As we move into 2022, it’s a good time to outline priorities for the coming year. Similar to other teams, successful procurement groups use forward-thinking strategies to innovate and help inform their strategy. As we continue to navigate the developing COVID-19 situation, procurement organizations have an increasingly important role to play in the business. With working environments still uncertain and unreliable supply chain issues impacting businesses, resilient purchasing is essential.
Discover the five top Procurement Trends that every Procurement team need to know for 2022 and five things it’s time to leave in the past.
The Top 5 Procurement Trends for 2022
1. Procurement Performance Management
Measuring the performance of your procurement team is becoming increasingly important for gathering business metrics and determining the success of procurement projects in the framework of overall business goals. With Procurement Performance Management, you also gain additional visibility for stakeholders and better collaboration throughout the entire business. Procurement Performance Management is an absolute must for teams in 2022.
2. Non-Financial Performance
Businesses are not driven by P&L sheets alone and it’s important to demonstrate how procurement teams are contributing to goals beyond cost savings. Non-financial metrics show how businesses are evolving and innovating past what they can show in monetary value. The non-financial metrics will be specific to your industry and should be defined according to your goals. Some common non-financial metrics for procurement teams include:
- Reducing supplier risk
- Building diverse suppliers
- Fair trade and ethical purchasing
3. Procurement Teams Will Focus More on Collaboration with Stakeholders
Making business gains should certainly be a primary goals of high-performing procurement teams, but there may be misalignment with other business priorities if there is inadequate collaboration with stakeholders. For 2022, it’s essential that procurement teams enhance how they are collaborating with stakeholders. It’s time to go beyond email updates and passing on of monthly reports to have genuine, quality collaboration, where procurement works hand in hand with other business functions for enriched interactions.
4. Accelerating Digital Transformation in Procurement
As a younger business function, some procurement teams can be a little late to the game in terms of digital transformation. Traditionally, there has been a lack of agile digital solutions and adoption was inconsistent at best and miniscule at worst. In 2022, there are so many more options available to procurement teams and it’s time they embrace a digital platform that works. Find an agile solution that allows for greater collaboration and transparency with intuitive tools and embrace digital transformation.
5. Diversity Tracking
With diversity, equity, and inclusion efforts becoming more central to business priorities, procurement teams are uniquely positioned to make significant gains. With the right tools, procurement can seek out deeper relationships with organizations that meet their DEI goals and track their progress toward them. The old way of validating progress involved measuring the diversity of your suppliers retroactively. With the right tools, procurement can now use diversity metrics before signing with suppliers, enabling better relationships and measurable DEI initiatives.
5 Things Procurement Teams Should Stop Doing in 2022
It’s easy to see where others are headed and look forward to “maybe doing that next year.” But it’s also essential that you stop engaging in certain practices now to prevent your team from holding back the development of the business.
1. Spending millions on solutions when it isn’t necessary
Large ERP and end-to-end solutions are the way of the past. Rather than spending months and months on implementations and money for tools that may or may not serve your purpose, select best-of-breed tools that fit your business at a fraction of the cost.
2. Doing double entry
Younger procurement teams may find themselves constantly entering data, performing the task more than once for monthly consolidation. With the increased availability of digital solutions, no procurement team should be wasting valuable time with double entry.
3. Using spreadsheets
Spreadsheets are a risky way to run a procurement team. Manual entry can lead to human error and lack of transparency into project progress. Spreadsheets also have significant limitations when it comes to identifying causal factors to different purchases. For instance, one supplier may be chosen over a cheaper option if the selected supplier helps your business meet their sustainability goals. These elements are often lacking when you engage in spreadsheet tracking.
4. Leaving no budget for training
It’s a common problem to allocate so much budget towards technology implementations that there is little money left over to put towards team development. Digital solutions are necessary and they offer much in the way of innovation and progression, but without proper team training, you will still experience lack of gains on your team. Set aside budget and invest in your team alongside your other initiatives to truly push towards greater efficiency.
5. Evaluating digital tools at face value
A best-of-breed solution is often the best option for procurement teams in particular. However, it’s important to think outside the box as you evaluate the options. Don’t simply omit a solution from the running because they don’t meet every criteria you set out needing. In reality, a best-of-breed tool may be able to solve your problem with integrations more quickly and at a lower cost. Consider all of your options before making the investment.
The agile procurement team has a lot of work to do in 2022, but there is the possibility of great gains if you can implement the right practices.