2022 – Will it be a Good Year for Procurement?

It’s now the start of a new year. A refreshing start is badly needed, especially with the unfortunate things that happened last year due to Covid. Despite an anxious economy, an ongoing shipping and freight issue, and a global pandemic threatening the health of workers worldwide, the procurement industry is managing to pull through.

Now with the new year, 2022 brings hope and anticipation for everyone invested in supplying and procuring materials. Of course, there are still a lot of challenges along the way. One of these challenges happens to be a more virulent form of COVID, which is the Omicron variant.

As health experts continue to be baffled by Omicron’s sudden appearance in South Africa, the rest of the world is now feeling the effects of this fast-spreading new COVID variant. The United States is one of Omicron’s biggest conquests, with the virus also spreading havoc in some parts of Asia and Europe. While health experts are stating that the new variant is milder than Delta or the earlier COVID variants, it’s not labeled by the World Health Organization as a “variant of concern” for nothing.

The effects of Omicron’s wrath can be plainly seen in how consumers are reacting to retail and other industries. Pharmaceutical companies are worried that the new strain will make it even harder for them to procure more materials, thus ending with shortages in medical supplies that are badly needed right now. In London, the surge of Omicron cases is making it hard for businesses to remain afloat. 

With the world still fighting against another growing threat from the COVID pandemic, will 2022 still be considered a good year for procurement? The answer is, again, entirely dependent on the procurement process developed by the company itself. 

A good procurement process nowadays is entirely different from the procurement processes of old. In the old days, procurement teams rely on paper and traditional methods, such as keeping actual transaction slips and records into huge cabinets and folders. Today, those methods no longer work. Companies are investing in e-procurement software; programs that allow companies to upload and store all receipts and transaction records, as well as do market and product research on products to help the procurement team in sourcing potential suppliers.

Even with COVID restrictions still enforced in most countries, there are numerous ways in how companies can still procure needed materials for operations. Local suppliers are stepping up to the demand, as well as alternate sources for needed materials are also provided, thanks to new and upcoming technology. Of course, the need for local suppliers has never been greater, thanks to a shipping container price crisis that is still far from over. 

So again, back to the question of whether 2022 is a good year for procurement or not, our answer is yes, 2022 will be a good year for procurement. Companies will always have a need for procurement. Of course, the only question here is how effective is your procurement process going to be?

Editor's note:

Hi there! My name is Marijn Overvest, I'm the founder of Procurement Tactics.
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5 Challenges Every Procurement Manager will Face this 2022

With the whole world still anxious over COVID and the Omicron variant, procurement managers are set to face 2022 with a series of challenges. The outcome will depend on two things; first is the procurement manager’s skill and wit, second is the procurement process followed by the procurement team.

Before we come up with solutions though, it’s time to talk about the challenges first. 2022 looks like it’ll be the perfect year to address the challenges that most procurement teams faced last year:

Shortage of Raw Materials

With factories and farms lacking the manpower for labor, there is a huge concern for lack of materials needed for the processing and manufacturing of the needed supplies. In fact, when the COVID pandemic started, it was the countries where labor was its primary resource that got hit the most. 

Inflation

The economic issues surrounding industries that were heavily affected by the pandemic are most likely causing an inflation issue. This will also cause a problem since inflation will affect the prices of raw materials and services.

The Shift from Offer Towards Demand Market

The law of economics is quite clear; if there is a huge demand, supply is most likely going to take a hit. The more demand for material, then the more likely that procurement teams are going to have an issue trying to get their hands on the material or service.

Higher Prices

It’s expected that with the shift from offering towards demand, prices for valuable supplies and/or services will go higher than the average price.

The Container Crisis

The Container Crisis is an ongoing world crisis where shipping companies are having a hard time buying container crates due to the lack of materials for building the containers. Worst, even if containers are available, they are simply too expensive for shipping companies to buy. The lack of containers will affect the procurement of much-needed materials, especially for those who rely on materials coming from abroad.

We at Procurement Tactics can’t stress enough the value of keeping your procurement process as simple as possible. With simplicity, you see, comes efficiency. One is able to directly focus their skills, time, and attention towards items that need the most help. 

There is also value in learning BATNA and applying different negotiation styles to come up with better offers that will give any procurement team the edge against other companies.

For example, the sourcing of future suppliers is a far more important aspect in the procurement process than, say, the organization of contracts or shipping requests. While we are not stating that their importance is at the bottom tier, this kind of task is better left to an e-procurement system.

FAQs

What is procurement in 2022?

Procurement in 2022 will be a time of great concern, but it also shows limitless potential.

Will procurement be okay in 2022?

This remains to be seen. Companies can do everything they can to make sure their supply flow is in order.

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