11 Procurement Trends for 2023 According to the Experts
Procurement trends are considered signs by procurement managers that it’s time to reflect on the future. And that statement is halfway true; as we’re slowly moving into 2023. That’s why it’s only right that for this article, we are going to talk about procurement trends for the year 2023 according to the experts.
We are going to decipher each trend and learn whether it’ll be doom or gloom for the year 2023 for procurement teams from all over the globe.
After reading this article, you’ll sound like a true expert when you start talking to people about procurement trends during your company’s end-of-the-year party.
The Procurement Trendsfor 2023
The world is slowly getting back to normal. However, there are still many challenges that procurement professionals will face in 2023 due to the disruption in global supply chains, the ongoing war in Ukraine with Russia, and other trade disputes among countries. Thus, many procurement professionals are still strategizing how they will face these challenges.
The key here is a strong procurement strategy due to the fact that there are many factors to consider when making a decision. Because one wrong move will put your company at great risk of losing a lot of money.
That is why it is best to be guided on how you will make your strategy for 2023. You do not have to worry, we offer the best procurement strategy course to guide your company to be ready for 2023. Our course will give you an edge over other companies as our team has invested a lot of time in researching the best approach and strategy for 2023.
So without further ado, let us now check the procurement trends that experts are waiting to happen in 2023:
Now the storm of the pandemic is slowing down in 2023, procurement managers will need to focus again on sustainability. Many procurement professionals are seeing how customers and investors prefer businesses with sustainability in their operations.
A study by McKinsey has found that the usual consumer company’s supply chain is responsible for more than 80% of carbon emissions. Due to this, procurement professionals are faced with the task of lowering the impacts of companies on the environment. Thus, procurement professionals look for ways in implementing sustainability in their procurement.
Additionally, buying trends are increasingly being driven by conscious consumers nowadays. These conscious customers prioritize factors such as the impact of a business on the environment and society when buying or doing business with them.
Furthermore, multinational companies like Unilever and Nestle are committing to having net-zero operations. Many Multinational companies are setting a clear pathway to have zero carbon emissions in their operation by 2030. Due to this, many small to midsize companies are starting to hear and check what sustainability means in business.
After two years of hard times for suppliers to keep up with the demand, suppliers will work on pre-Covid stocks in their warehouses again in 2023 to secure a supply of products for their clients as there are many delayed deliveries of products due to increased demand.
As the world is slowly going back to normal, the surge of delayed products is starting to overwhelm the inventory of many businesses. The unexpected rise in the number of products was evident as many companies put their products on sale with huge discounts to ease their inventory.
Also, the recession is currently felt throughout the world, and no economy has been left unspared. Thus, consumer demand is likely to be reduced in 2023 resulting in oversupply as demand decreases.
This is crucial for businesses, especially procurement professionals, as they do not want to overstock or understock their inventory knowing that inventory is one of the areas with huge spending. Failing to control the inventory entails a great loss for a company. Thus, many professionals see the importance of inventory management systems and forecasting tools.
If the last few years taught us one thing, it is that we need to have good relationships with our suppliers. Many companies without good relationship management found themself with no delivered products last year because suppliers preferred to deliver to other companies with whom they have good relationships.
The company will grow further when you have a deeper relationship with your suppliers as they can help to build confidence and assist you in your growth. When suppliers are involved with the company, they will help you come up with new ideas because the company has made itself an attractive proposition for them.
A change in the customer landscape and increased digital and automation integration entails new ways to deal with and build relationships with your suppliers. As new risks are rising in the future, one of the ways to mitigate them is by building a good relationship with your supplier.
Good relationship management with suppliers is for any company. Thus, for procurement, the driver of security of supply. For now in 2023, but also in the years to come.
The possibility of governments intervening in trade in the future is feasible as geopolitical events, inflation, and trade disputes are felt all over the world which could cause a lot of problems.
Governments may look closely at supply chains as a matter of national security. If this continues, the intervention of the government in sourcing and trade of materials and services may become a big challenge for supply chain professionals. This trend has already been amplified due to the war between Ukraine and Russia.
Additionally, the US-China is the greatest geopolitical risk for businesses in 2023. Although neither side is prepared for a military conflict, both retaliate with one another through trade.
The deteriorating relationship between both countries guarantees that most trade agreements and sanctions imposed during the US-China trade war since 2018 will remain in place in 2023. Thus, exerting continuous pressure on investment decisions.
Furthermore, when trade disputes and deteriorating relationships among countries continue to rise, the global supply chain will be affected severely. As a result, the prices of commodities will increase which will be detrimental to nations, especially developing countries.
The days when only one party must gain the best benefit are over. Today, for you to be able to land a deal, you must put yourself first in their shoes. When you do this, you will know why they wanted those conditions. Thus, you can go in the middle for both of you to benefit.
The key to a successful negotiation is that you understand the other party which you can do by knowing empathic negotiation design.
The empathic negotiation style allows you to learn the intentions of the other party’s point of view. If you know your counterpart’s values, what drives them, what they want to achieve, and what their interests and core values are, then you will have better results in your negotiation.
As people want to be heard more nowadays, you should know first who you are dealing with to know which way the negotiation will go best. You must take note that less is more. Give yourself a few seconds to think and ask questions then assert your intention so the both of you will know where to meet.
The role of the Chief Procurement Officer (CPO) continuously evolves through the years. CPO is no longer an operational function. It is a strategic advisor who helps to shape the business, especially in tough times.
The pandemic exposed holes in businesses with their processes, policies, supply chains, and resiliency. Therefore, CPOs must focus on driving technological innovation to improve reliability, transparency, and efficiency in supply chains.
Furthermore, in making CPO a strategic role, it is important for businesses to invest in technology advancements. New technologies eliminate the hours spent doing mundane tasks. Thus, allowing CPOs to focus on strategic activities such as mitigating risks.
The past two years have demonstrated the need for CPOs to step up their game. CPOs must drive companies to focus more on creating value-add activities that create opportunities for business development.
A circular supply chain will soon replace the old linear supply chain where manufacturers refurbished used products for resale due to the rising cost of materials and to help the environment recover from waste.
Businesses spend less on raw materials and reduce the risk of price volatility by adopting the circular supply chain. As many companies focus on sustainability, circular supply chains may help them achieve it.
As stricter government regulations on recycling and waste disposal are being imposed, it pushed companies to consider circular supply chains. Additionally, consumers are becoming more informed about the products they buy and are showing increasing concerns about how companies manufacture or dispose of their products.
Today, consumers are expecting a fast transaction in returning the products that they do not like or were purchased in error. They are expecting to be able to exchange old products for new ones due to disposal and recycling issues.
Therefore, many companies adopt a circular economy due to its restorative and regenerative capabilities and aim to keep products at their highest utility and value at all times.
Many experts expect prices to continue increasing which makes the economic outlook for most of the world rough in 2023. Many industries can still feel the effect of supply chain disruptions during the global shutdown due to COVID-19 which has gotten worse because of the war between Ukraine and Russia.
Companies are now looking for ways to improve their resilience for next year. This means that businesses must reduce exposure to fluctuating market prices of commodities as well as strategize protective measures in their supply chains to deal with risks.
Artificial intelligence (AI) and automation are widely used in a range of industries nowadays to streamline their processes. It has been around for decades but has continued to be upgraded which makes the tasks easier.
AI uses machine learning to make decisions on its own without guidance from a human. Thus, it can be used for automated supply chain tracking in the years to come to reduce errors and streamline the supply chain of a business.
Additionally, blockchain is currently cited as one of the most progressive technologies even if it is often associated with digital securities.
Given that blockchain enables quick transactions, a great level of transparency, a secured digital environment, lower costs, and verifies smart contracts on its own, it is not surprising why it is conquering the procurement and supply chain industry. Thus, you must expect more of it in the coming years.
As many processes of a business are being moved into the digital world, the company’s valuable data is left vulnerable to threats like hackers. According to a survey by PwC, cybercrime is the biggest fraud that many businesses face today.
Thus, many companies are expected to invest more of their resources into cyber protection to maintain a high level of online security by hiring a third party or developing their own IT department.
Many are now starting to implement cybersecurity in devices being used for home and remote working since the start of the pandemic. Many businesses hire or create IT departments to regularly check and update company laptops and mobile devices used at home. This ensures that the devices are free of malware and spyware and are running on the latest versions of antivirus software which prevents cyberattacks.
Furthermore, it is no longer good enough for companies to think of cybersecurity as an issue for the IT department to mitigate. In fact, employers and employees must be aware of various kinds of cyber threats and basic precautions to ensure safety. Thus, in 2023, it will be a fundamental part of an individual’s job description; cybersecurity awareness.
For the last two years, there has been a huge number of employees leaving their companies which they call “The Great Resignation”. Due to this, many companies promoted high-performing individuals in order to retain them.
A recent poll by Gartner found that the number one priority of CPOs in 2022 and the years to come is talent acquisition. The war for talent is on and companies will try their best to get you hired if you perform well.
However, there is a skill gap even in entry-level jobs in procurement as they have little to no experience in the work. Thus, developing the next generation of leaders is a top challenge for many industries.
This is when training again comes into mind. It is always interesting to learn new things, especially now that many companies are eyeing the skills and talents of an individual. Therefore, enrolling in courses that will enhance your knowledge in procurement is a must.
Here in Procurement Tactics, we will make sure that if you enroll in our Negotiation Course For Procurement Professionals, you will gain knowledge that allows you to land every deal in your profession. Thus, attracting many companies due to your skills. Additionally, we will ensure that every cent that you spend with us will be worth it. Our course is proven to make individuals negotiate better deals. So what are you waiting for? Start your journey with us and get the job you have been dreaming of!
+ What are procurement trends?
Procurement trends are upcoming events or situations that tell us something about what will happen in the procurement world.
+ How to deal with procurement trends?
The only way to deal with procurement trends is to always keep an open mind and to regularly check the changes that happen in the procurement industry, to use them to your advantage.
+ What procurement trends can we expect in the future?
The pandemic will continue to be a challenge for the procurement industry. But procurement managers are consistently trying to keep up with it.
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