The year 2020 brought many ups and downs for every firm in the U.S. and around the world. The situation is not expected to change in 2021 as the issues that caused the disruptions in 2021 are set to continue.
With that in mind, companies will look to ways to maneuver the rocky times ahead and manage risk and resilience.
Due to globalized supply chains, the pandemic leads to increased risk, and companies adopted risk mitigation strategies that will continue over 2021. More resilient supply chains will also be trending as companies try to build on their responsiveness to disruptions, uncertainties, and demand changes.
These are the key procurement trends to watch in 2021:
The unpredictability of supply chains was one of the most significant outcomes of the COVID-19 pandemic. For that reason, companies aimed to diversify and shorten their supply chains over the recent months; this trend will continue over 2021.
Companies adopted remote work in 2020, and this trend is expected to continue even beyond the pandemic. Outsourcing became popular as companies tried to cost-cut and became more flexible. Businesses will be looking for cost-effective strategies to withstand the effects of pandemic and progress; outsourcing will be one of these strategies.
COVID-19 created awareness of the real impacts of climate emergencies. Businesses now understand the investment risk posed by global warming and adjust their environmental, social, and corporate governance (ESG) frameworks to boost their sustainable agenda.
Businesses should build a purpose-led supply chain that aims to meet sustainability goals. Organizations should not only monitor how they supply their finished products but also oversee their supplier compliance and help improve their environmental, social, and economic performance.
Businesses are increasingly investing in technology that improves their global visibility as they try to find new ways to meet their procurement needs.
Proper cooperation between businesses requires adequate information from all partners up and down the supply chain. The pandemic has exposed how shallow the information is in a supply chain and the need for improved technology linking all players.
Remote working has enabled businesses to build their technological advancements, including tackling security challenges such as phishing attacks and unsecured personal devices.
The COVID-19 pandemic is holding steady and may worsen with the new COVID-19 variants being reported and the slow vaccination.
Procurement efforts globally will still face challenges and remain unpredictable. Businesses should work on transforming their supply chain models to be resilient to such scenarios for good. This will ensure businesses survive even after the pandemic as different regions will be cautiously adapting to global activities as they move out of the pandemic.
Businesses should build on supply chain resilience that reduces exposures and risk. Some actions to take could be:
Environmental initiatives being agreed upon by countries means green supply chains are likely to be on focus.
During lockdowns, there was an increase in home deliveries and a significant reduction in traffic levels, which reduced the level of carbon emissions. The public noticed the change, and there will be calls for businesses to cut emissions sustainably.
With Joe Biden taking office with a plan for the clean energy revolution and environmental justice, strict regulations are likely to be introduced to ensure supply chains' sustainability. As businesses strive to address their visibility in the global market, they must ensure they have the right tools to make green changes for eco-friendly supply chains.
Get rewarded for greening your supply chain!
As companies beef up their effort to build up supply chain resilience, the interpersonal relationship becomes the key ingredient. Having good relationships throughout the supply chain will be vital to the business' ability to adapt to any situation that arises.
What COVID-19 has taught us is that businesses should focus on people before finances. Building processes and people is way more significant than the overall price, and businesses should stay in touch with the real necessities of their supplies, employees, and customers.
With the new regulations being imposed, businesses may need to enforce supplier diversity, especially on international trade.
Businesses will be required to buy from firms that uphold diversity and avoids conditions such as disregarding human rights or modern slavery.
They will also be required to work with suppliers upholding environmental friendly activities. Suppliers should help reduce global warming through green shipping that cuts on carbon emissions.
As countries recover from the effect of COVID-19, there will be increased pressure to grow the local economy by sourcing locally, sporting local employment, and supporting local community projects.
Businesses never expected that the pandemic would have a significant impact on the global economy. Many businesses have shut down because they were not prepared and could not adapt as quickly as possible.
Every organization should have a vibrant procurement department with an agile operating model that can quickly scale its functions up or down to respond to sudden supply chain changes. Businesses need to recruit new talents or retrain existing talents on changing supply chain operations. The most effective way to be future-ready is to adopt a continuous learning culture in the organization.
The pandemic has pushed most businesses and their procurement teams to their limits. It is not over yet, and it is better to be prepared for what 2021 brings.
There are many procurement trends aiming to see businesses through the hard times, and technology takes center stage as an advisor to business units. As businesses recover, they need to adopt new technologies to help them stay competitive in the global market.