Top 7 Trends Shaping the Future of Sourcing & Procurement Beyond 2021
If the mantra of 2020 was “uncertainty,” the term of 2021 will be “adaptability”.
As economies recover, some sectors will see a return to pre-2020 operation. But for sourcing & procurement teams, adjusting to the “new normal” will take some time.
Everywhere you look, sourcing & procurement lines have been disrupted. The Travel & Tourism Industry is operating at reduced capacity. The retail Sector is closing physical locations and building its e-commerce operations. Many businesses — big and small, young and established — are closing their doors for good.
In a few industries, such as travel, costs will go down due to decreased demand. In most sectors, however, sanitization needs and supplier failures will drive costs up. More companies will turn to group purchasing organizations to strengthen their sourcing & procuring lines.
What does all this mean for your sourcing & procurement operations?
1. Strengthen Sourcing & Procurement Resilience
With sourcing & procurement becoming more global and interconnected, organizations face a range of challenges, including climate change, the rise of a multipolar economic system, added geopolitical risks, and the risk of mass health-care events. Companies are trying to do a thorough assessment of their sourcing & procurement risks and are managing them more thoughtfully.
2. Enhance Sustainability
With clearly defined business and vendor requirements, your vendor selection team would be able to easily find suitable vendors, who can deliver the service /product that you wish to outsource. Ask your team to compile a list of possible vendors, but remember that not all vendors would meet your requirements.
3. Sourcing & Procurement as a Service (ScaaS)
While many organizations manage their supply chain activities in-house, executives in the industry predict that more and more businesses will adopt supply chain as a service (ScaaS) models, outsourcing the likes of manufacturing, logistics, and inventory management.
4. User-Driven Artificial Intelligence & Digitization
Procurement has integrated various e-marketplaces to ensure the delivery of products and services on demand. The process and user interface have gone through radical change with AI/ML, and usage of NLP (Natural Language Processing), where the requesters can order with great ease. The speed of the procurement process has increased leading to a shorter fulfillment cycle time in comparison with what it was a few years ago. Adoption of technology has been one of the key aspects.
5. Integration with Circular Supply Chains
Soon to replace the linear supply chain, organizations who adopt the circular supply chain approach stand to gain from reduced costs in the long term, reduced waste, and reduced impact on the environment.
A key driver in the adoption of this approach is stricter regulations when it comes to recycling and waste disposal, as well as potential incentives for sustainable efforts made.
6. Localisation of Suppliers
Adoption of local suppliers is gaining prominence due to pandemics like Covid-19. Organizations have started to venture and look at the local suppliers — especially suppliers under Small or Medium Scale and even some regional groups (such as local tribes, etc.). The idea is to encourage diversity of thought and participation.
7. Future-Ready Organization
To lead in the next normal, procurement & sourcing departments need to transform how they operate and collaborate with internal and external stakeholders. Adopting an agile operating model could help procurement functions scale up or down quickly to respond to sudden supply challenges. This will require attracting new talent and upskilling the existing talent.
The Path Forward
With all of the insights that sourcing and procurement bring to the table, technology will become a stronger strategic advisor to the business units. The more we automate, companies will speed their supply execution speed and gain more business.
Regardless, sourcing & procurement lines will resume slowly but surely. As they do, sourcing & procurement leaders will need to shift their spending and adopt new technologies to stay competitive.
