In a technologically driven world, it is normal to expect procurement and supply chain management to be infiltered by technological advancements. Moreover, the Covid-19 contagion has further paced up the process of adapting to changes.
So, let us delve into, how the procurement landscape will transform in the next 10 years?
Two top strategies of procurement are likely to work well in the coming years:
1. Traditional procurement with a pinch of technology
The procurement would involve the processing of tenders, contract negotiation, execution of contracts, and renewal of contracts. The paperwork involved in the mentioned processes will be upgraded and IT-driven, this would further reduce human involvement and increase the precision of the work.
2. Novel procurement
Here, the procurement scenario will change its focus from cost and functionality to sustainability and reducing carbon emission. This affirmative change will be heavily based on IoT and, hence the need for data analysts would emerge.
There is always an underlying priority that provokes a system to change. Here are such procurement priorities which are also the core points considered while devising a supply chain strategy:
1. Work Capital Optimization
‘Cost’ is at the heart of every organization. And one of the final goals of procurement is to ensure capital is being saved. The costs involved in handling a procurement process can be greatly reduced by receiving real-time insights into the process.
2. Supplier Consolidation
Even though vendor diversification has proven to be an asset in providing resilience during the pandemic situation, businesses are keenly focused on consolidating their supplier base for the future. The reason is simple, with a limited supplier base the risk is mitigated and the procurement process is simplified.
3. Effective Risk Management
Supply chain leaders have been focusing on ways to scan flaws in the supply chain, formulate methods, and leverage technology to predict risks. Risk prediction can help in improving the sustainability of the process and save money.
4. Strategic Business Foresight
Similar to risk prediction, a deep understanding of market dynamics and insights on the supply chain can support business agility. Studying the forces of change and implying it in the procurement process would help the organization thrive in the new age.
5. Supplier Relationship Management
‘Mutual benefit’ is the key to a long-standing relationship with the supplier. In the tech-era, businesses will lookout for innovative products and processes, the only way for a business to claim it is by having cordial collaboration with the concerned supplier.
Be it today or in the future, these are the key factors that a procurement officer will take into consideration while formulating an effective supply chain management system. With the involvement of technology, these processes will undergo a drastic makeover in the coming years. The key drivers for change will be:
- Artificial Intelligence: In days to come AI will help in contract negotiation, transaction verification, and invoice processing.
- Blockchain: This will lead to automation of processes like invoice management, fraud detection, and global outsourcing.
- Internet of Things: IoT will be the game-changer that would affect almost every aspect of the procurement process, making it feasible and sustainable.
- Robotic Advancements: The involvement of robots in warehouse management is a distant dream, but the possibility of it revolutionizing the supply chain is worth mentioning.
After understanding the forces of change for the future, it is important to note that all these changes will be at the cost of loss of employment, increased expenditure to set up the process, and based on the need for skilled/ trained workers. Along with the business, the job scenario would also undergo a drastic change, which might further lead to reverse migration of laborers due to lack of job opportunities. But as the saying goes ‘change is the only constant’. So, in the course of adapting to these changes, new methods to address these problems will also be devised.
How to Devise Supply Chain for the Future?
Now that we have understood the trajectory of procurement, let us go through the process of making the supply chain resilient to unpredictability and spurts of technologically-driven changes.
1. Plan the impact of automation on the workforce
As automation of processes would deeply impact employment, it will make the supply chain labor dynamics volatile. This would promote mass migration and disrupt the labor force. A way out of this is to find ways for labor inclusion, redirect the workforce to industrial counterparts, and suggest better enforcement of labor laws.
2. Enforce supplier network that can meet commercial expectations & sustainability
To fulfill the emerging customer and demographic demands, connecting with nimble regional suppliers would ensure meeting the commercial expectations and achieving sustainability.
3. Digitize supply chain management
It is practically impossible for a procurement process to transform into a new-generation system overnight. The process is bound to take time. So, start with the digitalization of small aspects like supplier assessment and management. As automation would suggest downsizing and revamping of the existing workforce, it would be difficult to effectively handle it by following the current auditing methods.
In the course of transformation, the supply chain manager would be required to alter the supply chain to meet the global trade demands and to comply with regulations. Transparency of the process will help cope up with such changes. Similarly, improving the quality of the procurement process would protect the organization from future scrutiny.
5. Climate-smart procurement
Try to enforce environmental sustainability and zero carbon emission into the procurement processes. As India has already devised policies for low-carbon economies, one needs to be aware of their actions and contribute towards the global climate supply chain demands.
‘Prepare for a better tomorrow’. By involving small changes in the procurement process like investing in technology, understanding sustainability, and training the workforce, one can easily adapt to the upcoming landscape of procurement. 10 years might seem like a long journey but time flies by, and in days to come, with minor modifications the supply chain management will be completely redefined.