With the festive season now over and reality beginning to set in, we are at that stage of the year where many are looking to make changes and get ahead of the game for the year ahead. This is very much the case in the procurement world as well.
2018 saw many changes within procurement and there are more to come this year. We have compiled a list of predicted procurement trends for 2019 to help you prepare for the year ahead and get the best out of your procurement function.
Procurement Trends for 2019
Trend #1: The Rising Importance of Strong Supplier Relationships
In a recent report by Deloitte on the transformation of procurement, they listed supply assurance as one of the largest, growing year-on-year procurement risks.
In order to manage this risk, a focus on supplier management is one of the procurement trends for 2019 that we envisage. In a recent blog, we uncovered 5 ways to enhance supplier relationship management. One of those ways is through the use of technology, which will continue to grow in importance in the procurement world in 2019 and beyond.
With the adoption of an automated procurement solution, organizations gain a greater understanding of their supplier spend data which can then be converted into predictive data that informs decision-making.
An area of supplier management particularly important for procurement teams to get the most out of their supply chain activities is supplier compliance. In another blog, we explained how closely managing supplier compliance can help organizations to:
- Better assess supplier capabilities before purchasing
- Monitor supplier activities during contracts and
- Manage supplier contracts based on performance
For all procurement teams, when it comes to choosing suppliers and products/services, the major factors to consider are:
- The ability of the supplier to deliver the products/services in a timely and acceptable manner
- Ensuring no major cultural differences exist with the supplier
- Guaranteeing the products/services are consistently of a high quality
- Ensuring the products/services are reasonably priced
By embracing technology and focusing on supplier compliance, procurement teams will be able to better assess these priorities and get the best out of their suppliers in 2019.
Trend #2: Digitalization Opens up Possibilities for Procurement
For a long time, many organizations have based their procurement activity solely on reducing costs. Cost reduction is still important in 2019 but procurement teams need to place more emphasis on return on investment and be more strategic in their activities.
With the likes of machine learning, Internet of Things, artificial intelligence and blockchain becoming more common and more frequently used within procurement, we see the digitalization movement continuing to gather momentum and being one of the most important procurement trends for 2019. These technologies will help procurement teams make smarter, more strategic decisions and in turn, increase the perception of the function internally.
More and more organizations are switching to cloud-based, automated procurement solutions, allowing them to operate at a faster pace, more efficiently. Some of the benefits include reports viewed in real-time on any device, invoices approved on-the-go, and invoices matched automatically against purchase orders, allowing procurement teams to focus on more value-adding roles such as improving technologies further and assessing data for better decision-making.
Trend #3: Cybersecurity Threats
While the move to digitalization yields many advantages, the growing amount of data moving through interconnected software systems can leave the entire supply chain open to cyber attacks. With an increasing amount of organizations focusing on supplier management and digitalization, we also see a focus on cybersecurity as one of the main procurement trends for 2019.
With procurement becoming all the more connected to the threat of cyber attacks, there are a number of things that procurement teams can do to protect both their organization and their suppliers.
- Ensure all members of the team are security conscious when it comes to e-mails
- Work with suppliers to put security plans in place that protect both parties
- Make suppliers subject to cybersecurity measures including training and regular assessment
- Limit supplier access to IT systems
- Ensure compliance is treated as a priority for all team members
Once such measures are taken, organizations will be in a far better position against the threat of cyber attacks.
Trend #4: Talent Shortage Crisis
With the move to digitalization progressing further all the time, and the role of a procurement professional changing as a result, one of the most alarming procurement trends for 2019 could be that of a talent shortage.
According to a recent report by DHL, the changing role of a procurement professional requires them to have leadership qualities, strategic thinking, operational expertise, creativity and analytical skills.
The report also states that an estimated 25-33% of the current supply chain workforce is at or beyond retirement age, leaving many procurement teams with an aging, un-qualified workforce.
Organizations need to place a focus on attracting new talent that fit the new criteria, presenting a clear career path, with training and education for existing procurement staff.
Trend #5: Spend Analytics
With the age of digitalization seeing growing numbers of organizations switching to automated procurement solutions, the availability and adoption of spend analytics to drive better decision-making and improve processes will be one of the biggest procurement trends for 2019.
According to the Deloitte Global Chief Procurement Officer Survey 2018 spend analytics will be the area of procurement most impacted by technology over the next five years.
Organizations will begin to realize many benefits of spend analysis in 2019. These include:
- Greater visibility into spend with different suppliers or on particular goods/services
- Better risk management by monitoring your dependency on certain suppliers
- Gaining insights into spending patterns and supplier profiles to realize unexpected savings by switching to preferred suppliers, negotiating volume discounts and reducing waste from overbuying
2019 will be a particularly big year for procurement with many changes taking place. Change brings both risks and possibilities, but by focusing heavily on the biggest procurement trends for 2019 your team will be in a strong position to get the most out of 2019 and cement its place as a key function within your organization.