2020 Procurement and Supply Predictions

Procurement has three major levers to deliver the ‘sourcing at speed’ opportunity whilst keeping cost under control. Firstly, we need to continue purposefully seeking innovative solutions and doing things differently. Secondly, in terms of our core activities, procurement needs to ensure maximum efficiency and coverage in sourcing activities. Finally, procurement needs to aspire towards new delivery models through partnerships, self- service, automation, and knowledge / insight augmentation.

Inclusion of sustainable supply base management is the most significant step change that procurement can make to impact the triple bottom line of people, planet, and profit. Zero-based consumption and culture with ZBB at its core will only become more prevalent. Procurement is a natural catalyst to test budget assumptions and, depending on the spend category, to establish them. ZBB is not only about cost assumptions but rather about fundamentally and culturally questioning what is required and whether this suits the company strategy.

 

Working capital has, following direct EBITDA levers, often be dubbed as the next value driver. Working capital management and addressability via procurement is no longer a technical business school staple but is rather becoming a more accessible way to realise tangible impact. The past few years have seen the advent of several payment intermediaries in both the consumer and the b2b space. In a similar fashion and as end-to-end platforms, with integrated analytics capabilities including for finance, become ubiquitous working capital improvement and the application of supply chain finance will become more sophisticated and impactful. This enables both suppliers and buyers a better cash flow outcome via payment intermediaries as credit checks, histories and approvals are carried out in real time. This will extend procurement's role as company commercial champions.

 

Inclusion of sustainable supply base management is the most significant step change that procurement can make to impact the triple bottom line of people, planet, and profit. Changing customer and employee preferences, in addition to the business and political engagement in global issues such as climate change, mean sustainable procurement is accelerating. In 2020 and the 2020s companies will become yet more serious about their societal and ethical responsibility and procurement will become more directly involved, beyond certifications and figures.

 

Procurement is on the spot not to hamper, through death of process, but rather aid and accelerate innovation. We are seeing a continued rise in supplier-led strategies such as category captaining, supplier-managed inventories, and collaborative knowledge exchange and solutions. We view this as the natural progression to long-term supplier partnering. Innovation is not just a new solution as part of RFPs and improvement is not just a rarely monitored commercial continuous improvement clause.

See the full article the full article on Spend Matters, January 8, 2020.