The world of procurement has undergone tremendous changes from the past couple of years. It is now time to look at what 2020 has in store. The New Year seems to be shaping up the procurement trends which were already started in 2018 or earlier and are expected to gain maturity in the coming year. Here is the list of top 7 procurement trends that we need to look out in 2020 –
For long, the rise of digital technologies and its positive impact on procurement has been projected as a procurement trend. In 2018, we saw organizations finally moving to adapt to cognitive procurement technologies such as Big Data Analytics, Machine Learning, Natural Language Processing, Artificial Intelligence, and Robotic Process Automation. The year 2020 will further enhance the usage of these technologies.
The procurement function has to move from delivering cost savings to providing a strategic edge to the organization. To build a holistic supply chain and to drive enterprise-wide cost reductions, procurement has to utilize the maximum value out of digital technologies. Procurement professionals would need to acquire the critical skills to succeed in a digital world and to remain relevant in the market.
Collaboration with suppliers remains a critical approach for all these years. With advanced technology and the changing landscape of supplier management, the procurement function has shown the tremendous scope of improving the relationship with suppliers. Now, buyers cannot afford to communicate with suppliers just over the price. They need to involve them in more strategic decisions right at the initial planning phase. Suppliers thus become an integral part of any supply chain and can play a pivot role in making/breaking the backbone of the procurement. In 2020, more focus would be given in improving work synergies with suppliers. Suppliers will have visibility of all the steps in the procurement cycle to help in getting the best pricing and reducing the risk quotient.
Procurement in 2020 will have to remain at the top when it comes to minimizing the supply chain costs. It will require bringing in innovation and technology interference to save costs wherever necessary.
A transparent system not only reduces exposure to risk but also reduces the information gap that helps in managing risks more effectively.
Focus on indirect spending has always been on the radar of procurement function though recently, more and more organizations are readily putting efforts to control it. Indirect spending or tail spending follows the 80/20 rule
AI will not remain just a procurement trend in 2020 with more and more organizations going to adopt in their processes. Procurement teams will design and deliver intelligent bots to complete most run-of-the-mill procurement tasks with minimal human intervention. From managing large-volume of orders to running repetitive sourcing events, from negotiating with suppliers for low-value items to updating inventory lists, AI will undertake all these activities, thus putting mundane tasks on auto-pilot mode. Products like bid4best.com can quickly scale up the procurement process.
Procurement leaders have time and again agreed change management being the biggest roadblocks in achieving the outlined procurement goals. With the advent of digital technologies, the transactional work in a procurement function is becoming automated. As a result, the extra time available due to automation can be deployed by resources in more strategic activities that a business needs. But the transition to change management is not easy, as it brings a sense of insecurity about the end state and hence resistance to undertake new initiatives. In 2020, more organizations will focus on a smooth change management plan through increased focus on regular communication with the employees; engage them through the process and by providing adequate training and support.
As procurement is gaining more strategic importance within an organization, the expectations from this function are also increasing. This year, the procurement function will continue to deliver on traditional cost savings while focusing heavily on digital technologies and supplier synergies. Overall, 2020 seems like a promising year full of challenges and opportunities for procurement to undertake.