Procurement Trends in the second half of 2022

Procurement has become one of the crucial strategic components of a manufacturing or industrial company in the 2020s. 

Ensuring that this function is well attended to is an important strategic move for companies that are worried about risks in their supply chain.

In this podcast, Yacine and Hamad will review the top trends they’ve witnessed in procurement during the year and cover the following topics:

• Hiring procurement vs outsourcing the procurement process.

• Digitalization of procurement.

• Shift in power dynamic with respect to suppliers.

• Sustainability and equitable sourcing.

What Trend will continue in 2023 and beyond

• Hiring for procurement will still be difficult moving forward, outsourcing procurement might become a more desirable solution if roles can’t be filled.

• The procurement role will be much more tech-driven in the future where there are a lot more requirements for having the ability to analyze data.

• Procurement will become a strategic center in a company with high procurement needs.

• Digitalization of the industrial and manufacturing sector will increase. To a more extreme extent, there will be many more digitally native companies in this sector.

• Suppliers will keep having the high end of the power dynamic between buyer and supplier.

• We’ll see an over-specialization in the manufacturing sector (already started in the US, but still getting there in Canada) of the suppliers.

• The consumer will keep pushing for sustainability which will directly impact the company's readiness for sustainability.

• The relationship between suppliers and buyers will need to be much closer in order to align with both companies. The sustainability compliance will still need to be based on trust fundamentally.

Out of-context quotes:

> There seems to be a lot more demand for procurement people and for senior ones. If companies can’t find these folks, they will outsource that process.

> As soon as this one person that is driving the procurement operations leaves, the whole thing starts to fall apart. They are real currency for the company.

> The company that best fared [during the pandemic] had already started digitalizing. The ones that struggled the most didn’t even start.

> Right now if you go into any software company and say “Hey we are just going to email the source code back and forth”, everyone will be like “What are you talking about”. How can you collaborate with a setup like that?

> After COVID some big companies had to call people in retirement back because the knowledge was so siloed.

> I’ve seen suppliers say “Hey man I’m not going to quote on this, it’s beneath us”. I didn’t think it was like this, but when I went to visit those shops. I was amazed by how much some suppliers didn’t want more business.

> Digitalization looks colder than not digitizing because if your process isn't digitized you will need to meet suppliers, talk to them on the phone and fax them (much warmer). But this isn’t the case. Digitizing is only for improving procurement processes to remove inefficiency. The relationship part has much more impact now that you have more time on your hand.

> Having a transactional way of doing procurement and trying to mix that with sustainability won’t work.

> What we are going to see in the near future is a more holistic view of procurement where cost isn’t the sole parameter.

See you in the next podcast! 👋

Yacine Mahdid