What Will The 4 Hot Topics In Procurement Be In 2030?
Look at your latest supplier contract. Does it specifically mention Zoom catch-ups? If not, why not? Sally Guyer from World Commerce & Contracting talks with Procurious about getting the most from suppliers and technology.
Have a look at your latest supplier contract. Does it specifically mention communication like regular Zoom catch-ups or phone calls? If not, you’re missing a trick.
Procurious Founder Tania Seary recently spoke with Sally Guyer, Global CEO of World Commerce & Contracting on getting the most out of supplier relationships and predictions about the future of procurement.
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It’s been a wild year, but disruption isn’t unique to 2020.
“I think it’s really interesting because there have been numerous supply chain upheavals inflicted by disaster in the last decade,” Sally says.
“You’ve got things like the volcanic eruption in Iceland, Japanese earthquake and tsunami, the Thailand floods, numerous hurricanes, not to mention the global financial crisis which also needs to sit on that list; yet we don’t seem to have learned very much,” Sally explains.
“Most companies still found themselves totally unprepared for the COVID-19 pandemic.”
After this crisis is over, companies will fall into two categories: those that don’t do anything and hope that a disruption like this never happens again, and those that map their supply networks.
Supply networks
You should know how your suppliers (and your suppliers’ suppliers) fit together, which is why mapping out your network is so useful.
Companies who already made the effort to document their network acted quickly when the pandemic spread. Other companies were floundering and reactive.
“We know from our research that many organisations typically don’t see beyond the first tier of suppliers, or possibly tier two,” Sally says.
“If we ever doubted the importance of visibility, the pandemic has provided a dramatic example of why it’s absolutely essential to have insight into sources of supply.”
Sally is seeing leading organisations require suppliers to participate in supply chain mapping efforts as part of their contract.
And it serves an important part of rebuilding.
“[We’re] moving away from the linear and much more to a recognition that supply networks’ supply ecosystems are a huge number of organisations all interacting with one another where there needs to be fluidity amongst them all.
“And that’s essential to accelerate and support recovery.”
Sustainable cashmere
Companies are also investing more heavily in technology to help them gain end-to-end visibility.
Blockchain technology is particularly noteworthy.
Sally gives the example of tracing Mongolian cashmere production. The country is famous for its luxurious fibres – producing nearly a fifth of the world’s raw cashmere.
And even though cashmere is considered natural and sustainable, soaring consumer demand is fueling overgrazing and damaging the land.
So Toronto-based Convergence.tech and the UN teamed up to create an app for Mongolian farmers, backed by blockchain technology.
Now the UN is able to interact with over 70 different herders and eight cooperatives through a simple app.
Farmers use the Android app to register and tag their cashmere. Then their location is pinned on a map to allow for end-to-end tracking. The UN works with the farmers and other producers along the supply chain to improve sustainability.
“Farmers are willing to have their goods marked in return for training on better practises, and then open markets pay fair prices for truly sustainable and high-quality cashmere,” Sally explains.
“Everybody benefits. Everybody wins.”
Better contracts, better relationships
Another way technology is transforming the supplier/client relationship is through communication.
Sally advises all clients to include communication obligations in supplier contracts.
“It comes down to simple things like if we want to do video conferencing does your organisation support Zoom or not, because if I do and you don’t then [that’s an issue],” Sally says.
It’s not rocket science. All good relationships hinge on good communication, says Sally.
“Fundamentally, partnerships are founded on robust and clear communication, and you know I always talk about professional relationships in the same context as I talk about personal relationships,” Sally says.
“If you don’t have clear communication with your friends, with your partner, with whomever is around you, then you are not going to have a very successful relationship.”
While you can’t provide for every eventuality in your contracts, you need a robust framework to support the relationship which means communication needs to be at the top of the agenda.
Predicting the future
The year is 2030. What are the hot topics in procurement? Here are Sally’s predictions:
1) Sustainability
“We’re still a long way from creating our sustainable planet and it has to be something that we all continue to champion,” Sally says.
“We need to be promoting best practices to reach the next level where we’re actually starting to give back. Not just to seek neutrality but actually give back.”
2) Social inclusion
“I can’t imagine that social inclusion wouldn’t be important in 2030,” Sally says. “Perhaps a scorecard of corporate performance on social inclusion and social value.”
3) Technology
“Numbers suggest we’re only using 30% of the data that we are producing,” Sally says.
“And if organisations are genuinely on a journey of continuous improvement then they need to be using data and the likes of artificial intelligence natural language processing if they’re going to continue to advance.”
4) Integration
“We need to organise for integration,” Sally adds. “We need to break down the internal barriers that exist.
“We all operate in silos. We’ve got organisations who have a buy side and sell side and they have no idea what’s going on on either side of the organisation. So those companies are starting to look at how they create an integrated trading relationships function.”
Sally Guyer can be seen in our exclusive series The Future of Supply Chain Now.
