Five trends that will define procurement in 2021
1. Artificial Intelligence
There is no doubt among the experts that artificial intelligence and machine learning will be having a huge impact on procurement function in the near-term future. However, the CPOs are still trying to figure out how it will impact their way of functioning and to what extent.
Some experts believe that traditional procurement will be completely transformed and done by automated systems going ahead. However, instead of looking at this as a challenge, they are looking at this as a huge opportunity.
In most of the big companies, these days, procurement is the biggest driver of the company’s bottom line. Also, outsourcing has made it an even larger player in managing costs and achieving savings at the organizational level. So the evolution of the cloud based systems is seen by many companies as an opportunity to grow their relationships with the suppliers. Also these systems are growing in terms of their capabilities as well as user friendliness. These systems also provide APIs that help them interface with any other system used by the supplier and exchange information.
2. Sustainable Procurement
Due to the advent of social media, the information flow amongst the consumers is happening at the speed of light. This has made them more aware and also demanding of ethical products from the companies. Consumers want to have a complete idea of how the goods were produced and the kind of impact they have on the environment.
So this puts added responsibility on the procurement team as all the business functions are putting pressure on the procurement to deliver a high level of transparency. This trend of sustainable procurement is being felt globally across all the large organizations. So the procurement teams are in turn putting pressure on the suppliers to ensure that they are complying with the stringent CSR standards.
3. Talent Acquisition
One of the most important factors in creating a successful procurement function is to have the right talent at your disposal. However, selecting the right talent is probably one of the biggest challenges faced by the procurement organizations today. Firms are also believing in the motto of growing their own talent in-house as poaching talent from competition is neither sustainable nor an efficient option. Hence they are investing heavily in hiring fresh graduates from colleges and training them. However the problem faced in this strategy is that not a lot of graduates have thought of strategic procurement as a career option, so the role of hiring managers becomes very important in advocating procurement as a highly lucrative career option.
Moreover, the fact of the matter is that strategic procurement, which earlier comprised only 25% now makes up more than 50% of the total workforce. In order to manage this challenge procurement is also recruiting talent from other business functions including sales as they have a better knowledge of business and can have a tremendous impact on procurement.
4. Change Management
Constantly transforming the procurement function to make it more agile and sensitive to the business needs is one of the biggest challenges of the CPOs. At the same time there is also a danger that the CPOs might end up doing too many things too fast just to tackle this change. So it’s very important for the CPOs to tread a middle path very carefully. The most important thing is to stay focused on customer satisfaction more than anything else.
5. Agile Procurement
Constantly changing business models also demand a different sort of mindset from procurement. This includes faster supply of goods, richer insights as well as dynamic and proactive actions to global events. Modern procurement has been obsessed with Total Cost of Ownership, however the future is going to be decided by the Total Value of Sharing where in the procurement will need to identify the suppliers that will deliver an immediate and sustainable impact.