perspective

Procurement Perspectives In Year 2017

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Technology has shaped all future plans for businesses over a couple of decades. Parallel side, the changing nature of corporate world is also having deep impact upon companies. Procurement too is not untouched from these changes, but the question is how?

We have been seeing over the years that procurement executives keep on surveying and conducting researches that the function continues to transform itself but it will have to adapt to these wider changes if it wants to continue to deliver.

On the executive side, we explore the budgeting and resource allocation plans for next year as well as the transformational intentions of functional leaders. In the past, we have seen the sourcing and negotiation aspect of the function diminish as CPOs commit more resource to more strategically valuable activities like SRM.

The role of intelligence though is becoming more increasingly integral to buyers. Not only old data, but also information that possess predictive capability. The power of the crowd to unlock concrete forecasts about the future is a key means to add real impactful data into buyer’s plans.

Where will Procurement be in 2017?

The function has changed lot over the past few decades and this has been evident in the last ten years. Procurement chiefs have long sought to move out of the shadows of the back office to stop being known for buying paper clips and staplers, and instead be known more for the value they can add in terms of reduced risk, new product innovations and greater analytical insight into the supply chain.


2017 procurement

But what next? There has to be something. What will we be talking about for the next ten years?

There will be risk. Given the devaluation of sterling following the UK’s decision to leave the European Union, economic vagueness is unlikely to disappear anytime soon, especially while the UK’s future relationship with EU remains unclear. Supply chains that have enjoyed tariff-free trade for years will break, perhaps pushing more companies to localise their supply chains.

Sustainability will be a greater priority. Governments and consumers will call on businesses to make their products more sustainable and that pressure will filter through to procurement to drive improved performance along the supply chain.

There will also be a thrust to drive more value out of the supply base. That will no doubt centre on working with suppliers to develop new innovations.

Procurement’s job will always be to reduce costs. But if it drops the focus on the wider value it can add, then it will quickly loose the position it has established within the business as well as put at risk the relationship it has created with the suppliers.

Time to reward Suppliers?

As we move into 2017, it is the ideal time for procurement to examine and explore new ideas. While it is often said that procurement doesn’t get the recognition it deserves within the business, and same goes for the suppliers as well. It is the time for procurement to recognize and reward the important work suppliers do and reap the rewards from that recognition.

suppliers

2016: Tough time for Suppliers

2016 has been a year of global economic uncertainty and there is not denying the fact that that has filtered through the supply chain. Payment delays have continued with some suppliers waiting around some 100 days to get paid, as businesses try to keep cash flows in a healthy state. Meanwhile there has been a succession of high profile CSR issues with factories found to be violating labor rights across the world.

Concluding…

For suppliers, there are obvious benefits. Offering rewards can act as an incentive to their work and gives a sense of appreciation, no doubt!

While for procurement, incentivising suppliers can encourage them to work harder and bring more innovation to the business if there is a potential worth an award. In rewarding its supply base, procurement implants supplier loyalty and also has a higher opportunity of analyzing and evaluating supplier efforts, giving greater insight into the supply chain and a higher understanding of any issue it may be facing.

It is impossible to give out an award to every single supplier, but the opportunity can have a marked impact on relationships and be a win for both the parties!

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