This year has been a tough one for most industries, and procurement is no exception. Procurement organizations are expected to adjust and adapt according to the prevailing economic challenges. Here are trends to look out for in the procurement industry.
1. Building Deep Supplier Relationship
A strong supplier relationship is a priority for procurement organizations. However, most organizations often put it on paper without actualizing it.
This year, we hope to see departments implement consistent processes across supplier segments and categories. Procurement firms will adopt a more structured approach to fostering supplier relationships.
The process will involve segmenting suppliers vital to the organization’s supply chain into tiers. This enables a strategic approach to building supplier relationships at each tier. With different tools, firms can monitor partnership with each tier and implement strategic plans to build better relations where needed. This process will enable meaningful connections between suppliers and customers.
2. Ongoing Digital Transformation
Digital transformation in the procurement space is an ongoing process as every year there’s a new development. Different organizations will adopt different software depending on the organization’s size and the specific needs of the procurement department. Most organizations focus on tools that target contract management, spend analytics, risk management, and SRM.
With the many technological advances in procurement, the challenge has always been settling for the right tools. Often procurement professionals are stuck between end-to-end services or a mix of best-of-breed capabilities. For an organization to choose the right tech, the focus should be on its value.
3. Increased Volatility
Market volatility is at an all-time high, given the devastating effect of coronavirus. The situation could worsen over the coming months because of the fluctuating commodity prices and shifting trade tariffs and barriers.
The global supply chain is increasingly becoming unpredictable, and therefore, risk management must be a top priority for procurement firms in 2020. With the right processes in place, procurement firms can track suppliers, manage commodity-related volatility, and predict problems before they happen. An investment in analytics helps predict change and avert any disruptions before they escalate.
4. Delivering Value Beyond Savings
The primary goal of a procurement organization is to drive savings. However, this year, procurement firms are going beyond to meet the demands of SG&A functions, thus doing more than just cost avoidance, cost savings, and cost containment. Given the technological advancement and talent in the procurement space, procurement will contribute significantly to the overall organization’s strategic goal.