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For a long time, procurement had been reduced to a mere buying function. However, the traditional perception of procurement departments is no longer in tune with reality. Procurement is more than just buying – its functions have expanded to cover more than just purchase transactions, cost optimisation and data processing. This blog article delves into the current state of procurement by spotlighting five pivotal trends that are redefining the landscape.
The state of procurement is in flux. The procurement landscape is undergoing a significant transformation. Globalisation, various crises like the Corona pandemic, inflation and wars, the digital transformation, and a renewed emphasis on sustainability and corporate responsibility shape the worldwide business landscape. As businesses continue to evolve in response to these dynamic factors, the role of procurement within organisations has equally shifted. In this article, we will outline the current state of procurement, focusing on the pivotal developments and trends that are reshaping the sector. From the evolving role of procurement professionals to the emergence of Environmental, Social and Governance (ESG) considerations, we will examine the multifaceted nature of modern procurement.
The procurement profession is transforming significantly. The traditional focus on cost optimisation and management shifts to more strategic roles including risk management and decision-making in the face of global volatility, ambiguity, and complexity. Traditional roles like data entry clerks and bookkeepers are seeing a decline, while the demand for data analysts and automation specialists is on the rise.This trend is underlined by the need for procurement professionals to become business problem solvers and critical thinkers who can navigate a rapidly changing business and global environment. As a result, the most important skills fall into the categories of problem-solving, self-management as well as technology use.
As the role of procurement professionals evolves, it’s imperative to attract, train, develop and retain the right talent. The future of procurement lies in next-generation transformative talent, with a particular focus on digital expertise. The rapid growth of digital procurement necessitates a team with strong digital skills, calling for continuous learning and adaptation to new ways of working. As such, talent acquisition, management and development are becoming increasingly complex and critical functions within procurement.
The procurement sector is undergoing a technological renaissance. Through advancements in technology, the power of data comes increasingly into the focus of procurement. Data is the backbone of any successful procurement process. However, collecting data is not enough to leverage the power of data and to optimise procurement processes. Raw data needs to be transformed into actionable intelligence with the help of digital automation tools to provide transparency into each stage of the P2P process and to empower procurement professionals to have insights into supplier performance results, make more informed decisions, improve cost efficiency and increase overall productivity. The most important benefits of a data-driven procurement strategy are:
There’s a growing emphasis on Environmental, Social, and Governance (ESG) factors within procurement. CPOs are increasingly expected to act as stewards for the planet, people, and resources, reflecting a larger trend towards sustainable and responsible business practices. ESG in procurement is a set of guidelines or principles to assist businesses in assessing their sustainability and ethical impact regarding their procurement practices. By embracing ethical procurement practices such as fair trade, preventing corruption, and promoting diversity and inclusion in the supply chain, procurement not only minimises risks but also enhances the organisation’s reputation and stakeholder relations. By embracing sustainable procurement practices, organisations can promote resource efficiency and waste reduction. Integrating ESG considerations into the procurement process thus means that organisations can foster sustainability, equality and increase transparency in their supply chain. ESG considerations are predicted to dominate procurement conversations in 2023 and beyond.
Relationship management, especially with suppliers, is gaining prominence in procurement. The ability to closely collaborate with suppliers, understand their performance, and align them with business needs is critical. This evolving landscape necessitates a re-evaluation of traditional supplier relationships, encouraging the formation of true partnerships that aim for long-term business success.
The five trends in procurement outlined in this article represent the transformative state of procurement and its evolving role in a fast-paced and complex business world. The requirements for procurement regarding ESG factors underscore procurement’s central role and impact in the global business landscape. Through advancements in technology, potential of data and ongoing digitisation, procurement professionals’ roles develop and change along with the need to attract and manage the right next-generation talents. In summary, the role of procurement is transitioning from merely focusing on cost management and transactions to adopting a more strategic, collaborative, and data-driven approach, facilitated by enduring and robust partnerships. As we move forward, embracing these trends will not just be an option but a necessity for procurement professionals seeking to thrive in a rapidly evolving landscape.
Read in our next blog article how automation technology empowers the future of procurement.