunity to give our thoughts about the exciting year ahead.
Disruption is constant, change is rapid and supply chains are more complex and interconnected than ever. If 2021 has proven anything, it’s just how interconnected businesses are and how weak supply chains can be. The key to transforming your procurement process into a strategic asset is to evaluate current trends and build a strategy that embraces changes.
By reviewing these 10 procurement trends and incorporating them into your organization, you can build a stronger, more agile supply chain. What’s more, you’ll give your company a competitive advantage unlike any other.
“Stakeholders expect organizations to proactively collaborate with suppliers to improve their mutual environmental and economic performance. It’s the responsibility of the procurement team to understand that impact and do everything in your power to improve it.”
As a company that fully supports the world’s sustainability goals, we completely agree with the importance of this trend. mysupply uses the Total-Cost-Of-Ownership approach which expands the traditional procurement process to account for more than just the price. This gives the opportunity for both parties to negotiate not only the price but also criteria like sustainability certifications. By including this in the negotiation process, suppliers are given more incentive to increase their efforts toward sustainability in the supply chain.
2. Ethical sourcing
“… “it’s an area where technology can play a significant role in managing procurement processes and improving global supply chain operations.”
Despite the pandemic, customers still value sustainable and ethical sourcing practices. Businesses will continue ESG ratings as part of the sustainable sourcing strategy. However, companies will need to do more in the future. Organizations that fail to do so will face increasing scrutiny, putting their reputation and results at risk.
3. Transparency and visibility
“Your organisation must have visibility over the clients with whom it is doing business, as deep into the supply chain as possible – after all, second-and third-tier suppliers might be involved in unethical sourcing practices that could lead to bad public exposure for your organisation.”
It’s clear that businesses will want to work more and more directly with their suppliers, making sure their supply chain is transparent, building strategic partnerships that are mutually beneficial and long-term. Direct collaboration with vendors will be key to keeping supply chains more resilient.
4. Digitisation & automation
“Without a digital transformation, procurement leaders are limited in their abilities to derive strategic insights from the data they collect.”
As evidenced by our work in digital procurement, we believe that without automated processes, companies will be stuck using spreadsheets and manual processes to conduct everything the procurement teams do. Cost savings in these instances will be minimal, and the chance to bring visibility into the spending will be missed. This leaves the budgets at risk of increasing tail and maverick spend, costly errors and unnecessarily high labour costs.
The good thing is that many organizations understand that transitioning to a digital solution like mysupply is the only way to reduce spending in a meaningful way.
“… cyberattack could lead to ransom demands, theft of intellectual property, and other risks that result in lost business, possible fines and damage to your company’s reputation.”
With the advent of Software-as-a-Service (SaaS) procurement tools, organizations must integrate multiple services and standardize processes across the enterprise. This standardization means that organizations can reduce the time it takes to complete the buying cycle while also improving the data necessary for analysing costs. However, as with all technologies, cybersecurity weaknesses in the procurement technology supply chain can lead to increased data breach risks if not managed appropriately.
6. Supply chain resilience
“A resilient supply chain is ready with the alternative resources so that it can pivot in response to an unforeseen situation.”
Supply chain disruptions cost the average organization 45% of one year’s profits over the course of a decade. Are you ready to pay the price? Having a backup supplier network can save you not only money but also save you stress from hearing that the regular delivery will be delayed with two months.
In 2022 data will be a key driver in the decision-making process as organizations will look for guidance on how to develop a more resilient and agile supply chain. Organizations are expected to make pivotal, permanent shifts from previous procurement practices. They’ll be less likely to over-rely on certain vendors. Logistics will be heavily scrutinized to avoid shipping delays. And business will prioritize local vendors to reduce risk.
7. Risk management
“In 2021, one-third of organisations surveyed in the research report had suppliers declare Force Majeure on contract obligations – a 50% increase over 2020.”
The motto of 2022 risk management in procurement should be “Foresee and prevent.” Risks are inevitable, so efforts are made to foresee the risks and set in place plans to avoid them by identifying and analysing the hot spots and assigning appropriate actions. To manage risks properly, companies should employ effective forecasting methods by using the available technology that helps monitor the processes and sort out problems before they spin out of control.
8. Supplier relationships
“With the security of stable relationships, suppliers are more likely to invest in technology and development for their own capabilities.”
The key advantage of strong supplier relationships is to grow stronger together and bring greater value for both parties. The better you know your suppliers, and the better they know you, the more likely you are to benefit from dedicated service, preferential pricing, minimising risks, and special terms. The supply chain becomes more efficient, cost-effective and productive.
9. Strategic sourcing
“Strategic sourcing considers the total cost of ownership, built on fact-based decisions, and business intelligence.”
One of the most common misconceptions about optimization in procurement is that it is limited solely to reducing purchase prices, but the benefits of rethinking the sourcing process can be far-reaching. reason for investing in a strategic sourcing suite is to transform sourcing within the organization, at 74%. Businesses also reported increased productivity through automation (65%) and increased savings (61%) as top drivers for pursuing strategic sourcing. Leading companies in procurement are able to push automation even in strategic sourcing to the next level. This is done by tailoring the process for each category that basically enables highly automated tenders and autonomous negotiations.
“The automation trend supports the ongoing transformation of procurement organisations. Procurement teams offer data-driven insights that support the organisation’s strategic goals through deeper relationships and supplier-led innovations.”
An increasing number of companies understand the value of transformation and automation and will look to streamline procurement processes. They know that any kind of significant, lasting change requires key data insights, which are impossible to get without automation. Procurement software automates manual tasks away, allowing procurement professionals more time to focus on the strategic side. Best of all, it gives teams the data insights they need to make informed decisions.
As a bottom line, 2022 is a very exciting year for us to develop and grow our companies ethically and sustainably with the help of technologies and good inter-business relationships. Let’s make it a good one!
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