These procurement trends could change the face of business in 2018 and beyond.
These top trends could shape procurement heading into the future.
Procurement is the process of discovery, agreeing to terms, and acquiring goods, services, or labor from an external source. It is something that businesses do day in and day out. Sometimes, however, necessary procurements aren’t obvious to the procurement manager, and the business can miss out on key procurement trends that their competitors are taking advantage of.
So, what are the most important best value procurement trends that your business needs to be aware of?
As businesses around the world adopt digital technologies, procurement trends are slowly but surely shifting towards internet and cybersecurity rather than physical security. High-profile cyber-attacks have impacted corporations in recent months and year.
Malware and ransomware have wreaked havoc on customer relations, public relations, and corporate image. Some attacks, such as Shadow Brokers, WannaCry, Petya, and Cloudbleed, caused problems for multiple businesses around the world. Every business, regardless of industry, needs to invest in cybersecurity and procure the software and services necessary to do so.
Brexit, Great Britain’s exit from the European Union, isn’t a done deal just yet, but it is increasingly looking like efforts to reverse course will fail.
Companies that do business in Great Britain and/or the EU, will need to be able to navigate a new, UK-only market as well as the European market without the strong British factor. Companies that have their European base of operations in the UK will need to forge new relationships to keep their products in EU countries and vice-versa.
According to Mark Perera, founder of the Procurement Leaders Network, “Cognitive procurement is the application of self-learning systems that use data mining, pattern recognition and natural language process (NLP) to mimic the human brain to around the processes of acquiring, buying goods, services or works from an external source.” In short, it’s AI for the procurement process.
According to a study by The Hackett Group, “85% of procurement professionals believe cognitive technologies will transform their operations over the next three to five years.” Cognitive procurement technology will allow procurement managers to automate more of the supply chain process. Computer systems will be trusted to spot buying trends based on depleted inventory and adapt to issue purchase orders for products and services. Faster will become the watchword for many procurement managers. The race to adopt cognitive procurement will affect competition between rival corporations.
Corporate Social Responsibility
Gone are the days when corporations can donate a significant amount to charity at the end of the fiscal year and call it social responsibility. In this age of social media, 24-hour news cycles, grassroots social activism, and the hyper-aware consumer, corporations must pay close attention to how their products are made, where they are sold, where advertising dollars are spent, and how their products (and sales) impact the larger community, local and global.
Public relations teams know that it only takes a single tweet or Facebook message to cause a firestorm that can end with a company falling out of favor with the media and with a large segment of consumers. The best procurement strategy is one that helps the corporation get out ahead of potential problems and establish socially responsible practices before conflicts arise.
Offshoring, the practice of establishing a company’s headquarters and/or manufacturing operations outside of the company’s home country (usually for tax reasons or for cheaper labor), has been common ever since it was feasible.
However, over the past few years, many companies in developed nations have been exploring keeping their operations inside their home countries, a practice referred to a nearshoring. With governments offering incentives such as lower corporate tax rates, more businesses will be exploring nearshore opportunities. Closer control of procurement and supply chain processes are two of the benefits that make nearshoring an attractive opportunity.
Staying on top of the latest procurement trends can help your company succeed.