5 Core Procurement Practices and Predictions 2019

1. 5 Core Procurement Practices and Predictions 2019 Procurement is the process of gaining goods or services for any business. This term is usually used for legitimate businesses because they need to solicit their goods and services at a larger scale than usual. The process of procurement is generally referred to as the final stage of the supply chain process of buying the goods. Many a time this also includes the process of purchasing which can be very important for the companies. These companies can either be buying or selling their products for purchase, but here we will be focusing more on the company’s purchases. Over the years, the procurement process of companies has gone through a lot of change. Over the last decade itself, many trends and different systems have come into play during procurement. Many of these trends are not new or game-changing, but these are very crucial for recognition and play an important role in the system. Let us have a look at certain trends for Procurement that have started in 2019. Top 5 Procurement Trends of 2019 1. Digital Strategies With the rise in digital technologies like Big Data Analysis, Machine Learning, Artificial Intelligence etc., procurement has experienced a very positive and enhancing impact. The year 2019 will further enhance the usage of these technologies. With the help of these technologies, the companies will experience better market visibility and product innovation to increased profitability. There is a 32% increase in the number of companies that have implemented one or more digital strategies. Most of these companies believe that their business plan will change in the next few months. However, without the correct infrastructure and resources for a supply chain, these organizations’ objectives will not align with their long-term goals. 2. Finding Talent to Adapt to Digital Technologies The newest procurement system's aimis to save costs and provide a strategy that is profitable in the long run to the organization. To construct a holistic supply chain and ensure cost reductions in the procurement process, the organization has to utilize most of the digital technology out there.

2. Many company managers and leaders believe that their teams are not knowledgeable enough for adapting digital technology. This sort of slows down the evolution of the company is in actually getting the technology, because the employees will not be able to use it. Hence, many companies are focusing on getting strong talented people who are well informed about the cutting edge of digital technology. These new talents will ensure the right applications of the new digital tools available and help groom the in-house employees with the right skills to operate and apply digital technology as well. 3. The Correct Risk Management Uncertainties are very common when it comes to the market and economy. With these uncertainties, the procurement functioning system would be at risk most of the time. Procurement today and predicted in the future will be a key accessory when the supply chain cost will be affected. It is then when risk management and the correct use of digital technology will come into play. Procurement outsourcing will have to work on various risk management methods. Also, many times procurement outsourcing companies suffer from internal risks due to the flaws in the management and lack of transparency. It is surveyed that almost 70% of the procurement leaders have little to no awareness about the supply chain. This alone holds a major threat to the company. Thus, organizations should work on having a transparent system that will not only reduce the risk but will also fill in the information gap. 4. Logical Procurement Decisions The best price or the cheapest offer is still a major consideration for most procurement outsourcing companies. But little do these companies know that this aspect of cost-saving might be effective and profitable at the moment but is not so profitable in the long run. This is the era of big data and various other strategy-based digital technology, so it is rather plausible and popular to consider things like vendor performance risk assessment and sustainable practices on the basis of evaluated data. No longer do managers have to sit and crack their heads on making the right decisions only to realize how bad it really was. More than half of the mid-market enterprises have applied big data analysis and have reduced a lot of loss in the long run. The access to data and analytics provides procurement outsourcing companies with greater insight into their supply chain. This addition to the procurement system can help professionals improve cost management, detect potential fraud, mitigate risks, and promote more strategic vendor negotiations. 5. Tariff Improvement The new tariffs on $200 billion worth of products come up to almost $50 billion. This amount has already been taxed earlier this year. This sort of taxation affects procurement outsourcing in a major way. However, digital technology cannot really be of much help here.

3. Strategic sourcing is the process of developing various supply channels at the lowest total cost and not just the lowest purchasing price. This strategy is extremely important in today’s world and will become increasingly important as procurement professionals look at add value to many of the unmanageable prices. Conclusion Procurement is attracting a lot of attention now and is evolving more into strategic management within an organization, thus there is a lot that is expected from this stream of work. This year, the procurement function will continue to deliver on traditional cost savings while focusing heavily on digital technologies and supplier synergies. Overall, 2020 seems like a promising year full of challenges and opportunities for procurement to be undertaken.