5 Emerging Trends in Procurement
By Hugo Britt | January 5, 2021
What sort of cool stuff do you expect to see in the future? Do you immediately think of things out of a science fiction film like flying cars and hoverboards? Or maybe you think of the not-so-distant advancements in robotics and machine learning?
For procurement professionals, the future isn’t so much about nifty gadgets as it is about observable trends and new ways of working.
Emerging trends in procurement
Here are what we believe to be five emerging trends in procurement and why they’re arguably some of the coolest things that will happen to the profession in 2021.
Procurement will apply learnings from 2020
It would take an extremely stubborn procurement team to plow ahead with business-as-usual after the disaster that was 2020. Thankfully, most teams have adjusted their ways of working, with some changes intended to last for the duration of the crisis, while others will be permanent.
- Becoming faster, more flexible, and more responsive. Take the PPE shortage, for example, where organizations simply could not afford to wait for procurement teams to undertake weeks-long RFx processes. Instead, sourcing heroes proved that in a crisis they could act fast and decisively. How can this be applied in a wider sense while balance compliance and risk management?
- Increasing the focus on risk. Risk has always been a part of the equation when making purchasing and supply chain decisions. In 2021, however, we can expect to see its importance grow even more. This means organizations will be willing to pay more for a product or service that comes with a lower risk profile than a cheaper option.
- Shifting away from JIT (Just-in-Time). JIT supply chains are designed to be as efficient as possible by only purchasing what is needed for the immediate future. Unfortunately, JIT supply chains collapsed when faced with a massive crisis like COVID-19. In 2021 we can expect to see a shift toward Just-in-Case supply chains. This means purchasing in greater volume and having fuller warehouses. If (or when) the next crisis hits, this will give procurement and supply-chain managers some breathing space to find alternative supply solutions without their organizations running out of vital materials.
Procurement will increasingly leverage AI
The artificial intelligence revolution in procurement is well underway, but machine learning takes time. This means that AI that was as clever as a four-year-old in 2019 could be as smart as a 10-year-old by 2021 as it gets better and better at tasks such as categorizing company spend.
Procurement AI solutions to explore in 2021 include:
Procurement will shift from end-to-end systems to procurement tech stacks
Last year, Gartner’s influential Magic Quadrant report declared that the days of end-to-end P2P suites are over. Organizations are shifting away from Enterprise Resource Platforms towards what is known as a procurement tech stack.
This best-in-breed approach involves building your own integrated ecosystem of procurement software solutions. You might opt to partner with one vendor for procurement analytics, for example, and a different vendor for supplier discovery, and so on.
The key to success lies in integration. Data should flow seamlessly between the solutions, whether it’s a tech stack of five or fifty elements.
Procurement will become influential drivers of positive change
Social and environmental factors may have taken a back seat in procurement decision-making for now, but there’s absolutely no doubt this will become an emerging trend in procurement this year.
In some organizations, the cultural change had already been locked in before COVID-19 hit, with every procurement decision taking sustainability into account, no matter what the circumstances are. There is also the influence of the Biden/Harris administration, which will certainly have a stronger focus on sustainability.
- Supplier diversity
- Environment/sustainable procurement
- Social procurement
- Modern slavery
Procurement will increasingly partner with the experts
We talked earlier about stubborn procurement teams. These are the ones that fail to recognize that some challenges – such as COVID-19 – are just too big to tackle alone. Therefore, collaborating and partnering with others to pool resources, share ideas, and find solutions to common goals is a smart move. It is often the best choice financially, as well.
Together, we can do more. This is a core belief here at Una, where our members come together to leverage the power of group purchasing to save time, money, and effort. It may not seem as cool as a hoverboard or flying car, but we can guarantee that partnering with a group purchasing organization (GPO) will take you further in 2021.
The smartest move you make this year starts with a phone call. Click here to learn more.