As we begin 2022 it is important to look back on 2021, in order to build on procurement industry themes that have impacted 2021 and others that will emerge and shape 2022. It is important to understand that the procurement industry has transitioned in the last two decades. Let’s dive into five trends that are undergoing major changes in 2022 and beyond.
Visibility will be the first trend to build on. Data has surrounded us all with limitless applications, but we don’t benefit from it.
Taking a look back allows us to see how procurement teams all around the world use modern tools and systems to access data and information; however, the data is used as a fundamentally distinct data processing system without exchanging data or interacting with other computer data processing systems. This issue causes data to be poorly classified and presented.
Investing in capabilities will continue in 2022 for procurement teams in order to make sense of this data. The trend will continue to allow faster extraction and reporting of data. The shift from broad based enterprise procurement systems to flexible data fabrics that sit on top of legacy systems and newer best of breed investments. Systems will most likely be augmented and scalable versus being entirely replaced. For software providers this means capability needs to be delivered in weeks and months not years.
The second key theme for procurement leaders and their teams is to drive velocity by streamlining and improving business processes. Leaders need to be constantly asking: How can procurement simplify its operations so it can focus on generating more value? The goal of touchless procurement is becoming closer to reality particularly for lower value and risk indirect transactions.
Streamlining and improving business processes will be needed to drive velocity. Procurement leaders and their teams will need to focus on this. In order to generate more value, procurement teams will focus on simplifying its operations. The future of touchless procurement is becoming more of a reality than ever, especially for lower value and risk indirect transactions.
The highest priorities for procurement investments are RPA, Advanced Analytics, Advanced Sourcing Optimization, AI, and Advanced Contract Analytics. Human capabilities can be flawed and these technologies will be used to augment and replace these skills.
Manufacturing and distribution will see new technologies spread across the business system. Warehousing automation, driverless vehicles, drone deliveries and automated stock and pick system will continue to be deplored. Adapting and being comfortable with these technologies, the shorter product life cycles and different contract terms and conditions will be key for procurement teams. The focus will shift from securing physical and make data ownership, storage, protections, and manipulation just as important.
It’s easy to see how the Covid pandemic has shown businesses to be agile in every aspect of the word. Businesses have realized the importance of procurement and how it must remain front and center. To deliver more value, procurement leadership must focus on how to drive key business decisions using technology and data visibility. In 2022 procurement needs to move away from data aggregation to “what if” scenario planning, spend modeling and cost management to creating real time digital twins of the organization (DTO). These technologies will grow in adoption and capability.
Risk management and ESG metric tracking are other emerging priorities that affect every aspect of the value chain. Procurement will be in the forefront of 2022 across all industries and bringing technology solutions to integrate supplier information will need to be advanced as quickly as possible.
Legacy solutions will no longer be acceptable to monitor first tier vendors. The investment in multi-tier management and collaboration systems will be integral for procurement leaders. The adoption of digital twins and collaboration tools will allow procurement teams to collect and manage ESG data. As businesses struggle with the challenges of cost management and environmental impacts, procurement will be the driving force for change. A usable technology to assist industry leaders will also blockchain.
2021 brought the great resignation and talent shortages across all industries. Procurement will continue to face outsourcing and hybrid work models. These new technologies will need to be supported by HR and business leadership to grow procurement talent. By identifying these new technologies procurement will be ready for the future new modes of work.
In order to keep the top talent, procurement leadership must develop and set high standards across the organization which include the gift of recognition, work purpose, personal and professional development, communication and belonging. A high priority for leaders in 2022 will be the retention and recognition of existing talent. The focus will be on bringing further value to the organization.
Procurement leadership will be increasingly searching for nontraditional talents. The need for your team to be digital natives will rise in 2022. The transactional nature of procurement is shifting and the staff needs to build communication and entrepreneurial skills to face it.
Value will make everything come together. The value delivered is essential to demonstrate for procurement leadership. Our reliance on legacy technology, including using excel spreadsheets, needs to continue to move toward real time value tracking. The cost tracking capabilities of 2022 will be greatly improved by facility, product, region and spend category.
As new business’ needs continue to emerge, in 2022 and beyond, procurement leadership roles will become front and center. CEOs and other executives will recognize and contact procurement leadership first. Responding to the unexpected and to be agile enough to pivot quickly will be necessary in 2022. The utilization of data and available technology must be used effectively and efficiently when facing the challenges of 2022 and beyond.