Procurement Future Trends

Organizations that are unprepared will be chasing the same low value targets with lower growths. Upcoming trends in procurement are

A renewed interest in developing local and ethical sources

The growth of home-grown supply may lead to a small reduction in overseas dependency. And as governments’ sign up to more environmental commitments and consumers continue to show preference for socially responsible brands, procurement needs to be ready to roll up its sleeves to deliver step changes in this space. For too long, most of us have done little more than muck about in the shallow water. It’s time to dive in head first.

Greater supplier collaboration

As more companies deploy spend management platforms that automate or enable employee self-service for tactical procurement activities, procurement departments will find mundane supplier activities waning. That will give professionals across the source-to-pay process more time to focus on higher value add from suppliers, including suppliers of services.

Working collaboratively with suppliers to develop innovative solutions is second nature to much of the retail and manufacturing sectors, but its high time the services sector stopped talking and started acting. This is a team objective, not just a leadership one. Procurement should reposition itself as a business enabler by proactively analysing spend data patterns and supply markets. We must deliver insights and recommendations that let business leaders make key decisions on how to meet their financial goals.

Suppliers are likely to welcome this shift; they would rather focus on value too. Both sides have always held collaborative supplier relationship management as a goal, but we just never had time to do it. Now it should become more widespread.

Time for indirect procurement to finally get some respect

Procurement could improve its positioning internally by handing over the tools, analysis and responsibility to the business. We have to lose our “policing” persona and progress toward empowering the business with analytics that allow them to make local decisions. Functions within firms that have earned the respect of the businesses and executive stakeholders will find that proverbial seat at the table is there . . . with the chair pulled back and ready.

Reverse auctions for SaaS

Certain SaaS software has become commoditised enough to make the prospect of “rip and replace” a lot less daunting, and in some areas there is very little hesitation to switch out. This means that sourcing groups in some cases can get away with quick and easy reverse auctions on solutions that just a year or two ago would have required complex RFPs. That means those SaaS vendors are under more pressure to compete, and there are better deals to be made.

Continued technology evolution

Integrating sourcing, purchasing and procurement technology, and its interface, into wider business applications, has been single-handedly transformational for every organisation that has had the acumen to implement it to date.

Technology will continue to evolve over the medium to longer term to a mode with a core “container” with a myriad of transactional apps. Companies will see the impact as they start to control a much larger percentage of indirect spend.

Other noticeable trends are

• Value creation is more desired that price management in the future
• Innovation transfer is required for the success of the entire supply chain
• Internal and external collaboration is a business requirement
• Business strategy alignment will be required between all links in the supply chain
• Distribution, logistics and asset management will continue be a bigger priority
• Agility, flexibility, integration, transparency and alignment will dominate competition
• Life cycles are becoming shorter