What are the top trends going to be in procurement in 2021?
The consultants at EY have completed a top 10 list, which we summarize below.
Supply Chain Digest Says... |
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| EY says that with the emergence of new technologies, notably 3D printers, and the need to drive competitive advantage, the current status quo around make versus buy will be challenged. |
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1. Procurement's Contribution to the Overall Organization Strategy Will be a Major Driver For Competitive Advantage: In good news for procurement executives, EY says that leading procurement functions will become part of an organization's core value stream and contribute more to the overall business strategy and the growth agenda. Along the same lines, EY says procurement leaders will evolve their focus on cost leadership to enabling innovation, agility and supply certainty.
2. Procurement will be a Smaller, more Agile Function that Partners Directly with Business Units: EY also says that procurement organizations will be a smaller, centralized function, with more happening in a virtual center and with managers geographically embedded within business units, meeting the need for increased collaboration. It adds that "Category managers will also become business partners focusing on all procurement and category needs of a business unit."
3. Computers will Mostly Clean and Curate their own Data: EY predicts that in the future, procurement ddata will be continually cleansed and improved using machine learning techniques to automatically identify and correct data anomalies within systems. It cites as an example that a company's vendor master database will be continually maintained using data from contract invoicing systems. This will create a "virtual cycle of digital," EY says, where data will continually improve, and organizations will mostly use machines not humans for periodic data cleansing.
4. Integrated Data Ecosystems will Enhance Visibility of Patterns across the Organization: EY predicts that data captured from Internet of Things (IoT) devices will enable real-time tracking and monitoring of outcomes through continuous feedback loops across assets. This can allow tracking of consumption such that when systems are connected to suppliers, the industry will see "touchless procurement" in the next 24 months. EY also say IoT will be used to create "an enhanced data platform to inform decision-making around spend and purchasing patterns, catalog content, supplier portfolios and contract fulfillment."
5. Organizations will Leverage Internal and External Data Sources to Better Assess Supplier Risk: EY believes that in the near future, most organizations will have a holistic view of suppliers through a combination of internal data, data from suppliers themselves, market data and external data on suppliers' performance. This will enable organizations to accurately and broad establish supplier risk profiles and to predict risk events.
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6. Robotic Process Automation will be Ubiquitous and will become an Integral part of Every Software Deployment: EY predicts that robotic process automation (RPA) will become an integral part of any commercial off-the-shelf software deployment, reducing the impact of software upgrades. It also predicts that by 2020, leading procurement functions will have fully enabled end-to-end procurement, where manual intervention for high-volume repeatable tasks is removed. It also says manual reporting will disappear, and employees will get the opportunity to focus on higher value work instead of creating endless reports.
7. Software Providers will Open Up their Architecture So that Third Parties Can Develop and Sell Apps and Software That Enhance Functionality: EY says the mobile phone app store ecosystem approach will be available to the business world with software providers, allowing access to third-party apps and extension. This trend is already starting to see this happen, but will soon become more widespread.
8. Voice-activated and Bot-Purchasing Experiences will be the Norm: EY believes that buyers of the future "will be supported by seamless and intuitive purchasing experiences, regardless of underlying technology systems already in place." What does that mean? Think voice-activated purchasing execution for goods and services, supported by natural-language search and virtual assistants.
9. Blockchain will be Selectively used in Procurement: EY notes that while blockchain is a hot topic in some areas of supply chain, it will be just selectively used by procurement functions. EY thinks there will be some hesitation on implementing private blockchain networks in procurement due to the high costs of development and deployment. EY expects blockchain use will most likely be limited to scenarios where there is a regulatory track-and-trace requirement, high levels of counterfeiting or a clear business case for operational integrity.
10. Existing Decisions on Make versus Buy will be Challenged: In perhaps the most interesting trend, EY says that with the emergence of new technologies, notably 3D printers, and the need to drive competitive advantage, the current status quo around make versus buy will be challenged. Today, "organizations will need to understand the tradeoffs in reducing production downtime and costs and improving sustainable practices by making products versus buying," EY says. Adding that "Procurement will need to become more strategic when analyzing new technologies and supplier portfolios to help with this decision."
SCDigest's Take: Most of these trends are nascent and will be fortunate to gain any traction in 2021, the "future is just around the corner," EY says, and now is the time to plan.
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