In an article originally published on Procurement Leaders, Toby Munyard, Vice President at Efficio, talks about the challenges and opportunities ahead for Procurement in 2017.
As business leaders across the world wrestle with the implications of Brexit, a Trump administration and political instability in Europe, you don’t need a crystal ball to know that risk will be on the agenda in 2017.
The wider macro-economic landscape and the knock on effect this has for commodity pricing and currency fluctuations are all variables that have a clear impact on procurement. Companies have to optimise their cost position to be competitive and at the heart of this are four main themes that will play out over the course of the year.
1. Develop supplier relationships
In 2017 we will see supplier relationship management (SRM) come of age. Sitting in a unique position between the supply base and the business, procurement has a real opportunity to leverage that position to bring new innovations into the business. Capitalising on their supplier management role, we will see more procurement teams using insight and market intelligence to seek out new suppliers and different ways of working to leapfrog endless iterations of ‘business as usual’ to really drive change. Moving away from reacting to the business or finding a cheaper way of working, the more challenging business environment will see procurement teams looking externally for innovative suppliers that can revolutionise the existing business and make a significant impact on the bottom line.
2. Focus on savings
As the tough trading environment continues over the coming year, it will be increasingly difficult to grow top line revenues. Procurement teams will need to use all the levers at their disposal - from managing demand, volume and usage as well as considering low-cost country sourcing, in-sourcing as well as outsourcing - to deliver savings. 2017 will test procurement to its limits here and we expect to see a focus on specifications where the function will have to challenge existing decisions to check if they are fit for purpose. Asking whether the business is buying the right items at the right price or whether buying something different that could perform the same task might actually unlock even greater savings.
3. Look at technology
2017 will see a big rise in the use of technology through better deployment of solutions. Increased automation will allow the function to gain the overview they need when it comes to assessing risk across their suppliers by tying the whole supply chain, procurement, sourcing and supplier management process together.
4. Big Data
While 2016 saw the emergence of technology as a tool for reducing overheads and costs, 2017 will see the data provided by new tools used to drive deep insight and decisions. Initially developed to speed up business processes, this same technology now provides all the insight procurement teams need to increase value, savings and efficiency within their businesses while at the same time identifying risks.
For procurement, economic uncertainty in 2017 will bring opportunity. Businesses will be increasingly reliant on the function to map future risk in the supply chain and understand how and where the uncertainty will have the most impact.
Perhaps most exciting of all is the chance for the function to step up as innovators, using their overview of the supplier market to bring in new providers that can truly make a difference to their business and drive costs savings and add value.
Although not for the faint-hearted, 2017 will definitely be an interesting year.