According to Santosh Nair of GEP, “Value Focus” and “Managed Complexity” will be the two procurement trends to watch out for in 2014.
In the eyes of CPOS, 2013 was a notable year for significant macroeconomic and technology changes, and 2014 promises to present even more “interesting” challenges. Nair has compiled the “Sourcing and Procurement Trends Report 2014” (registration required) in which he predicts the two key procurement trends to watch out for in 2014.
Trend 1: From “Cost Focus” to “Value Focus”
Procurement has played a critical role over the past few years in achieving cost savings targets for organizations. As global trade expands and conditions for business improve, procurement, Nair predicts, will now start to be measured as “value-centric” while continuing to focus on the bottom line.
The demand to change the focus from “cost” to “value” will only be met by CPOs changing the way they operate. Suppliers must no longer be seen as an opponent that needs to be cajoled and threatened to deliver cost savings, and the procurement professional must actively collaborate with their strategic suppliers in order to drive innovation, new product development and improve overall supply service quality.
Trend 2: From “Complications” to “Managed Complexity”!
One of the prevalent trends in procurement over the last decade has been for companies to seek low-cost countries for their sourcing requirements. As this globalization of supply chains continues, so will the complexity of supply chains and the procurement function.
Nair sees products and requirements become more complex, and companies needing to create diverse sets of options, packaging designs, and logistics arrangements. This means that companies need to have more facilities in more countries, more e-commerce and other market channels driving the complexity of distribution logistics.
With increasing urbanization, economic volatility in growth markets, and ongoing political disturbances in countries such as India, China, the Middle East, there is a powerful set of possible complicated interactions for which procurement professionals will have to find solutions to manage the increasing complexity of global procurement.