The future of procurement is here and it’s all about simplification. How can we simplify steps in the onboarding process, as well as throughout the buyer/seller relationship? How can we simplify managing risk? How can we innovate in a way that makes the user experience streamlined and simplistic?
Risk is inevitable in any industry, and having better processes in place to manage that risk is always necessary. In this age of Big Data, the types of risks businesses face are evolving due to new technologies and privacy laws. Whether it be day-to-day risks on the lower end of the spectrum, or high profile and low probability scenarios, you need to always be on your A-game.
For example, Material Handling & Logistics conducted a survey which reports that, “Only 27% of companies surveyed said they have a structured, quantitative assessment of financial impact related to supply chains.” Additionally, only 44% have a qualitative assessment of criticality of suppliers, such as substitutability.
This is a huge blind spot for procurement teams and businesses when it comes to avoiding and mitigating major disruptions.
Additionally, 58% of respondents said that the solution to the challenge of minimizing risk vs. generating savings is either unclear or simply still unresolved. Essentially, this means that procurement is operating in a state of fluctuating goals, usually in favor of cost savings—even when that means risks could be higher.
Today, we see risk management conflicts where privacy and technology intersect. In the future, we can expect more safeguards to be put in place as the industry learns more through trial and error. For example, we can expect to see the growth of highly-specialized teams to evaluate and measure risk and the consequences of error.
Companies will be forced to continually innovate to keep up with their competitors. According to EY, the main functional challenge will be making procurement a channel for innovation to and from the supplier base. It’s commonplace for larger firms to offer expertise in direction and management, sourcing skills from a third party for more detailed work. This allows for more flexibility, both for the company and the talent it sources. As technology evolves to more seamlessly connect with people, this becomes easier for businesses to do. It’s predicted that by 2030, freelance work will be trending to become the norm over full-time jobs within the sector. In the age of a highly skilled and multi-faceted workforce, higher-level teams will gain more context into the operations of their contractors.
We are now seeing that sourcing talent from local markets in a freelance-style fashion is showing a positive trend in performance. Freedom in functionality is the image of the future. In fact, according to the Chartered Institute of Personnel Development, in the next 20 years, over 40% of jobs will not be salaried—rather, people will be contracted in and out. This will increase efficiency and allow for more flexibility for those that are contracted. If properly embraced by businesses, this is a trend that will allow talent to be sourced from almost anywhere, resulting in a new wave of diverse, eclectic ideas. Being aware of this growing trend will enable companies to assess their current intellectual diversity to see where they can grow, and what their individual plan looks like on the path to embracing the future.
Leadership in procurement is also evolving. Savvy CPO’s are owning the influence of the Internet of Things as an increasingly essential parts of their operations. As more aspects go digital, innovation is allowing processes to become simpler, smarter, and more strategic. Not only that, but the overall image of a CPO will evolve as well. As one high-tech CPO noted, “Future CPOs at global companies will be coming from any field and any place. This will mean that buying strategies, which are often products of local social and cultural structures, will become much more diverse.”
The future is all about conquering challenges—how do we cost-effectively and simply increase efficiency, innovate, and rise to the next level of success? We can expect to see a larger focus on subjects like globalization, collaboration, and even sustainability. Is your business ready for the challenges of the future? At OnTask, we’re here to help every step of the way.