The procurement and supply chain industry continues to evolve rapidly due to the lightning-fast technological advancements of the modern era. The COVID-19 pandemic forced every organization – big or small – to go digital and adapt to the changing procurement ecosystem.
However, it was not easy for procurement and supply chain managers to go digital and stay on top of these changes. But if you want to maintain the integrity of your supply chain and see your businesses succeed, adapting to these changes is extremely crucial.
On a side note, while adapting to these trends is important, rather than treading on the heels of change, it will help your organization if you are ahead of the trends that are shaping the future of procurement and supply chain management. Predicting these trends will help your company stay ahead of the game.
Top 10 Procurement Trends for 2022
The following are the trends for the procurement and supply chain industry for 2022:
1. Automation in procurement
The recent global crisis showed us that intelligent technologies are needed not just for similar contingencies, but also because it is good business. Automating the procurement cycle will help boost the bottom-line profits of your organization. Procurement analytics or more importantly Artificial Intelligence (AI) integration will drive better outcomes and improve employee skill sets and efficiencies.
Many organizations have started integrating automation and AI into their supply chain to tackle contingencies and gain a competitive advantage. Automation allows you to streamline repetitive purchasing tasks while AI attempts to mimic human intelligence and can assist with more complex and challenging tasks.
As we move forward in 2022, partnering AI and automation will boost procurement intelligence operations.
2. Sustainability
2022 is said to be the year of sustainability in procurement. Economic sustainability will be the focus as businesses are recovering from the global pandemic and are adapting to more sustainable solutions.
Most companies have started to rethink their strategies due to the pandemic. This could be an opportunity for them to go beyond compliance and into impact-based value creation. By shifting a company’s purchasing power in the right direction, social procurement can enable corporations to create social and environmental impacts. In the near future, most businesses may turn to more extreme measures in the name of environmentalism. However, it may not always be a smart choice as these attempts at sustainability may not be long-term.
Such extreme measures need will require a complete overhaul of each step of your supply chain which will not be feasible. Hence, it is always better to start small like updating your packaging to be more sustainable and environment-friendly. Making changes gradually can increase an organization’s long-term commitment to sustainability, without overlooking any crucial steps or burning out.
3. Prioritizing risk management
The current global procurement and supply chain industry is constantly at risk of disruption, thanks to the increased volatility and unpredictability of the COVID-19 pandemic. Your organization can certainly not control these contingencies but, you can control how your procurement process and supply chain prepares for and responds to these threats.
4. Supply chain visibility
The state of your organization will be known to you only if there is transparency and visibility in your supply chain. No matter what kind of volatility threatens your company, a transparent supply chain will help you overcome it.
Digitization has revolutionized the supply chain and hence, it is easier to track and access every piece of information in a jiffy. Minor issues like order errors and delivery delays can be prevented with increased visibility in your supply chain.
5. Maximizing talent
Companies are battling labor shortages across the globe, thanks to the pandemic and hence, it won’t hurt to look at utilizing external workforces. Businesses will see a heightened need to maximize talent utilization and manage external workforces. Businesses are realizing the benefits of tapping into contingent workers and external service providers like freelancers. This gives undenied access to quality talent and flexibility and hence, the organizations will be better prepared for contingencies.
6. Planning for contingencies
Contingencies arise when you least expect them to and your organization needs to tackle these contingencies with resilience.
The current global crisis has highlighted the need for an extensive plan for contingency to safeguard supply chains. The past two years have taught us the need to monitor third-party risks around your business 24/7 wherever you conduct business. When your company learns to manage these contingencies at the sourcing stage, it will be easier to mitigate risks at an early stage. This will be a top priority in 2022 to ensure resiliency as more disruptions unfold.
7. Green supply chains / Ethical sourcing
The pandemic has highlighted another important aspect in the procurement and supply chain industry and that is – being more sensitive to the needs of our Mother Earth. There is an urgency in the procurement industry to procure materials coming from supply chains that are consistently green. This essentially means that there is a growing demand for suppliers who are consistent in ethical sourcing.
8. The growing importance of supplier relationship management
Technology and digitization of procurement are a significant force in the supply chain management process, but so are the humans flourishing it. An organization’s vendors or suppliers are crucial for business success and forging strong, long-lasting relationships is necessary. The global crisis highlighted the importance of supplier relationships. When in need, only your most trusted suppliers will come to your rescue and that is the magic of a strong supplier relationship.
9. Workforce globalization and challenges
The traditional workforce is dying a slow death with remote working still preferred by a lot of companies. It is okay for companies to expect major changes in the labor component of most supply chains. With the pandemic, there is a shortage of employees working in the logistics department and this can continue to be a problem. While remote working is a boon for other industries, the supply chain industry needs warehouse and logistical managers on the ground as well. Companies will have to be prepared to face such shortages and overcome them.
10. Digitization in procurement
Digitization is necessary to secure the future of supply chain and procurement. It is non-negotiable. But what is digitization? It is the practice of putting information into a digital format. This practice has the potential to make your entire supply chain more dynamic, streamlined, and mobile. All of this can be highly effective on your organization’s bottom line.
Yes, the transition can be challenging but what can be more challenging is not implementing a procurement software that digitizes your entire supply chain. The pandemic has highlighted the harsh realities of the traditional methods of supply chain and it is time we upgrade.
Conclusion
The COVID-19 pandemic is not going away anytime soon and the companies will never be prepared for what is next in-store. However, we can always plan for contingencies and improve our chances at managing unforeseen circumstances by digitizing the supply chain, automating the procurement process, turning towards a more sustainable approach to procurement, and much more.
