Well, if 2020 taught us anything, it was the value of having a solid procurement team and being prepared for anything.
In a year of turmoil, we faced a global disruption in the supply chain from coronavirus, the UK leaving the EU, a close and acrimonious election in the USA, devastating fires in Australia, Brazil and the USA, a massive explosion in the port of Beirut and locust swarms sweeping across West Africa.
Combined, these events shaped a year of disruption and adaptation.
So, what are the hot trends for procurement in 2021?
At the top of the agenda is climate change and sustainable procurement. We’ve seen the emergence of strong environmental software platforms and a growing desire for using procurement as a force for environmental and social good.
Procurement professionals globally are signing up to sustainable practices and large corporates are actively engaging with procurement to drive the social agenda that their clients (both end consumers and corporate customers) are demanding.
And that demand is becoming ever more urgent as warming temperatures and man-made pollution are increasingly impacting where we live, our food supply and the natural environment.
2. Shifting Working Practices
The next major shift has to be the impact that coronavirus has had on how we work. Coupled with an increasing focus on the environment, property directors and staff are reconsidering the size of large city center office complexes.
There has been a huge upswing in the use of video conferencing and reduction in commuting and business travel. No doubt, some office workers will return to offices as the pandemic eases, but most procurement teams are considering the benefits of reducing their property footprint and the consequent reduction in facilities management, rent and utilities charges.
Close behind working practices is the inexorable rise of Automation. Digital tools in all departments are changing the way that tasks are done.
Robotic Process Automation, Artificial Intelligence engines and 3D printing are now mainstream and, as the power of these tools increases, the nature of how procurement works and the solutions we introduce to our internal customers is changing.
Real time data and end to end visibility that used to take weeks to prepare is now accessible instantaneously for stakeholders. Negotiating a 5% discount on a moulded part fades into insignificance in the face of a 50% reduction in cost through 3D printing…. and AI in all parts of business is revolutionising marketing, production control and contract creation.
4. The rise of the long tail
Once, when we relied on human beings for our supply chains, we drove supplier consolidation as a strategy. They could achieve economies of scale, see across company and department boundaries and invest in new technology.
But this landscape has changed. Digitalization has enabled the rise of the micro-supplier. Small firms and individuals using tools that can be built or deployed relatively quickly. The skill comes in how to use these tools and customize them for each individual client.
In Fintech, procurement is working out how to identify and work with small, niche suppliers to deliver innovative software packages. In clothing, large brands with a single range are losing market share to “Shop Fronts” like Asos and Amazon which allow thousands of small brands to reach a consumer audience. In distribution, Just-Eats Uber and Amazon have created ways of moving products and people without a reliance on large suppliers.
It seems likely that this trend will continue with new models increasing the need for procurement teams to manage more smaller, rather than fewer larger suppliers.
The trends that nearly made the top 4:
External Data. When I started in procurement, each company ran its own due diligence assessment on a new supplier. Then D&B and others started providing a central service to check financial stability. Today, those types of external data feeds are available in hundreds of different areas. From raw material prices, to sustainability metrics and reputation… data providers can plug directly into your supplier management databases to give an instant alert to supply chain risk or price movements.
Traceability. There is certainly a trend towards end-to end traceability of materials… powered by blockchain, RFID, Smart Contracts and Smart Tags.
Certified end-to-end-secured supply chains are certainly set to rise, but the landscape is still evolving and transparency still feels patchy… Perhaps a trend for 2022?
Self Service Bots. New AI enabled procurement bots and voice recognition customer service tools are appearing daily. But in reality many procurement organizations are still struggling to get the best out of existing Source-to-Contract, P2P, Supplier & Contract tools. So, for me this feels like a trend that is a step too far for many in 2021.
Responsiveness. The ability to respond quickly has always been critical, so it’s not a “2021 trend”….. but 2020 really showed us the value of agile responsiveness. The winners were not those companies (and countries) that had fully formed plan envisaging every possible outcome…. but, those that were agile and quick enough to make swift, decisive decisions.
In 2021, it is, perhaps, this last point which underlines that the days of a slow, structured procurement process, driving a 6 month-long RFP process may be ending in favor of a more dynamic, responsive procurement capability.