This document summarizes 3 major procurement trends for 2019:
1) Labor shortages in procurement due to an aging workforce and lack of supply chain education programs, exacerbating a deficit in supply chain professionals. Automation can help address this by performing up to 60% of routine tasks.
2) Growing emphasis on corporate social responsibility and sustainability driven by millennial preferences, with 95% of S&P 500 companies now publishing sustainability reports compared to only 25% in 2011. This is an opportunity for procurement to recruit talent.
3) Increasing geopolitical and supply chain risks from trends like tariffs, Brexit, cyberattacks and natural disasters. Procurement must assess supplier financial health, logistics, and diversity to
3. Labor shortages in procurement
Demand for supply chain
professionals exceeds supply
Of the current procurement
workforce at/beyond
retirement age
* Stats from DHL
4. Other reasons for deficit
Industry & function are growing
• Increasingly complex
• Difficult to skill up newcomers
• No substitute for experience
5. Other reasons for deficit
Education – lack of supply chain professors
• Barely 1.3% of all business faculty – worldwide
* Stats from DHL
Unfavorable perceptions of procurement function
• Only 25% believe their company views supply chain
as equally important as other disciplines
• Tough to attract and keep talent
6. Solutions
Promote positive culture, market the department, invest in
training and development
• Provide opportunity for advancement
Decentralize (some) spend – if done carefully and
thoughtfully
Leverage automation
• 60% of tasks involved in source-to-pay could be
automated (McKinsey)
8. Robotic Process Automation
Robotic Process Automation (RPA)
Image Credit: basware
• Software that mimics human activity
• Great for labor-intensive, rule-based
processes like:
• Purchase requests & approvals
• Invoices, payments & receipts
• Running reports
• Email notifications
9. Machine Learning
Contract compliance: scan and store contract data and automate
renewal alerts
Spend analysis reports: run before, during and after a sourcing
event to provide a more complete picture
Areas Machine Learning can help:
Negotiations: search contract history to highlight opportunities for
savings or growth
11. Artificial Intelligence
Procurement could leverage to:
• detect cost/price discrepancies
• identify unusual order frequencies
• make supplier recommendations
• predict market prices
Can learn, understand and interpret data
12. What about blockchain?
• Lack of regulation/standards
• Slow transactions – example:
• Scalability issues
• Tough to understand and manage
Max. 7 transactions per second (tps)*
1,600+ tps*
* Forbes, May 2018
Blockchain: Exciting! But …
13. Technology takeaways
✓ Technology is a tool to empower people – not the
answer to all your problems
✓ Focus on efficiencies
✓ Free up time for high-value activities
18. Sustainability Reports
of companies on the S&P
published in 2011
* According to Governance & Accountability Institute, Inc.
of companies on the S&P
published in 2017
19. CSR in 2019
New leaders could bring changes in legislation and regulation
Ever-increasing standards for companies to meet regarding
sustainability, ethics and transparency
• Stakes are high for procurement departments to source sustainably
and ethically
Take advantage of this visibility to recruit millennials into
procurement!
20. Supply chain risk
More frequent and intense natural disasters
Leads to logistics disruptions, increased prices,
shortages of goods
Buyers must consider geography / exposure to
disasters and diversity of locations
21. Man-made disasters
Cyber attacks are increasing in frequency and sophistication
Have come up against a
supply chain attack
Average financial cost of
an attack
* Stats from Crowdstrike
22. How does procurement prepare?
Carefully consider suppliers’ cybersecurity capabilities
Involve IT to create performance standards and protocol for
ensuring that suppliers are meeting those standards
Limit suppliers’ access to IT systems
• Segment suppliers based on which backend systems they require
access to; vet and monitor accordingly
23. Tariffs and Brexit
Be proactive!
• Assess financial health of global
suppliers
• Assess logistics involving UK and EU
• Avoid sole sourcing
Lots of political instability world-wide
right now – a change from recent years
Implement “what-if” costing