Uncertain global markets. Layoffs and hiring freezes. Supply chain risks heightened by geopolitical conflict. These are just some of the many challenges procurement teams have had to face since the pandemic and throughout 2022. What all of these obstacles have made clear is that process resilience and long-term procurement strategies are essential for mitigating future risks.
2023 will serve as a chance to reset, rebuild, and forge a path forward by implementing technology that delivers process excellence, drives innovation, and empowers procurement teams to do more despite fewer resources.
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5 procurement trends for 2023
Here are five procurement trends and predictions to help you navigate future disruptions, future-proof your procurement processes, and support your procurement teams in 2023 and beyond.
1. Burnout prevention will take center stage
Among global workers, stress has (once again) reached an all-time high. During the last half of 2022, anxieties about a looming recession and a constant drip of headlines about layoffs and hiring freezes amplified existing feelings of burnout.
According to Gallup’s 2022 State of the Global Workplace Report, employees that are engaged at work but not thriving are 61% more likely to experience ongoing burnout. This presents a very real economic cost for companies already faced with a lack of procurement resources.
A recent survey of procurement and supply chain leaders found that 32% of procurement teams admitted to cutting corners with their sourcing criteria and suppliers to secure supply.
This lowers standards and undermines adherence to due diligence. These two shortcuts can snowball into bigger risks, cause leaks for businesses, as well as quality and sustainability issues for procurement teams. In addition to balancing roles affected by layoffs or hiring freezes across already narrow bandwidths, supporting procurement teams is a must as pressure and expectations increase.
Going into 2023, it’s imperative that procurement teams not only tap into employee engagement but employee wellbeing as well to offset mass burnout. This is especially timely considering the projected 6% decline in employment for purchasing managers, buyers, and purchasing agents through 2031.
By investing in procurement digitalization, businesses can reduce burnout, thrive through hiring freezes, and foster healthier employee engagement, wellbeing, and operational resilience.
2. Simplifying complex data and process management will continue to be top of mind
As procurement teams face increasing pressure to be more transparent, efforts to digitize manual processes to improve their visibility will take center stage.
In 2022, the five biggest procurement issues experienced by B2B buyers were:
- Reliable delivery (43%)
- Maintaining compliance of spend policies and dealing with rogue spending (40%)
- Complex purchasing systems (31%)
- Complex approval processes (29%)
- Time-consuming invoice reconciliation (28%)
These issues highlight the many e-procurement opportunities that can be leveraged to digitalize and automate procurement in 2023 with tools that offer management controls, automation, and data analytics.
In order for teams to make effective decisions, digital infrastructure with integrated systems and seamless communication between systems will make procurement much more sustainable and agile. Higher speed and accuracy, higher levels of security, and lower processing costs will follow once processes and tasks are streamlined and automated.
3. IT and developer shortages will continue
The IT talent shortage is expected to continue for the better part of the next decade, and 64% of IT executives see it as the most relevant barrier to the adoption of emerging technologies.
This presents a challenge for complex and ever-evolving procurement processes. Typically, these processes require technical help to make optimizations or changes in response to market shifts, supply chain disruptions, compliance needs, or risk mitigation. And to make matters more complicated, IT talent retention is now also at risk.
IT and development teams were already limited. Now both teams are faced with an agility and flexibility crisis. The deficit of technical resources and bandwidth required to manage procurement processes leads to longer delivery times, dissatisfied procurement teams, and an operation that may lead to additional company costs, not savings.
To solve this issue, some companies are turning to borderless technology talent to resolve this issue (a practice that has doubled in the last three years), with 58% of organizations reporting some of their technology talent already working in a fully remote borderless arrangement. An additional 27% of leaders report currently exploring the option of borderless tech employee hires.
However, this type of talent will require business and IT leaders to implement major adjustments to management techniques, infrastructure and technology, and cybersecurity and data protection. Business process automation (BPA) with a low- or-no-code framework fills in the workforce gaps and sets the standard for technology, process infrastructure, and security management, all the while upskilling procurement teams so they can manage procurement processes themselves with an IT-sanctioned toolbox.
When businesses adopt this model, IT teams get to be flexible with the projects they take on and focus on more complex and strategic initiatives. Meanwhile, procurement teams are able to remain agile in the face of constant change.
4. Inflation will cast a long shadow
When it comes to inflation, experts are unsure of the forecast. For some, the belief is that inflation has peaked at its highest level in decades, meaning less cause for concern going into 2023. However, a recent survey by Ipsos and the World Economic Forum found the opposite to be true with 69% of people anticipating inflation to continue into the next year.
Which way the winds of inflation will blow is yet to be determined, but one thing is certain: procurement teams are already struggling and will continue to do so unless leaders intervene and provide support.
An alarming 81% of procurement teams report feeling pressured by executive teams to respond to challenges (like inflation, disruptions, shortages, and internal workforce changes) more quickly and effectively. However, few feel equipped to handle these challenges and thrive in current conditions.
Many predict that global supply chains won’t be back to pre-COVID operational norms until 2024 (at the earliest), so it’s imperative for leaders to set realistic expectations, prepare for inflation, and find ways to relieve the mounting pressure on procurement teams so they can best manage financial and operational risks. By implementing a data-driven and cross-functional approach to procurement management, teams will be prepared to maintain price and supply chain stability, inform sourcing and negotiations, and minimize costs.
5. Investment in procurement technology will increase
If the last three years were about survival, then the next year (and beyond) is about recovery and resilience — and investment in procurement technology that promotes agility and flexibility across the procurement process and supply chain is the catalyst for this. This long-term strategy improves agility and paves the way for additional short-term benefits for purchasing and P2P processes.
BPA software increases supply chain transparency and visibility while also improving risk mitigation and management, all requirements for process resilience. This will allow agile purchasing and P2P processes to improve profitability and deliver savings by optimizing sourcing, payments, and approvals to match a new, recession-proof way of operating.
A recent survey of CFOs found that 78% will either increase or maintain enterprise digital investments through 2023, despite recent inflation. This lasting level of investment will free up precious IT and developer bandwidth, and the planned increases in reporting automation provides procurement teams a chance to focus on strategic, value-adding activities.
Procurement and finance strategies are shifting from reactive survival to proactive growth. With an eye toward the future and procurement technology that helps them navigate disruption, procurement teams are able to use data analytics to map what’s to come, meet changing immediate business needs, and continue with cost-saving strategies that benefit the entire organization.
Procurement process excellence and resilience are within reach
Despite lingering uncertainties procurement teams may be feeling, 2023 is set up to be a year full of second chances to get things right and prepare for the next great disruption. With technology like low- or no-code process automation across entire procurement operations, the companies that will thrive in 2023 will be the ones replacing short-term solutions and spending on more long-term strategic investments in technology, people, and processes.
Cost savings will always be top of mind, but the shift toward sustaining additional costs at every level of procurement will lead to wider business benefits. Why? Upgrading procurement technology and future-proofing processes for higher risk mitigation will result in a more fulfilled and agile workforce.