The predictions from the ProcureTech100 were focused on 4 main themes of:
1. Digitalisation, 2. Intelligence, 3. People, Planet and Prosperity and 4. Organisation.
Fundamental in all digital transformation journeys is the organisation, and the ProcureTech100 predictions reinforced this.
Despite the impact of ‘the great resignation’, procurement will attract more of generation Z talent and establish deeper business relationships with supply chain, finance/treasury and suppliers. Digital leaders will thrive, especially those that prioritise proactivity, are bold in solving critical business problems and proposing new solutions, which will result in more influence and value being delivered.
The way procurement work will change, optimal AI and human interaction, stronger management of the supplier end to end experience and more meaningful work will all increase in 2022.
“‘CFOs will give CPOs a seat at the table’ – that’s not how it works. You take your seat at the table!”
Dr Elouise Epstein, Partner at Kearney and Futurist
“‘Year of the Supplier’ – I 100% agree!”
Dr Elouise Epstein, Partner at Kearney, and Jason Kurtz, Managing Director at Accel-KKR
“Digital is becoming a talent. Let’s help digital to help us. How do we embed it in our ecosystems? How can we make our processes work around it for our systems to be most effective?
Let’s help human AI and human digital work together.”
Patrick Foelck, Head of Strategy & Transformation Procurement and Head of Professional Services Procurement at Roche
Optimal AI and human interaction
Investment in artificial intelligence and combining it effectively with human intervention: The role of artificial intelligence will continue increasing within supply chain and procurement because it helps with effectiveness and efficiency. However, the key to being successful in growing technological processes is incorporating the human aspect. We must understand the relationships between data and human intervention to fully create a seamless process.
The great resignation
40% of survey respondents are either considering leaving their current jobs or already have concrete plans to do so. An even more startling revelation: a whopping 56% of younger professionals (under 35 years old) have plans to leave their jobs. This should sound alarm bells for CFOs and business leaders. You’re already facing major challenges in today’s competitive hiring environment and can’t afford to lose their staff.
Gen Z talent
More young talent will look to roles in procurement
Procurement is emerging as one of the most important sectors in creating impact for good, particularly regarding environmental and sustainability measures. In 2022, more Millennials and Gen Z will flock to procurement to drive positive change, but technology will be vital to attracting and retaining them in supply chain roles. Modern e-sourcing solutions that marry optimization power with usability will be crucial in convincing tech-savvy young professionals that a company is the right fit for them.
While procurement can’t reduce inflation, it can mitigate the concern by being proactive to move the needle as the first line of defense in inflation strategy. Mitigation strategies include reducing the input into production input and ingredient costs and enabling companies to hold product prices steady for longer. Practitioners must go beyond reducing input cost to further optimize, manage and offset cost increases by identifying substitutes and thereby increasing efficiency.
More influence and adding value
If given more time, how would finance professionals prefer to use it? When prompted with this question, finance workers highlighted team development, learning & networking, and working as a strategic business partner. This highlights an important point: that employees are no longer satisfied as a pure service provider within a business. They want to influence decision making and add value to their companies.
Bold in solving critical business problems and proposing solutions
Be bold in solving critical business problems and propose solutions that help companies navigate troubled, uncertain waters.
If 2021 has taught us anything, it is that even the best of predictions failed to anticipate some of the challenges the world has seen. What did occur though was that procurement organizations moved away from simply managing and optimizing processes to becoming pivotal in solving critical business problems. In 2022 procurement professionals should be bold in embracing this mandate and propose solutions that help companies navigate troubled, uncertain waters. Creative procurement solutions can address some of the biggest challenges businesses continue to face today: managing supply shortages, rethinking a globalized supply chain, leaning on a vibrant external workforce in the face of the Great Resignation, and focusing on working capital at a time of increasing global inflation. Let’s be bold and re-define traditional paradigms to tackle these challenges.
More meaningful work
Finance teams want and need to spend more time on meaningful work and tasks that have a clear impact on the growth of the company. Only one third of respondents said that most of their work is fulfilling, while 26% spend less than half of their time on meaningful work. And only 40% of respondents said they spend most of their time on tasks that add a clear value for the company.
Year of the Supplier
In 2021, procurement went from a largely neglected area of business to mission-critical operations due to the massive disruptions to the infrastructure that delivers goods and services. In 2022, I believe we’ll see the spotlight shift more specifically to suppliers especially as businesses face mounting pressure from investors and government to diversify and localize their supplier base, not to mention source from eco-conscious and sustainable vendors. As a result, we’ll see an accelerated adoption of tech like artificial intelligence and machine learning within the dynamic between businesses and their suppliers, making it faster, easier and more efficient to run their businesses. This doubling down on supplier enablement and performance tech will have a positive trickle down effect on the entire organization, particularly the long-neglected procurement teams – by helping the business make more money while also saving money.
New relationships with supply chain and finance/treasury
Further collaboration with finance and treasury to drive working capital efficiency across supply chain
-ESG coming of age – increased pressure and standardisation of ESG performance reporting will force those standards through procurement onto the supply chain e.g. scope 3 carbon reduction. Procurement will need to embrace this and find ways to incentivise suppliers to make changes and to support their working capital needs in doing so
-Diversification of supply chains will lead to the need to deal with a larger number of smaller suppliers, who will be in growth mode as a consequence – procurement needs to ensure financial health of supply chains across this wider portfolio
-Continued request for procurement to drive working capital efficiency in their own organisations – need for data driven optimisation of payment terms
-All of the above will force further collaboration with finance and treasury – finance savvy procurement who have digitised their processes will thrive
Digital leaders thrive
Digital leaders will thrive, and digital laggers will face a long uphill battle. The pandemic years have massively accelerated digitalization initiatives across practically all industries in all geographies, especially within procurement.
The procurement teams that made their digital roadmap a priority over the past two years now have the doors wide open to them – they have the credibility and budgets to begin phase two of their digital transformation, resulting in huge upside for the business.
They’ll also benefit at the professional level: digital leaders are now so marketable to other large enterprises that haven’t successfully completed phase one that it wouldn’t shock me to see a high amount of turnover and migration among procurement leaders in 2022.
On the flip side, those that failed to get the ball rolling on phase one will face a long uphill battle: In 2-3 years when competitors’ digital initiatives are in full swing and driving a huge impact to their bottom line, digital laggers will be at a big competitive disadvantage.
In this increasingly competitive market, digital vanguards will be the real winners, enjoying continuity of the supply chain, better margins, more agile teams, higher supplier diversity or sustainability benchmarks to win competitive business and recruit top talent, better end user experiences, and overall better brand to recruit top talent in this competitive arena.
Digital leaders thrive
Companies will leverage their IT investments to redefine supplier strategies that help them recover and thrive through uncertainty.
Businesses will leverage their AI and IT investments to reach mutually beneficial agreements with their suppliers so they can mitigate risk and create opportunities for growth at scale.
Suppliers have proven to be instrumental in enterprise recovery. 54% of CPOs plan to increase supplier collaboration in 2021.as companies with advanced supplier collaboration capabilities yield higher growth, lower operating costs, greater profitability. With the help of AI procurement teams can better collaborate in real time with suppliers and drive a positive impact across the enterprise and thrive during uncertainty: 64% of CPOs have shifted from defense to offense by focusing on adapting their supply chains to thrive in the “next normal.
CFOs will give CPOs a seat at the table
A long overshadowed C-suite role is finally grabbing the attention and respect of CFOs given the supply chain issues of the past few years: the Chief Procurement Officer. Chief Procurement Officers are responsible for the flow of resources, services and raw materials needed to sustain a business. In pre-COVID times, their function was largely regarded as a non-strategic, tactical role responsible for managing a company’s vendors.
CFOs didn’t take them seriously, and the relationship has been fraught with friction over mis-aligned priorities. But with the pandemic impacting the flow of goods and services, CPOs are now regarded by CFOs as mission-critical. In 2022, I hope that we’ll continue to see this paradigm shift take hold with closer than ever collaboration between the CFO and CPO as they work to influence bottom line profits and cost reduction amid continuous supply and talent shortages, product delays and more.
Supplier experience becomes new responsibility
A designated function will be assigned to champion Supplier Experience Management
Despite 78% of CPOs thinking they’re excellent to work with, over a third confess to needing better services and support in place for suppliers, and over two thirds know they need to resolve supplier queries faster. For strong supply chains, these friction points must be ironed out. Currently, there is no assigned role within organisations to manage the supplier journey. Procurement teams, however, have a company-wide view of the supply chain and a deep understanding of the supplier landscape. Therefore, we anticipate that in 2022, Procurement will start owning the end-to-end supplier experience.