Is the procurement profession known for being a trendsetter? In some ways, yes. Procurement is ideally positioned to be the gatekeeper for supplier innovation and as such is known for bringing game-changing ideas into the organization. But in other ways, procurement acts in more of a supporting role, helping other parts of the business turn a trend into a source of competitive advantage.
In this article, we examine three such trends that are emerging in the procurement profession this year.
Top Emerging Procurement Trends
1. Procurement is experimenting with Agile ways of working
Let’s face it, procurement is sometimes late to the party. In this case, the party has been underway for decades. Agile work practices first emerged in the software development space before being adopted in other functions including sales, HR, finance, and marketing. It is particularly popular in the manufacturing industry, which means that the suppliers we work with can often be agile.
What does this mean for procurement? Firstly, if you want to get the most out of a supplier relationship, it helps if you can speak their language and understand how they prefer to work. If a supplier uses terms such as continuous deployment or incremental development, you should (ideally) be able to understand what they are talking about.
Secondly, it’s possible that other functions within your own organization have embraced Agile methodologies. Again, it’s helpful to speak their language to help facilitate cross-functional cooperation and keep projects moving without communication roadblocks.
Finally, we’re starting to see procurement itself embracing Agile. Agile procurement means different things depending on where you look: for some, it’s a mindset, while others have developed innovative Agile procurement methodologies that claim to deliver business value within days instead of months.
2. Procurement is an increasingly vital enabler of environmental initiatives
A report by CDP found that carbon emissions in supply chains are on average four times those of a company’s direct operations. This means that even if an organization invests heavily in cleaning up its practices (such as investing in energy-efficient manufacturing machinery), environment teams cannot hope to make a true impact on reducing their carbon footprint without the cooperation of procurement.
While your organization’s head of sustainability may come up with an idea such as eliminating the use of unsustainable palm oil in your products, it’s the CPO and the procurement team who possess the in-depth knowledge required to get this done. Together, environment and procurement teams can set sustainability targets, establish environmental auditing systems and get to work on greening the supply chain. While it can sound like a daunting task, the job is made easier with the assistance of third-party certification programs such as Energy Star, Fair Trade, the Forest Stewardship Council, Animal Welfare Approved and more.
How is this an “emerging trend” in 2020? The increasing focus on green procurement is part of a wider trend wherein the profession is moving away from a sole focus on cost to embrace a broader concept of value. For hiring managers, this will mean the ideal candidate possesses not only the traditional procurement skillset but experience with environmental initiatives as well.
3. Supply managers are helping make transparency a reality
Consumer confidence has changed. Customers are increasingly unwilling to take a company’s word for it that they’re doing the right thing. Today, people are demanding proof – whether in the form of third-party certification or through transparency made possible by traceability tech such as blockchain and scannable QR codes. A survey by Sprout Social found that nine out of ten consumers will stop purchasing from brands that lack transparency in the future.
Ideally, a customer will be able to scan a product (such as a cotton shirt) and gain access to information on its entire supply chain journey all the way back to farm-level. This will be particularly important in combating modern slavery and other human rights abuse, improving product safety and addressing the growing challenge of counterfeiting.
Transparency, therefore, is high on the agenda of CEOs all over the country. But transparency cannot happen without data, so it’s up to procurement and supply managers to ensure that accurate data is being collected at every link of the supply chain to enable this. Not long ago this would have been impossible to implement at scale, but technology including the Internet of Things is automating the collection of data to make full supply chain transparency possible.
In conclusion, procurement professionals are positioned to lead the way when it comes to facilitating ideas and bringing valuable changes to their organizations. By experimenting with different ways of doing things, allowing important initiatives to be at the forefront and continually striving for transparency, you, as your company’s sourcing hero, will be on point when it comes to aligning your procurement strategy with today’s emerging procurement trends.
Become a trendsetter. Una is the nation’s fastest-growing Group Purchasing Organization (GPO) dedicated to helping businesses and individual professionals improve their financial performance while providing world-class associations with superior member benefit programs. Contact us today.