7 strategic sourcing trends for 2021 and beyond

Kait_Ries.pngBy Kait Ries, Digital Marketing Manager, Bid Ops (a strategic sourcing software powered by AI)

Strategic sourcing has been growing in importance in the world of procurement. The traditional sourcing strategy of picking the supplier who offers the lowest cost worked for centuries, but does not cut it in a modern, globalised business climate.

Strategic sourcing has proven to be far more effective. In 2020, we saw the value of this approach as a pandemic pushed supply chains to breaking point. Consumer buying behaviour was upended, while many companies were forced to pivot and produce high-demand products such as personal protective equipment (PPE).

Adding to the challenges, there were travel and shipping restrictions, and many employees rapidly shifted to working from home.

Based on developments in procurement that were already underway - and the many lessons learnt during 2020 - it is clear that strategic sourcing is more important than ever. Looking to the new year and the near future, here are seven strategic sourcing trends for 2021 and beyond that every procurement professional should have on their radar:

Sustainability in procurement on the move

Marcell_Vollmer.jpgBy Dr Marcell Vollmer, Daniel Weise, Wolfgang Schnellbächer, Michael Jonas and Ann-Kathrin Merz (all professionals at Boston Consulting Group)

Growing momentum on bringing sustainability into supply chains
Companies are shining a spotlight on the environmental dimension of sustainability. This is evident especially in the automotive industry. With a small share of a car's parts responsible for most of the environmental harm, automakers have homed in on these categories and their suppliers to drive impact. With some suppliers, such as battery producers, renewable energy commitments are expected to yield an improved carbon footprint. For more difficult to decarbonise materials, such as aluminium and steel, automakers are leveraging design to use more recycled materials and make the cars themselves recyclable. However, there is more to it. The importance of actions like these to address Scope 3 emissions upstream will only rise with the growth of electric cars. Also, over-arching design and architectural levers play a role. While automakers have responded to sustainability challenges with innovation, the true test lies in whether they can sustain this momentum to meet their ambitious targets. Comprehensive ways to measure emissions and to track the progress of abatement initiatives are first and important steps.

How to diversify your suppliers

Will_Green_100.jpgBy Will Green

The need for greater diversity has finally reached beyond staff and hit the company purse strings. Supply Management takes a look at why you should up your supplier diversity and how to go about it.

Efficient public procurement comes to the rescue

Bosio_Galiano_Reyes_200.jpgBy Erica Bosio, Programme Manager: Growth Analytics, Development Economics Vice Presidency, World Bank, and
Emilia Galiano, Private Sector Development Specialist, and
Nathalie Reyes, Operations Analyst: Private Sector Development, World Bank

Governments around the world are wondering how to save their small- and medium-sized enterprises during the economic downturn caused by the coronavirus (COVID-19). Look no further: just pay your bills on time. Public procurement represents approximately 12% of global gross domestic product (GDP). If governments paid all receipts due to their contractors within 45 days, between $1 trillion to $4.65 trillion in fresh liquidity would enter the private sector, supporting firms' cash-flow needs and preventing them from accessing credit. This is not trivial. It is of the same order of magnitude that G20 countries have so far committed ($6.3 trillion) for fiscal support measures to alleviate the effects of the pandemic.

Are you utilising data effectively to drive synergies between procurement and finance?

UtilizingData_100.jpgBy Piotr Raszewski, Senior Analyst: Knowledge Services, Infosys, and
Srikrishna Koneru, AVP, Strategic Business Practice Head: Sourcing and Procurement, Infosys

When one thinks of ways to measure the effectiveness of cross-operation between procurement and finance, more than a few methods come to mind. Purchase order (PO) compliance rate, discount utilisation, the number of active vendor accounts, etc., are some of the indicators.

The business metric of impacting payment on time, however, best reflects the level of synergy between procurement and finance. In this article, we will look at one of the resounding examples of how business intelligence (BI) reports and data analytics can be leveraged to gain a clear perspective on the cause-and-effect relationship between the two departments.

Silk vs. steel: rebuilding supply chains after COVID-19

Kelly_Barner.pngBy Kelly Barner, Owner and Editor, Buyers Meeting Point

Supply chain disruption was a popular topic long before the world was seized by the coronavirus pandemic. Geopolitical disturbances, natural disasters, labour strikes and changing regulations were already factors, and anyone that has been in supply chain during the last decade has seen all of these play out.

At this point, the phrase 'supply chain disruption' seems as natural as 'supply chain' must have seemed the first time people put these two words together. It would be easy to assume that all supply chains have been disrupted, especially given the breathless news coverage and layman consumer's perception that toilet paper and meat are impossible to purchase. While most supply chains have been affected by today's fluid, unpredictable conditions, few have stopped altogether.

3 experts share how to strengthen supply chain defences

Navigating_100.jpgThree procurement experts share their strategies for mitigating supply chain risk after 2020.

The Economist put it best in July 2020: "You may have lost interest in the pandemic. It has not lost interest in you. COVID-19 is here to stay. People will have to adapt. The world is not experiencing a second wave: it never got over the first."

This reminder rings true for procurement and supply chain leaders.

3 reasons why focussing on spend analytics matters

KirkPoucher_100.pngAll sorts of spend analytics technology is available - but how do you best translate this data into constructive action? Procurious spoke to Kirk Poucher, Managing Director of SpendHQ.

February PMI builds on January's increase

PMI_Feb2021_200.jpgThe seasonally-adjusted Absa Purchasing Managers' Index (PMI) increased to 53 index points in February 2021 from 50.9 in the previous month. The further increase (January 2021 was 0.6 points up from December 2020) was supported by three of the five sub-components gaining relative to January. Only the Employment Index moved lower, while the Supplier Deliveries Index also ticked down but remained well above the neutral 50-point mark and thus supported the headline figure.

Procurement needs less processes - as they are slow, boring and self-centred

Sammeli_Sammalkorpi.jpgBy Sammeli Sammalkorpi

During the past few months, I have discussed with a number of chief procurement officers (CPOs) how they have managed procurement during COVID-19. One recurring answer was along the lines of 'we broke all of our processes and went into wild-west-mode'. Now, many said this with an interesting combination of sadness and pride. Sadness that they had to give away great processes perceived to be the basis of any professional procurement organisation. Pride and excitement at how procurement teams were able to improvise, work hard and survive.

New International SCM qualifications launched

IMM_100.jpgAs an unprecedented 2020 trickled into 2021, it has become abundantly clear that competent and proficient supply chain management is a major catalyst when it comes to sustainable economic growth.

With this in mind, the IMM Graduate School has added two new, cutting-edge supply chain management qualifications to their offering: a Higher Certificate in Supply Chain Management (NQF5) and the BCom Honours in Supply Chain Management (NQF8).


 

 

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