Top 10 Procurement Trends of 2023
Sustainability
Going nowhere, sustainability is deeply ingrained in the strategies of any future-forward organisation. Success in sustainability efforts comes from active collaboration transparency, and communication both internally and externally with all stakeholders and suppliers.
"Supply chain is the closest business organisation that can support sustainability principles and goals. Together we can ensure that we have a more sustainable relationship,” said Eirini Etoimou, Head of Corporate Sustainability and Director of Supply Chain Development at Sellafield Ltd.
“‘Setting goals is the first step in turning the invisible to the visible’,” said Patsy Duncan, Global Procurement Senior Director, PepsiCo. “If we don't have ESG targets and we don't know where we're heading, we will just be wandering in the ocean of possibilities.”
Generative AI
Generative AI, the buzzword of 2023. A form of artificial intelligence (AI) that has taken the world by storm, and can produce various types of content including text, images, audio, videos, graphics and synthetic data.
“AI, in its forms, is a critical part of lots of different applications that you use every day. Everything from the software that powers your schedules, your aeroplanes, and trains to software that powers search engines, e-commerce websites to facial recognition systems,” said Hassan Mahmud, Lead AI/ML Technologist at Digital Catapult.
According to PwC, AI is predicted to contribute US$15tn to the global economy by 2030. Key ways in which Generative AI will benefit the procurement industry include increased efficiency, productivity improvement, in-depth market analysis, risk mitigation, spend reduction, sustainability and compliance.
Digital transformation
Building on the above, digital transformation continues to be a staple on business strategy agendas. Emerging technologies continue to provide significant benefits for the procurement function, aiding successful operations.
From supplier diversity to sustainability, risk management and more. Digital transformation has its place to drive strategic advantages.
Collaboration
Crucial for building stronger, long-term relationships with both suppliers and stakeholders, collaboration continues to grow in importance. In addition, collaboration leads to greater transparency across the wider supply chain and drives innovation.
Reflecting on the partnership between IBM and Compass Group, Nathan Pearce, Partner at IBM explained that a collaborative team structure is a critical success factor: “We work seamlessly together. You cannot differentiate between Compass over here and IBM. It's not like that at all. And I think that drives the power of the relationship and that success. Everybody is on the same level playing field. It's very much an open door policy that can speak to myself or Sue or any of the leadership team any point in time.”
Diversity
Defined as a business that is at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group, diverse supplier programmes are not only ethical, but they have significant benefits for the organisation and its wider strategy.
"If you plant the seed of inclusion, you'll bear the fruit of diversity,” said Rob Collie, Group Director of Procurement at Sky."If you can create a level playing field, those great new businesses and businesses you might not have worked with before will come through and you'll end up with a better supplier ecosystem.”
“Diversity and inclusion is one of the mainstays of the organisation [Novartis] and it's one of the stated goals of the C-suite and also supported by the board. I definitely ascribe to the belief and really the truth that diverse teams build better software,” said Cameron Smith, Global Procurement Senior Partner of Professional Services, Novartis.
Strategic sourcing
When it comes to sourcing, procurement needs to align its efforts with the overall business objectives and goals due to the impact it can have on cost, resilience, delivery, quality, and innovation.
“[Strategic Sourcing] makes or breaks the organisation and last three years - if you see from the pandemic - a lot of organisations who did not get their strategic sourcing right, they just couldn't survive the difficult times that were there," said Milind Tailor, Global Head, Services Procurement & Vendor Management at Diebold Nixdorf.
Risk and resilience
The last three years alone have emphasised the significance of effective risk management and the need for resilient operations. With every supply chain having its nuances and pitfalls, there is no consistent measure of risk and will be tailored to the organisation.
"There is no consistent measure of risk, there is no global measure. Risks are only a challenge when they actually happen. In preparation, it's about giving yourself choices, knowing more today than yesterday,” said Michael Carson, Partner and Head of Supply Chain and Logistics Advisory EMEA at Cushman & Wakefield.
He adds: "You don't know what you don't know. It's acknowledging what we don't know and seeking the answers for those [...] Scenario modelling gives you the opportunity to run endless numbers of scenarios, stretching hypotheses to see different outcomes."
People and culture
It is well known that the procurement industry is facing extreme challenges when it comes to finding the right talent, largely driven by low unemployment levels, the ‘great resignation’, and the tendency to follow traditional recruitment methods rather than diversifying the talent pool.
When it comes to transformation, it is important to consider a people-centric approach to selling the business case to the board. She touches on critical success factors, including active sponsorship, governance, and team dynamics.
"Culture is absolutely key. It’s the one thing that will maintain your strategy,” said Alexander Tschentscher, Head of Supply Chain Excellence and Head of Strategy of Supply Chain and Logistics at Siemens
"The people challenges are always the most difficult thing. So when you're designing a transformation program, for me, you have to start [here]," said Sue Kay, Group Transformation Director at Compass Group and Nathan Pearce, Partner at IBM.
Data and analytics
Conducting an effective supply chain, requires a unified approach, it is important to understand data ecosystems, map business requirements, and find technology partners aligned with specific use cases.
Data and analytics can provide a host of benefits across the procurement function, but one in particular draws back to an earlier trend - sustainability. IoT can monitor and collect sustainability data on vehicle emissions, engine temperatures, and fuel efficiency, it can also measure utility consumption at property levels. As such data can help with the early identification of issues and enable proactive decision-making.
Adopting a data-driven approach helps franchises make informed decisions, implement management actions, and measure the effectiveness of sustainability initiatives.
Governance and compliance
Governance - the overall procedural arrangement and systems to ensure control and probity. It includes procurement policies, process management procedures, resource allocations and process reviews.
With the rise of technology adoption - in particular Generative AI - and the continuous drive to be more sustainable (to name a few), the industry will continue to adopt and adapt its governance and compliance to ensure the health, safety, and resilience of the industry and its workforce as these innovations grow.
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Other magazines that may be of interest: Supply Chain Digital, Manufacturing Digital
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