Is there anything industry experts love more than an annual exercise in soothsaying? What are their procurement predictions?
At the start of the year, the CIPS, McKinsey, Procurement & Supply, and others predicted a range of trends that would define procurement in 2022, from a war on talent to supplier experience management and flexible working.
So what has 2022 brought so far? How are the predictions playing out?
Let’s take a look:
Prediction: Supply chains will remain out of sync
Let’s face it, Covid-19 completely disrupted supply chains globally. For two years, our world has been reliant on lean, just-in-time supply chains. The problem is, this means businesses haven’t had the opportunity to build the inventory buffers required to withstand the disruption in supply. Experts didn’t expect this to settle down in 2022, with the situation predicted to get worse before it gets better.
Update:
As predicted, it’s proven difficult to easily adapt to the disruptions in the supply chain: 84% of CFOs see supply chain disruptions as either a moderate or severe risk.
However, organisations are innovating and looking for ways to improve resilience. For example, some are diversifying the pool of available suppliers across various regions. After all, if Covid has taught us anything, it’s how to be resilient and flexible.
Prediction: The war on talent will step up
The post-covid labour shortage was already hitting the headlines in January. As the CIPS predicted in January, ”The demand on the workforce and the thirst for talent is going to be extraordinary”. But not only was it expected to be difficult to attract talent – companies were warned they would struggle to retain staff too.
Experts predicted that employers would have to work extra hard and invest in the workforce by offering better training and benefits to keep talented employees close.
As an alternative solution, around 70% of executives anticipated they will hire more temporary workers and freelancers over the next two years for increased access to quality talent and flexibility, as well as improved productivity, agility and resilience, and reduced costs.
Update:
In June unemployment tumbled to 3.5% meaning Australia is approaching “full employment”. In other words, almost everyone willing and able to work is in a job.
You only need to look at the job sites to see that there’s a huge demand for skilled professionals in procurement. A search in June 2022 returned more than 120 jobs in “Procurement: and more than 100 in “Contract management”.
This means now is the perfect time for anyone looking to move into procurement. Check out our tips on how to find a procurement and contracting job.
Prediction: Supplier partnerships will make or break your business in 2022
Since the onset of the pandemic, supplier relationships have been put to the test every day, leading experts to advise that organisations should know their suppliers inside and out in 2022 if they want to minimise disruption, accelerate savings, and deliver innovation faster.
How do you build strong supplier relationships? By proactively collaborating with, listening to, and understanding suppliers, as well as improving visibility and using data and analytics. At the start of 2022, more than 66% of CPOs were prioritising supplier collaboration and other broader value-generating activities.
Update:
The focus on supplier partnerships has become part of a wider movement to reduce friction for suppliers and improve their experience. Just as we talk about customer, employee, and brand experience management, we’re now seeing supplier experience management (SXM).
This means we’re starting to see a shift away from companies simply supporting their internal stakeholders and procurement team, and towards focusing on reducing their suppliers’ challenges and frustrations, to ultimately improve their experiences.
The goal? To become the “customer of choice.”
Prediction: Digitisation will be key to success
CPOs were expected to intensify investments in digitalisation in 2022, with as many as 90% of CPOs considering digitalisation critical to success.
According to the Harvard Business Review, the top digital investment areas for procurement are analytics, automation, and improvements in procure-to-pay processes. Advanced analytics was already delivering valuable insights into spending and supplier relationships, with machine learning helping to automate mundane tasks such as purchase-approval workflows and delivery scheduling.
Self-service procurement was also predicted to gain traction, improving the experience of stakeholders within the business and reducing the need to recruit more employees.
Update:
According to a report released in July 2022, 90% of global procurement professionals are still urgently looking for ways to transform their operating models and processes to meet the volatile and uncertain business world.
But change doesn’t happen overnight – the survey revealed that digital transformation would be a top priority for the next three years. In another survey, many respondents admitted it is difficult to know which technologies to implement.
Prediction: Flexible working is here to stay
Hybrid work environments were predicted to become the norm in 2022. A global survey by PWC found that only 10% of respondents sought to return to a traditional work environment, and a staggering 74% of Australian respondents reported that they wanted a mix of face-to-face and remote working.
It’s not just the private sector either – the Victorian Government adopted a new flexible working policy allowing workers to work from home for three days as a rule. Victorian government employees can determine where they will work, whether at a collab hub, office or home.
Many experts agreed that offering flexible working arrangements would be the main draw to land highly-skilled workers. Job ads offering permanent work from home arrangements increased by 95% in 2021, according to the Business Insider.
Update:
Hybrid working is now the norm for many people – not least because the risks of the pandemic haven’t gone away. In July 2022, Telstra and Westpac advised staff to work from home if they could, after national health advice recommended that employers make changes to limit the spread of Covid during the winter wave of infections.
Westpac updated its employee guidelines to allow employees to work from home if they wished, “with no requirement to be in the office,” under its hybrid workplace model that had been introduced in the last year.
Prediction: Procurement will go green-er
The nature of the coronavirus pandemic propelled the need for sustainable procurement. Organisations were told they could no longer only pay lip service to environmental, social and governance (ESG) matters in 2022, as stakeholders were increasingly demanding more action. Supply chain contracts were recognised as a key opportunity for businesses to realise their ESG goals.
Government was already moving in the right direction, with the Victorian Government’s Sustainable Investment Guidelines (SIG), which impact how future tenders are evaluated and infrastructure projects are delivered, and the WA Government’s Social Procurement Framework amongst others.
Update:
No doubt about it, sustainability is still high on the agenda in 2022. Meeting environmental, social and corporate governance (ESG) compliance objectives remains a critical element of procurement’s value proposition. In fact, one in three chief procurement officers consider ESG within their top three priorities for organisational risk. Achieving a more sustainable supply chain ranks as the fourth largest factor driving the growing pace of digital transformation within companies’ procurement function.
Summary
The last two years have taught us that you should never rely on predictions. Even the best experts failed to anticipate some of the challenges the world has seen. However, the lessons we’ve learned from 2021 mean procurement professionals have never been better placed to deal with change and disruption to solve business problems.
How is 2022 playing out for your procurement function? Let us know in the comments below.
