As 2019 heads into its final stretch, it’s time to look at how procurement trends are tracking for the year.
The world of procurement has undergone tremendous changes over the past couple of years. What’s in store for the rest of 2019? What should you be planning for?
Here is the list of top 4 procurement trends:
- Digital transformation
Procurement professionals came into 2019 with digital technology on their mind. According to research by The Hackett Group, the sector had aggressive plans to increase its use of digital tools and procurement-specific technologies, including cloud-based and data management technologies, over the next two years.
So what’s happened so far?
Research shows that most organisations are significantly overestimating their digital maturity. In research by Forrester Consulting, only 16% of businesses had an advanced level of digital maturity in procurement, though 65% assessed themselves as advanced.
Takeaway: Procurement leaders have the opportunity to deliver a true competitive advantage for their organisations through digital transformation. Digital innovation and smart automation can reduce operating costs, improve accuracy and eliminate transactional work, freeing up staff time for more value-added efforts.
Yet, you can only do this if you know where you stand in the first place. At the same time, procurement professionals would need to acquire the critical skills to succeed in a digital world and to remain relevant in the market.
- Talent gap
With the move to digitalisation, and the role of a procurement professional always evolving, one of the biggest (and most alarming) procurement trends for 2019 is a talent shortage.
A DHL report in the United States states that the ‘demand for supply chain professionals exceeds supply by a ratio of six to one’. And trends in Australia are following suit.
The top factors driving the shortage are:
- Changing skill requirements e.g. digital technologies and data analysis
- Ageing workforce
- Lack of development and learning
- Perception that supply chain jobs lack excitement
Takeaway:Executives must be prepared to manage the changing skills requirements by investing in the right recruitment and training for their teams. One way to achieve this is to work with Transformed to customise in-house accredited learning and short courses to meet your goals.
- Cybersecurity threats
Another trend off the back of digitisation is the rise of cybersecurity threats. With the rate of cyber security incidents increasing by 33% each year, there is little doubt that cyberattacks will continue to threaten Australian organisations in 2019.
The damage is very real: the total cost of a successful cyber-attack is over USD$5 million, or $301 per employee. The most expensive impact of a cyber-attack is information loss, which represents 43% of costs.
According to research, over 60% of reported attacks on publicly traded U.S. firms in 2017 were launched through the IT systems of suppliers or other third parties, such as contractors. Yet the same research revealed that many procurement professionals do not consider vendors’ cybersecurity capabilities to be an important factor in selecting top-tier suppliers.
Takeaway:Procurement teams must proactively protect the sensitive personal and financial information belonging to their own organisations and to their suppliers.Procurement needs to look at measures to protect their systems, such as embedding cybersecurity measures in contracts with third parties, limiting suppliers’ access to IT systems, and training staff.
- Rise of ethical procurement
Last year, the Australian Federal Government passed the Modern Slavery Act into law. At the same time, New South Wales introduced its own NSW Modern Slavery Act (2018).
Hot on its heels, Anti-Bribery and Corruption reforms are expected in 2019. These newlaws are set to get tough on foreign corporate bribery, while placing increased responsibility onto companies to prevent it.
This brings huge opportunities for businesses to reflect on the way they engage with their supply chains and mitigate the risks of corruption and slavery.
Takeaway: If you haven’t already, now is the time to put strategies in place to act ethically. Prepare for the Anti-Bribery and Corruption reforms and take the right actions to safeguard your supply chain and organisation from modern slavery risks.
This includes education your team about the risks of non-compliance. Start with our online short course on the Modern Slavery legislation and what it means for procurement.
Over To You
These are just some of the trends that will help shape procurement for the rest of 2019, and beyond. Procurement leaders must adapt to make sense of the new technologies, risks and opportunities.
One way to achieve this is to keep yourself and your team on the leading edge with relevant training and development. Talk to Transformed to find out how we can help.
