What Next for Procurement? 24 Bold Predictions for 2022
To the sound of drummers drumming, we’ve reached our final blog of the year! We’ve made it through 2021, so what comes next for procurement and supply chain? Our 24 boldest predictions are right here.
Four words sum up 2021: The Great Procurement Reset.
Everything we knew at the start of the year has changed, and we’re all still coming to terms with what that means for our teams, companies, and careers. That’s why it’s the perfect time to break out the crystal ball and get our predictions in line for what we can expect next year.
Here are 24 of our boldest predictions for 2022:
Procurement Strategy
- China will dominate, but we’ll diversify regions
While China isn’t going anywhere, companies are increasingly setting sights on manufacturers in alternate geographies.
- Time to go local
More work will be put into developing alternate sources of supply. There will be a loosening up of control from the centre/procurement HQ, which (among other things) will lead to increased local sourcing.
- ‘Just in time’ is dead
Companies will keep a level of stock on hand significant enough to withstand disruptions, despite the additional costs.
- Relationships are key
The pandemic was a stark reminder that procurement and suppliers are mutually dependent. That focus on mutually beneficial relationships will continue, with all parties asking, “What’s in it for we?”
- Sustainability isn’t a buzzword
More companies will prioritise sustainable practices. Not only because it’s the right thing to do and has a positive social impact, but also because of the benefits resulting from ROI and cost reduction that come as part of the package.
That’s why Real Sourcing Network President Sarah Scudder predicts:
“Sustainability will finally become one of the most important elements of a successful supply chain.”
- Ethical sourcing becomes a core competency
“Procurement is responsible for ensuring that supply chains are free of unethical and unsustainable practices at every level,” said Euan Granger, Strategic Procurement Team Leader at Soil Machine Dynamics. “While that hasn’t always been top of mind, ignorance of supplier practices is no longer a viable excuse for unethical behaviours going unchecked.”
- Visibility remains key
Procurement teams will strive for better visibility. The majority of organisations are monitoring the sustainability performance of less than 5% of their sub-tier suppliers – which is worrying. Why is it such a big deal? HBR and Deloitte research shows companies that had visibility into their supplier base were much more likely to thrive in their day-to-day operations.
- Shipping delays will cause headaches
Respondents struggled to get their hands on supplies when they needed them in 2021. In fact, 55% experienced logistics and transportation slowdowns and delays. And nearly half (48%) had a lack of available supply due to production downtime and shutdowns. Add in the Suez Canal fiasco, and it’s likely we’ll be feeling the strain for a while yet.
Procurement Technology
- Expect a technology overhaul
Put simply, technology isn’t a ‘nice to have’ anymore. Digitalisation will make or break post COVID-19 procurement organisations.
- Automation will become mainstream
Some of us are letting technology do the heavy lifting when it comes to routine, data-heavy tasks. We predict automation technology will become even more common across procurement teams, freeing them up for more strategic tasks. As Dr. Marcell Vollmer, Partner and Director BCG, said: “Procurement has huge potential to automate operational processes, like PO-Invoice processing or onboarding of suppliers, but also has enormous potential in leveraging artificial intelligence and machine learning for strategic sourcing to deliver high value.”
- Technology is our best risk minimiser
Procurement teams are counting on technology to help spot danger on the horizon. In fact, nearly 40% of those we surveyed are considering implementing supplier risk management technology.
- Data rules all
More than ever, procurement and supply chain professionals need to be connected with what is happening up and down the supply chain. Data helps with that. The pandemic is still creating unpredictable demand and supply issues, and will for some time. We all need to stay connected to the data and remain vigilant to change and agile to respond. As Omera Khan, Professor of Supply Chain Management at Royal Holloway, University of London, said: “Too few organisations appreciate the costs of incomplete, out of date, or low-quality supplier data. If they realised their vulnerabilities in fraud, compliance, supply chain risk and purchasing performance, more would invest in better supplier data management.”
- Fighting cyber criminals
Procurement will be expected to take an active role in preventing cyberattacks – both in their own teams and for their suppliers. Magda Chelly, Head of Cyber Risk Consulting at insurance broker Marsh Asia, suggests getting it in writing: “Companies do not often include data and privacy within their contracts. Include the right clauses for privacy. That won’t protect you from data breach, but it will show due diligence when it comes to vendor management.”
- Your future in procurement depends on tech skills
As Vice President of Global Procurement at Compleat Software Max Kent put it, “Having undergone a digital transformation — or at the very least being comfortable with multiple procurement-based systems — is going to be a must for all talent going forward.”
How? Get familiar with the current technological-based procurement systems, said Charlotte de Brabandt, Global Procurement and Digital Keynote Speaker. “[T]he future of autonomous procurement will be an upgrade to whatever technology that is currently used in the procurement industry.”
Procurement Workplace
- Senior leadership will expect more from procurement
80% of our survey respondents said supply chain is important or critical to their organisation. But that puts even more pressure on us to perform, said Harold (Hal) Good, CEO of Procurement Pros Group.
“In order to live up to the higher expectations this generates, the profession must utilise all available resources to correctly analyse and predict market changes and develop viable options to agilely and effectively adjust to changes of all types.”
- Working from home forever?
The bulk of procurement teams won’t be returning to the office for a long while (if at all). CPOs will need to be deliberate in developing and implementing strategies that will help their teams be successful in building internal and external relationships, even if that happens virtually.
- Ditch the bulky RFPs
2022 could be the year teams finally ditch lengthy RFPs. Nothing puts off a supplier more than a bulky RFP. If we want the best value and the best response, we need to ask for less, not more, in this process.
- No more one-size-fits-all contract templates
If it’s clear that a relationship is strategically valuable to you, the contract should reflect your partnership. Those more valuable contracts need to be adjusted for pricing, payment terms, or any other number of factors.
Procurement Career
- Procurement will attract new people
Procurement leaders who have weathered the COVID storm will be highly valued in years to come. There will be more graduates than ever that apply for supply chain roles due to the increased visibility and respect for the profession that has been gained during COVID.
- Starting a job will be hard
Yet these new starters will be likely to struggle if everyone keeps working remotely. There will be a much higher fail rate for on-boarding new recruits and retention will be an issue the longer the pandemic keeps us at home.
- Employees will continue to have the power
Procurement is in-demand, so reach for the top of the salary band, advises Procurious’ recruitment partner, The Source. “Right now, there aren’t many candidates but a lot of jobs. This means that the power is in the candidate’s hands and they can and should negotiate.”
- But that power won’t last forever
The Source also warns: “Right now, there’s about a 65-75% chance of negotiating for and actually obtaining a higher salary. But as more talent comes onto the market, that might change – so get in quick.”
- Being good isn’t good enough
If you want to get promoted, you obviously start by being excellent in your job. But that’s not enough.
The people who will advance the career ladder going forward will be those who build a strong personal brand.
That includes skills like managing up and adding value to your network.
- The future is now, and you can define it
As Procurious Founder Tania Seary put it: “Senior leaders in your company are desperately looking for answers, and there’s no one better placed to help than you. You have the power to change your organisation for the better. You can influence change at all levels, and play a huge part in shaping a fairer, healthier, more inclusive environment for everyone.”
So there you have it. What predictions would you add?
Missed our webinar: What Next? The Great Procurement Reset? No worries! Catch up here for great advice from procurement leaders on preparing for whatever comes next.
And don’t forget to see what your peers predicted. Download the What Next? research report, proudly sponsored by Compleat Software.
