TOP TRENDS OF PROCUREMENT 2018
Procurement can be a highly process-oriented, administratively driven function mainly because of the perceived need for multi stage sourcing cycles. AI, big data and digitization are appealing phrases but they are mere agents of a bigger force i.e. the desire to accelerate change.
“Procurement’s role is changing.” – This is something we hear a lot these days and we keep hearing about transformation, technology, and the increasing awareness of procurement as a strategic contributor to an enterprise’s growth and performance. With technology changing at a rapid pace and procurement practices being regularly updated, the trends within the procurement function have been constantly changing. So here are the top procurement trends that are set to take off in 2018.
The Top Procurement Trends in 2018 are as Follows:
1.COGNITIVE PROCUREMENT: Cognitive procurement assists the supply chain managers in decision making especially in a complex and dynamic environment. The pace of innovation is picking up momentum at an exponential rate. Emerging technologies such as blockchain, 3D printing, autonomous mobile robots, IoT, machine learning, and related technologies are continuing to get popularity. According to a research study conducted by The Hackett Group, 85% of procurement leaders believe that cognitive technologies will transform their operations over the next three to five years. More importantly, this updated technology will allow buyers to make much smarter and more informed decisions that drive value and that go beyond cost savings.
2.CYBER SECURITY: Cyber security is another matter which will be gaining traction in this coming year of 2018.The procurement trends indicate an increased emphasis on cyber security more than physical security. Companies will need to step up their security and privacy protection protocols in 2018 as there is a rapid proliferation of data and connected end points. It is estimated that business disruptions caused by cyber-attacks will significantly increase and interrupt supply chains. This is why it is advised to increase the level of attention given towards it.
3.BREXIT CAUSING DISRUPTION: This is a political decision that has caused a massive impact on economy all across the globe affecting business and supply chains at large. Even though the incident took place in 2017, its impact of which will be felt more strongly this year. Uncertainty over the impact of Brexit has prompted 63% of European countries to cut the UK out of their supply chains, entirely.
As many companies decide to move their supply chain out of the UK and labor market as a result getting highly affected, procurement teams will need to start proactively helping their businesses minimize exposure to contract and legal risk.
4.INNOVATION: Companies have to rely on innovation in an attempt to gain a competitive edge against the competition. Companies will have to be more risk averse while seizing opportunities to adopt the latest procurement trends. Smart retailers will begin to market their products from an information/sustainability-first standpoint. In order to make it credible, they’ll need to invest in integrating technology that makes this level of transparency possible at every level of the supply chain.
5.NEARSHORING: Nearshoring is amongst the new procurement trends this year as companies try to exploit country based opportunity, shared laws, and has closer control of procurement and supply chain functions. However, in today’s shifting landscape, some of the most cost-efficient aspects of outsourcing to those areas are now presenting unforeseen challenges. Nearshoring is predicted to lead to reduced shipping costs, reduced trade barriers, simplified auditing and compliance and mitigated risk in economically stable climate.
6.TRANSPARENCY: There’s been an explosion of demand from consumers to know where their products are originating from and the required information is extremely granular. Procurement is going to utilize the opportunity to make suppliers move faster and thereby bring transparency to supplier performance and risk across their business. People everywhere want to be ensured that they’re dealing with ethically-based suppliers. As a result, transparency and sustainability are key best practices that add up to giving more credibility to this function.
7.INTEGRATION OF FUNCTIONS: In the year ahead, companies will move towards integrated platforms. 68% of procurement executives and 70% of practitioners believe procurement at their company is becoming more collaborative with other parts of the business.
As a part of their strategic move, businesses are collaborating various business functions including procurement and supply chain.
8.SPEED OF RESPONSIVENESS: By reacting to competitive pressures and real-time changes in markets, procurement team is being valued as agile, nimble and one that can respond quickly to immediate needs that arise. Speed of response is the new competitive edge.
Managing risk, creating value and being agile enough to respond to threats and opportunities is the need of the hour. RFI is no longer relevant and the months-long RFI process is getting either distinctly shortened or completely done away with. The primary reason for that is requirement for speed.
Procurement teams will need to demonstrate the ability to respond quickly, react vigorously and shed many of the old stereotypes. There is tangible evidence that this craving for speed is changing the way procurement interacts in the organization. Procurement in the coming year is expected to stay attuned to market trends and opportunities by relying on market data and supplier intelligence.