Here are the challenges for Procurement 2017! These are the top 5 that you need to look out for in the new year:
1) The Challenge of Risk
As time progress, the markets and supply chains have gotten more complex and globalization has become a larger part of the puzzle. However, many organizations still put risk management as an afterthought. Other companies think that compliance is all that is needed to deal with risk management. When you have a complex supply chain, this could be a disadvantage. Minimizing risk management could also hold Procurement 2017 back from its proper strategic role.
What we should do is to create a holistic version of Risk Management and mix it into the fabric of SRM and sourcing.
2) The Challenge of Agility
The year 2016 taught us that “anything goes”. We are now in the Black Swan Age. A black swan event is one that is not only a shock to those involved but it also has a large effect on future events. The 2016 presidential election is just one recent example. Nate Silver, the renowned statistician, predicted Democrat Hillary Clinton’s chances of winning the presidency at 71.4%. Of course, this is not what happened.
To some, Agile Procurement might seem like an industry buzzword, but it’s a vital need. Responding to change so that great opportunities are maximized and unnecessary risk is minimized is what is known as “agility”. Agile organizations can work around changes in their supply chain. They do this by working with new suppliers, materials, sources, and logistics. This agility will work as Procurement 2017’s best ally against one of the more difficult procurement tests in 2017.
3) The Challenge of Selling Any Value After Savings to Management
These days, the definition of cost is dramatically changing. Cost is no longer just the price of purchase – it also about getting the most value from the correct sourcing arrangements. As long as we hold the old images of the post office in our minds, the C-suite will continue to concentrate on looking for discounts on purchase prices. Some well-known examples like Tesco show us that going after savings too aggressively can turn out badly for suppliers. Some of the consequences that could occur include pushback from suppliers and an increase of poor quality products and services. To position Procurement 2017, the function’s reputation does not necessarily need to get better. Instead, savings needs to get rescued from the C-suite’s shortsightedness, which can have consequences at a later date.
4) The Challenge of New Product Innovations
In present times companies must defeat their competition and follow all of the technological advancements in their industry. A lot of markets have gotten scarred by new entrants in their field. Complacency puts older companies in danger of falling behind the new kids on the block.
To survive, companies have to get to the top by constantly releasing and launching new products. With Procurement 2017, this means fostering strong relationships. With R&D, this entails creating sales and marketing materials. Suppliers can also do their part by encouraging innovation and predicting industry trends. Supplier-supported innovation needs to be a top priority of organizations in 2017!
5) The Challenge of Finding Great Talent for Procurement 2017 Difficulties
Procurement 2017 faces a vital challenge in hiring the next generation of talent. It already has issues with ridding itself of its old images. To get young talent interested in Procurement, it will have to paint for potential employees an exciting picture. One way this is getting done is through online communities like Procurious, which is rapidly bringing in young professionals. Millennials have two things going for them: a fine-tuned bull alarm and dynamism. To get these millennial employees, Procurement 2017 needs to present them an unbridled energy for the profession, as well as honesty and respect.