7 Challenges for Procurement and Supply Chain 2020

The focus for most companies over the past several years have been on cost saving, mostly by curbing expenses associated with handling raw materials, shipping and providing various services. Operations today require increasingly complex procedures and workflows to cope with regulatory requirements, national security and code of ethics that take a toll on business performance, and ultimately, the brand image. Conscious consumerism, nevertheless, look for up and mid stream qualities, i.e., the source and production method behind products that they consume. To the same extent going forward, procurement officers will be expected to go beyond traditional KPIs and take on a new job perspective with redefined work scopes and scales that go way beyond securing equipment and supply that simply make the best sense on the balance sheet. The new responsibilities are, namely, safeguarding and public relating the company’s brand image to the world, on top of advisory capacities on best practices and standard operating procedures for product-service development.

Italian gourmet is only as good as the quality of ingredients. The definition of to what “quality” needs to encompass, on the other hand, has changed. A bowl of salad, for instance, is as good as, not least the quality of the vegs, how it was fertilized, pesticided, herbicided, or the associated degree of season-change crop burning, i.e., collectively the ecological footprint; but ultimately, also, the consumption will to pay more for the redefined qualities. Given that such will is now clear and present, the value of procuring will be derived as much from upstream quality as it will the integrity thereof. Procurement will become the brand’s most powerful marketing vehicle in a profound manner. Thus, a lot will be added to procurement’s redefined ‘mission must be accomplished’ list. Companies that embrace a new outlook for procurement will be better off sustaining change and advancement in the marketplace than others that stick to ‘wait and see’ protocols. As future requirements become the new normal, and eventually, supply chain barrier, procurement officers can circumnavigate probable predicaments and leapfrog the organization ahead of the game with minimal effort by grasping the importance of the following challenges:

1. Risks: by 2020, new rollouts of strategic comprehensive approaches will see a sea change transformation in risk management that extend procurement responsibilities way beyond traditional balance sheets to account for additional risk factors such as  Risk Exposure, Risk Mitigation as well as risks from price transfers.

2. Stability: procurement will transition from being simply a cost management instrument to a vital component of strategic supply chain development, capable of bringing about economic stability for the organization and extending positive values to society at large.

3.Integration: it is adamant procurement teams become the proponent that overlook source databases containing vital internal and external data such as customer value management and marketing information, industrial, demand patterns, strategic partners, liaisons, and suppliers, old and new. With hindsight expertise, departments across the organization will depend on procurement produce actionable information beyond the balance sheet, in areas that optimizes business operations as well as social responsibility.

4.Finance: In the future, KPIs for procurement managers will include extensive skillsets that aids the organization in identifying future opportunities and challenges, and cope with complex operational requirements that emerge, namely, from the finance department. Thus, modernized organizations will be looking to streamline procurement and finance operations to optimize overall operational performance.

5.Innovation: By 2020, a primary KPI for procurement units will be to scout the global market for creative ways to add value for customers. Officers will need to be specialized in engineering design processes to be able to carry out technological product-service development protocols for the organization that support industrial infrastructure-level enhancements.

6.Transparency: the proliferation of social media and amplified importance of information transparency makes procurement decisions exponentially susceptible to the public court of opinion. Thus, inadvertently, procurement units become a function that requires the highest degree of transparency in the entire organization. Leadership that fails to establish the proper code of ethics and conduct that are reflected in standard operating procedures, understood across performance metrics and rehearsed to perfection can expect to find themselves spending most of invaluable time fending off unnecessary scrutiny instead of carrying out much needed KPIs. Progressive standard procedures for business as usual (BAU) scenarios needs to be clear, easily accessible online and adopted across the board. Staff are expected to be able to engage with customer and oversight agencies clarifying utmost transparency on the organization’s behalf, confidently. After all, what differentiates high performers from the rest of the pack is it’s standard operating procedures.

7.Big Data & Digital Integration: as the IoT becomes the new normal for conducting business, big data is looked upon for answers to all performance metrics. As such, procurement is assigned, yet, another core competency KPI to be met with digital-savvy proficiency. As decision-making role expands, the team must be able to carry out accurate and creative data mining functions to analyze breaking patterns and keep up with the market. The ability to analyze a wealth of financial and business data in real-time will make or break their KPI.

In the future, the purchasing process will reflect on procurement as simply a buyer or an organizational core competency. The new role with heightened expectations will alter the role of related departments in a trickle down manner. Supply chain management, for example, will, to a greater degree, depend on massive computations and accurate planning that reflects strategic approaches at the highest level. Ultimately, if it wasn’t previously, procurement could become a core supply chain function, altogether. As digitization of the communication and energy sector sees manufacturing and distribution increasingly being liberated from physical-geographical limitations, tangible goods are being redefined as well, notwithstanding in a different way. Procurement officers will become leaders that overlook a core competency that make or break the entire operation. The KPI scope and scale will be streamlined with supply chain and finance and stretched to the span of the globe with undivided attention on scouting expertise required to identify and secure quality input material that defines the brand itself, and yet, meet expectations with even faster logistics and delivery. Organizations that manage to adapt to change will be able to outperform the majority of competitors with a better answer for conscious consumers. These are the trends that tomorrow players need to grasp to remain relevant in the new age of procurement, unfolding right around the corner.

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References and photos: industryweek.com, linkedin.com

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