The year 2023 brings with it a new air of opportunities with which businesses continue to propel their growth and recovery after the world came to a halt in 2020. The shift to the “new normal” remains full to the brim with novelty, as fundamentally businesses understood the need to constantly adapt through digital transformation.
In recent research conducted by DBS bank, it was found that 34% of businesses believe that procurement was the most urgent aspect that needs digital transformation to achieve commercial goals. However, 39% of businesses reported that their digital transformation initiatives did not bear fruit.
This brings to mind questions on how to leverage digital transformation so as to integrate into the new normal and what procurement trends can be leveraged in digital transformation initiatives. The following trends in procurement not only necessitate what businesses need to have but beckon the question of how to incorporate said trends to optimise procurement in 2023.
1. Digitalisation and Procurement Automation Paramountcy
According to research conducted by PwC, procurement digitalisation was placed around 21% just four years ago.
Across the board, businesses were employing strategic sourcing, predictive analytics, and supplier collaboration tools to streamline the procurement experience, automate manual tasks, and increase efficiency—albeit at a slower pace.
Fast-forward to 2022 and that figure has shot up.
To bring the lesson home, over the past two years Zoom grew over 3,000%, owing to the rise of video conferencing applications designed to replace in-office collaboration. Similarly, businesses across diverse industries are waking up to the call of the hour.
Spreadsheets, paper contracts, and files won’t do any longer.
With the life of the traditional brick and mortar office hanging in the balance, businesses of all sizes have been forced to deepen their dependence on digital procurement automation tools in order to survive the new normal.
With entire companies distributed, organisations large and small alike will now be forced to evaluate and adopt digital procurement automation tools to stay agile and retain market share.
This advent in procurement automation will cut across fields like sourcing, contract management, vendor relationships, payments, etc., as businesses take a more intentional approach towards digitising what can and freeing work from their outdated processes.
The recovery will be digital and only businesses that pivot accordingly will experience it.
2. Flexibility, Agility & Resilience are Key
The new normal set in faster than anyone could predict or plan to mitigate it.
A month prior and it was on the news, an issue that didn’t concern you. A month later and businesses across your city were all shut down.
There was little reaction time for businesses to create a strategy to react to the instant downturn.
And the results were catastrophic. Businesses that weren’t designated as essential had to shut down their supply chain entirely, leading to supply chain holdups, lost revenue, and waste of resources.
Just like the pandemic taught us, future emergencies may not allow anyone to prepare on the fly and step up in just days.
It’ll require long-term planning to create alternatives, plan for multiple scenarios, create loopholes, and design strategies to help you react and address challenges as they arise.
In hindsight, your business will need to be more agile to stay on top of future emergencies. And to build that agility, you need to build resilience.
Building resilience is all about designing your supply chain to survive disruptions should unforeseen circumstances arise.
2023 will be the year for taking a long, hard look at your business’s agility, creating a resilient plan, and stress testing it to sustain your operations during future rainy days.
3. Data & Analytics – The Way Forward
In 2023, as businesses rebuild, there’s going to be little room for guesswork. Businesses will be looking to make surgical, calculated moves to counteract any losses sustained over the past year.
And data offers the best approach to making winning decisions.
According to insights by consulting giant McKinsey, businesses that embrace data and analytics outperform slow adopters by a factor of 1.6, offering more value to their shareholders.
Data and analytics eliminate the need to base decisions on conventional wisdom and age-long patterns and rather, uncovers trends you can leverage to get outcomes both in the short and long term.
Businesses that’ll win the procurement game in 2023 will be those that give data a center place since they’ll make proven decisions that’ll create better outcomes.
4. Secure Supply Chains Require Resilient Supplier Relationships
Even if you weren’t affected directly by the developments from last year, you sure had a hard time because of it.
Everyone, from Airbnb to the IRS had to get into a lower gear to be able to survive the crunch.
And no doubt, the new normal affected several of your suppliers directly and sent some ripples into your internal operations.
Supply shortages, higher supply prices, transportation holdups, etc., plagued suppliers from Asia to Africa, holding up other businesses dependent on them across continents.
Your suppliers are an indispensable asset to your business’s operations—granted they function outside your organisation but they’re invaluable to whatever operations you manage in-house.
As the new normal has made obvious, it pays to build resilient supplier relationships that can stand the test of time.
Even if you successfully acquire the best suppliers, it pays to diversify your risk to ensure you can weather any unforeseen circumstances that may hit your supply chain.
In the face of 2023, you need an entirely new strategy. Organisations need to double down on assessing supplier risk and seeking to limit it. To achieve this, you need to:
- Investigate alternative supplies to diversify your risk
- Undertake in-depth supplier risk assessments to determine how reliable a supplier can be before building a relationship with them
- Determine high-risk areas in your supply chain and take proactive steps to secure them and diversify your risk.
Plan and expect disruptions to your supply chain as it’ll help you think far into the future, build resilience, and stay operational despite emergencies.
5. CSR at The Forefront
As the planet heals, everyone’s wondering how to prevent another downturn and build back stronger.
One of the areas coming to light is the field of corporate social responsibility. Businesses haven’t been doing enough for the planet, their employees, and the community. And it’s all about to change.
There’s a wave of dissatisfaction sweeping the globe as people demand change. Businesses that adjust in turn will build a stronger and more equitable image. Businesses that don’t will witness declining acceptance from every angle.
As an organisation building for the future, corporate social responsibility across your supply chain is a call to take a stance beyond just profit and invest in a more equitable and fair world.
2022 exposed a lot of loopholes we’ve always known were there. But the new normal showed us all how quickly fortunes can change, plus the level of planning and execution required to stay on the bleeding edge of change.
Procurement won’t be business as usual but businesses that plan and adjust accordingly will be able to mitigate risk and leverage the changing environment to their benefit.
This article is written by Prasanna Rajendran, Head of Business for Kissflow Procurement Cloud, Kissflow
