In recent years we have seen unprecedented speeds of change within the procurement sector, and I believe the next few years will be no different. I’ve worked with many of the supply management and procurement teams of enterprise organisations throughout this time. These are my thoughts on what will be the priorities for 2025 and beyond, and some tips on how you can integrate these trends into your developing strategies.
- Digital Transformation, Automation, and AI
- Sustainability and ESG
- Cybersecurity in Procurement
- Cost Management and Value Creation
- Data Governance and Data-Driven Decision Making
Digital Transformation, Automation, and AI
This has been a theme of the year past as well, but with the incredibly fast advancements being made in technology and, specifically, AI, this is going to continue into the new year as well.
What seems less certain is just how impactful developments in AI are going to be for procurement. Many have already embraced it on some level, and more have plans to integrate in the near future. With the sheer speed of the developments thus far, and the uptake of companies debuting AI-featured services, there is confusion surrounding the best approach to take.
While newer versions of generative AI are still proving their reliability, different kinds of AI have formed a part of many companies’ product offerings for far longer. Trade Interchange, for example, has featured AI within its ARCUS® Platform with an accuracy rate of 99% since 2019. This AI is not generative, and trains on data provided by our customers – taking the guesswork out of the reliability of its results. Dependable AI is the most useful kind of AI to use in procurement.
The reliability of AI aside, automation stands out as a trend which has a more general application but has proven itself as reliably useful. Removing the unnecessary minutiae from daily tasks by automating them saves time, and time is key. By automating tasks wherever possible you reduce the risk of missed deadlines and other related issues, which positively impacts your every day. When you confidently automate tasks and can trust that those little administration jobs are being completed without your direct input, you have much more time for work which is more professionally and personally rewarding – tasks which are too complex to automate.
Sustainability and ESG
Another trend which, rather than emerge new, is set to continue. Sustainability has been on procurement’s radar for a while now. More and more of the customers we take on incorporate sustainability into their procurement processes, which we map within our software offering. Collecting, verifying, and storing sustainability information is the responsibility of procurement in many of the customers we serve. While this may not be the case for every business, sustainability is an unavoidable consideration no matter which part of the business you operate in.
There are many aspects of ESG which are important to consider when building and enacting your procurement strategies. There are those such as carbon, more specifically the carbon footprint of your business. This covers everything from the carbon impact of the day-to-day running of your business: operating costs, office recycling initiatives, and more.
Then there is the carbon which procurement must take more responsibility for; the carbon produced by suppliers whom they select, and their suppliers, and so on all the way through to the very end of your business’s supply chain. This kind of carbon information, or sustainability-related information of any kind, is much harder to accurately capture and evaluate. It becomes an issue of efficiency and accuracy, striking the balance between how many working hours to dedicate towards the collection and verification of this data, versus the necessary standards of information which must be upheld.
Automation and integration come back into play here. While sometimes there is no replacement for a discerning pair of human eyes, the collection of sustainability data does not need to be manual. Particularly if you value the input of proven ESG data providers and verifiers such as EcoVadis, SBTi, RSPO and more, integrations with these certification bodies can dramatically reduce time and inaccurate data risks.
Cybersecurity in Procurement
In our current digital climate where data privacy grows fraught, the security of data within procurement has become paramount. Procurement professionals require and handle significant amounts of sensitive data, including important emails, addresses, and phone numbers. At a company level, contracts and other confidential documents are also shared during interactions with suppliers.
Should any of this information fall into the wrong hands, through exposure or mismanagement, the effects could be devastating for an unprepared business. Huge costs, loss of reputation, legal investigations, and more could result.
I predict therefore, that particularly with AI becoming more integrated within many of the online tools we use day-to-day, that security will become of particular concern.
The answer is to ensure robust cybersecurity measures are undertaken within your procurement team, with safeguards in place to protect sensitive data. It is also a good idea to ensure that the tools you use to help in your procurement duties are trustworthy. For example, a secure data repository is part of the standard offering of Trade Interchange’s ARCUS® Platform, which is cloud-based for further security.
Cost Management and Value Creation
Cost management has always been a core concern for procurement. Value creation is the natural progression of cost management. It’s no longer enough to reduce the price of a contract and call it a day. In order to drive a competitive edge for your business, it’s about building a strategy which creates value for your business to keep it head and shoulders above the rest.
By making smart procurement decisions, rather than saving money but stagnating in areas of innovation, procurement have the potential to drive that positive change throughout the business.
This could mean including sustainability in your procurement decisions, pivoting your business’ offering to align with market trends. This could mean identifying and snuffing out risks throughout our supply chains, as preventing the fire is far easier (and more cost effective) than dousing the blaze.
Value creation can be manifested through prioritising supplier relationship management, fostering innovative partnerships with suppliers, and building resilient supply chains. These things can be achieved through having a sound strategy, and the right tools to support that strategy.
Many of the biggest trends facing procurement now and into the future feed into one another, and that is no different in this case. The right tool to support your value creation strategy will have the ability to automate your processes and integrate AI seamlessly.
Data Governance and Data-Driven Decision Making
The final trend, but by no means the least important, is the creation, maintenance, and implementation of process surrounding supplier data.
Data-driven decision making is its own trend, but something I believe is fundamentally linked to it, is data governance. These are the processes, policies, and rules you instate surrounding the handling and storage of data. Pretty dry, I know, but when your business is driven by the data you are collecting and analysing, it is absolutely non-negotiable that your data governance strategy support accurate, secure data.
Concerning suppliers this features information which is highly volatile or vulnerable and therefore subject to higher levels of risk. The more complex the supply chain, the more robust your data collection strategy needs to be. Having an end-to-end tool, which is fully visible and transparent and which multiple stakeholders can access, is key to ensuring data is trustworthy. It’s also key to ensuring data which is pulled into analytics tools and reports is accurate, as these are the data representations on which further strategy decisions are made.
In Conclusion
These are just some of the trends which I feel will be important to procurement professionals moving into 2025 and beyond. I hope most if not all of them are familiar to you, and if you haven’t already started integrating them into your procurement strategy, I urge you to do it sooner than later.
If you need any help, or advice on the best way to go about it, my door is always open.