The predictions from the ProcureTech100 were focused on 4 main themes of:
1. Digitalisation, 2. Intelligence, 3. People, Planet and Prosperity and 4. Organisation.
For Intelligence predictions, 2022 will be dominated by data centric solutions that become increasingly sophisticated, where multi-dimensional data becomes the foundation for better decision making and workflow management. This is accentuated through the application of AI to data to improve decision making.
At the centre of intelligence are the suppliers throughout the supply chain, where transparency is critical to managing risk from cyber security to supplier due diligence.
Platforms are delivering real time insights that enable users to move from measurement to action.
“Don’t forget the ‘So What’. Some procurement professionals spend years building on data mapping and building great dashboards, but unfortunately forgot about the so what.”
“Intelligence is great fuel; you just need the engine.”
Patrick Foelck, Head of Strategy & Transformation Procurement and Head of Professional Services Procurement at Roche
“Stop making excuses for bad data – get the right data! Make it clean and use it well.”
Dr Elouise Epstein, Partner at Kearney and digital enthusiast
“The importance of supply chain resiliency, transparency and certainty has never been greater.”
Jason Kurtz, Managing Director at Accel-KKR
Boost resilience by addressing supplier data challenge
CPOs will boost resilience by starting to address the supplier data challenge
According to Deloitte, strong digital capabilities can make organisations and their supply networks more agile, by improving data visibility and the ability to collaborate with suppliers. Additionally, CPOs recognise poor data as an issue. 46% of CPOs in a recent HICX survey also admitted to needing more streamlined business processes for suppliers. As the pandemic continues to demand supply chain resilience, we expect to see more leading organisations investing in supplier-centric systems in 2022, to unlock good quality data visibility.
Supplier due diligence concerns
This will only grow as Supply Chains become increasingly decentralized, the pace of business accelerates, and the world moves toward DeFi, Crypto, and Web3 – CPO’s agenda will shift from traditional “Supplier Relationship Management” – to – “Supplier Identity Management”, and federated credentialing authorities will proliferate, leaving monolithic P2P suites in the dust.
Shift focus on measurement to focus on action
The assumption going into 2022 is that organizations have largely figured out how to measure – after all, digital platforms continue to gain more venture investment, while delivering easier and faster ways to digitize traditional processes. In 2022, it will no longer be acceptable to tell a CFO or a CEO that “we can’t measure it,” or “we don’t have the data.”
The conversation is about to shift to, “We have the data, now what?” Faced with this pressure from executives, procurement professionals will find themselves in one of three different scenarios:
1. Most of their data is able to be analyzed, and they now need a flexible platform that can not only identify actionable insights and opportunities from that data, but also automate those in a way that is configurable to quarterly objectives.
2. Most of their data is unstructured and therefore it can’t be analyzed, but they’ve identified the business objectives they’d like to drive towards and are taking action by bringing in tech-first platforms to ensure future optimal data collection.
3. Most data can’t be analyzed, and they’ve conceded to the fact that their data will always be in that format. My hope is that most procurement leaders realize the opportunity in data and find themselves in either scenario 1 or 2.
Actionable supply chain data and automation
Supply chain leaders will invest in solutions that (1) provide collaborative and actionable supply chain DATA and (2) automate manual work. Good data provides transparency into all aspects of the buying, production and delivery process.
Automating manual work frees up time to allow buyers to focus on more strategic, value add activities and reduces risk. Procurement organizations will reprioritize their historical focus from indirect spend to the more strategic and revenue impacting direct material supply chain procurement.
Real time insights
Procurement will be digitally and dynamically driven, enabling supply chain teams to take informed, proactive action and make better, faster decisions. Artificial intelligence, machine learning, and cognitive technologies will provide the real-time insights to replan production and customer allocation on the fly and advise providers, suppliers, and customers of changes required.
According to Deloitte, digital procurement solutions are allowing for many more physical and digital inputs to be connected, driving better decision making and improving efficiency, and ultimately producing results.
Platforms that deliver data insights
One positive from the pandemic was the heightened awareness surrounding the importance of utilizing procurement as a trusted advisor. Procurement teams have the ability to maintain supply chain continuity and drive better cost management and product availability.
Digital procurement will continue to improve as practitioners can become even more “Insight-led” – focusing on intelligence and analytics to drive the understanding of the business overall, their category’s role in the business as well as the alternative ways/scenarios through which better, more holistic procurement advice can impact the product/service being delivered, and hence the value the end customer receives and ultimately, shareholder value. In a practical sense, this means those solutions that drive insight and understanding (versus simply saving time/transaction costs) will see relatively greater adoption.
Multi-dimensional data will become the foundation for better decisions making and workflow management
Moving away from siloed data and fragmented insights frozen in Excel, top performers will build a dynamic “single source of truth” for vendors to save time, save money, and reduce risk.
Top performing procurement teams will continue to grow in importance to the business as supply chains become an increasingly strategic differentiator. Recent disruptions have highlighted the importance of more complete and agile supplier intelligence. With inflation, new COVID variants, trade tensions, and changing business priorities, we expect the disruptions to continue undisrupted in 2022.
Increased sophistication of data solutions
In the Procurement Performance Management (PPM) segment, besides an increasing sophistication of the solutions to replace homegrown spreadsheets, the focus will be on adding capabilities to track the non-financial aspects of Procurement’s contribution (ESG scoring, CO2 emissions calculations…).
ESG goals are at the top of all company boards’ agenda and as Hackett Group’s Fehring highlights, Procurement has a key role to play.
“World-class performance is being redefined through a digital lens while Procurement’s value proposition is being broadened to include sustainability efforts, spend with diverse suppliers, and process automation.”
Jonathan Fehring, Senior Director, Procurement and Purchase-to-Pay Advisory, The Hackett Group
Data centric solutions will dominate
New data-centric solutions will come to dominate leading-edge procurement and supply chain operations.
Top-level executives in global businesses are focused more than ever on sustainability, resilience and impact factors such as environmental, social and corporate governance (ESG). Driving improvements in sustainability and ESG across operations will require not only greater access to data but more meaningful insights into, and intelligence from that data. And the breadth data that organizations will need to make these changes must be much greater and deeper. The current state-of-the-art and next generation of digital procurement solutions must be founded on comprehensive, all-inclusive data models to provide the complete control tower overview the leadership requires.
Supply chain mapping and transparency
Increased visibility: The last year has showcased the importance of prioritizing visibility especially as it pertains to supplier risk. The Smart Cube saw a 167% increase in demand for supplier risk analysis in 2021.
Additionally, survey data collected from our recent webinar, What’s Next For Procurement 2022, showed that 47% of respondents noted supplier risk as one of the top three challenges facing procurement functions over the last year. With tools like supplier risk intelligence, companies can better identify, monitor, and mitigate risks through improved visibility.
Portfolio management of suppliers/3rd parties to actively manage cyber risk
Following on from an unrelenting and unprecedented year of ransomware attacks across the majority of sectors, GRC mandates will continue to increase their focus upon 3rd party cyber security assurance and mitigations. As a consequence, organisations will demonstrably place more importance and effort upon managing their portfolio of suppliers/3rd parties to actively manage cyber risk. Organisation which effectively accomplish this in 2022 will be at a competitive advantage as will the third parties themselves.
The “cat is out of the bag” in regards to the risk around supplier cyber risk management but the gap is speed, scale and scope AND a measurable reduction in risk.
Decision-making value of tying AI and analytics together realised
The hype around ‘big data’ has dissipated, and organizations are increasingly realizing the value and actionability of ‘small data.’ The strategic insights created when data analytics and AI are tied together tell a much deeper business story. The intelligence positions teams to make confident, justifiable, and measurable procurement and supply chain decisions.
My wish for 2022 is that more teams will understand and leverage the power of these capabilities for decision and process augmentation. Platforms with this embedded intelligence will continue to be enhanced with human input and ultimately learn and adapt to new tasks and situations. The tools guide organizations to better decisions that drive procurement efficiency, risk reduction, and strategic outcomes.