In many ways, every new year gives all of us the opportunity to “clear the slate” and start fresh with positive energy and new ideas. For procurement, 2019 offers new ways to help their organizations succeed while also leveraging last year’s momentum. There will also be new challenges to conquer—many of which reared their heads in 2018 and will likely continue to present hurdles as the new year progresses.
“As tariff negotiations and trade disputes roll on in fits and starts, manufacturers and their supply chain partners are getting a real-life object lesson in the importance of a resilient supply chain,” Greg Anderson writes in “In the Face of 2019’s Global Challenges, Speed and Agility Change the Game.” “From productive disruption like smart factories and digital transformation to the destructive forces of hurricanes and earthquakes, global companies face a constantly shifting array of challenges.”
While not insurmountable, these and other challenges will keep procurement professionals on their toes in 2019. Here are five resolutions to not only help you work through those issues, but also create sustainable, profitable organizations:
- Build out your digital procurement system. Given the state of procurement technology and analytics, compromising profit margins to preserve speed to market doesn’t work anymore. Neither does using antiquated, siloed purchasing solutions. Using a digital procurement system, companies can achieve both objectives. “In 2019, companies that aren’t managing indirect and direct costs on a holistic procurement platform are leaving money on the table; they won’t be able to keep margins intact or drive efficiency improvements,” Anderson adds. “In order to maintain speed, agility, and balance, they have to be able to get the right information in front of the right decision-maker at the right time.”
- Develop a “greener” transportation network. In “Reducing Emissions & Costs in the Electronics Supply Chain,” Stephen Petit discusses how the electronic manufacturing space is using various strategies and data-driven tools to improve the way it manages emissions across the supply chain, and how transportation is a key target for these initiatives. Procurement professionals can use verified data reporting (e.g., for transport-related emissions), supplier agreements (e.g.., freight contracts that encourage suppliers to be transparent with emissions data), and efficient packaging and mode-shifting to help their companies operate more sustainably. “For electronics manufacturers, the supply chain is the largest source of carbon and other GHG emissions,” Petit writes. “Within the supply chain, transportation is a rapidly growing source of emissions, and in the United States recently surpassed electricity generation as the largest source of GHG emissions.”
- Start a blockchain pilot. Blockchain is making noise in the digital world, and ecommerce-platforms.com’s Ana Farr believes this nascent technology can revolutionize procurement as well. “Blockchain has a lot to offer for the procurement function, which is why procurement professionals should start to consider its use in earnest,” she writes in “How Blockchain Might Revolutionise the Procurement Process,” She says that integrating this tech in a company’s processes will result in transparency, efficiency, improved trust, and security. “However, before you leap forward, you need to understand that blockchain is still in its early stages and hence suitable for pilot projects only,” Farr writes. “Additionally, it’s not a good idea to jump in blindly simply because every other article is describing it as the next big thing. You need to have a plan and understand which processes need improvement, and how much you expect to spend.”
- Get closer to your suppliers. How procurement interacts with suppliers has direct impacts on cost, quality of service, and overall return on investment (ROI) of the relationships. “These outcomes all hang on better supplier relationship management in order to tease out further innovation from suppliers (who are seen as partners, rather than sponges to wring cash out of),” Euan Granger points out in “The Key Procurement and Technology Trends for 2019,” “and closer collaboration to source solutions to problems we don’t even know we have yet.” Granger sees good communication as a core strategy that all procurement professionals should be focused on. “Select the right suppliers and talk to them more,” he adds. “You never know, you might just learn something!”
- Be realistic when setting goals. One can only get so much done in a year’s time, so be realistic when setting your New Year’s resolutions for 2019. If customers are pushing your company to think and act more sustainably, then take the procurement-related steps necessary to move in that direction. Or if you’re unsatisfied with the state of your supplier relationships, make improving them a priority. By centering procurement resolutions around achievable goals—versus unrealistic aspirations that are so far out of reach they just wind up creating frustration—you can impact positive change in 2019 (and beyond).