In the midst of ongoing global challenges brought on by the COVID-19 pandemic, businesses worldwide are navigating a landscape of uncertainty. However, amid these difficulties, there emerges a silver lining. Manufacturers are finding themselves compelled to enhance the resilience and adaptability of their supply chains. This has prompted a critical examination of internal processes, leading to significant advancements in the realm of procurement and supply chain technology.
As we delve deeper into 2022, it’s essential to explore the market forces that are poised to disrupt enterprises with intricate supply chains. Here are seven key predictions to consider:
- Sustainability Takes Center Stage: Sustainability considerations are increasingly under the spotlight. Investors are now closely evaluating how organizations approach sustainability and their level of maturity in this area. This scrutiny extends beyond a mere checklist exercise, with environmental, social, and governance (ESG) frameworks becoming a top priority. This trend is expected to gain momentum throughout the year. To fulfill their ESG commitments, organizations will heavily rely on contributions from their end-to-end supply chains.
- Supplier Data, Automation, and Digitization on the Rise: The COVID-19 pandemic has accelerated the need for greater digitization. Historically, supplier data has not been a primary focus in procurement and supply chain management. However, since 2017, Deloitte’s Chief Procurement Officer Survey has identified supplier data as a significant barrier to digitization. Last year saw major organizations prioritize supplier data to facilitate seamless connections between systems and increase automation through artificial intelligence and machine learning. As supply chains continue their transformation towards autonomous procurement, this trend will gather momentum.
- Best of Breed Solutions Thrive: Large enterprises are increasingly gravitating towards best-of-breed solutions. This shift is driven by the rise of business-managed and owned software, facilitated by the software-as-a-service (SaaS) revolution of the past decade. The focus in software purchasing has shifted from feature-functionality to being more user- and process-centric. Mid-market companies, while initially drawn to all-in-one solutions, will eventually lean towards best-of-breed solutions as their procurement and supply chain needs mature and become more complex.
- Emergence of Curated Data Communities and Multiple Networks: The concept of “data networks” is gaining traction, particularly in the governance, risk management, and compliance (GRC) sphere. These networks collect and validate data while monitoring supplier adherence to standards. The diverse and vast nature of data across industries necessitates a community or data domain approach. However, curating high-quality data demands time, effort, expertise, and continuous investment to remain current.
- Improvements in Interoperability, Standardization, and APIs: The aforementioned trends will drive a growing need for interoperability and standardization. The interconnected nature of supply chains demands greater transparency, including standardized identification of suppliers, customer entities, and their locations. As better standards are established, there will be a shift towards more point-to-point integrations, moving away from the traditional middleware hub-and-spoke approach, which has proven challenging to maintain in large enterprises.
- Focus on Supplier Experience: With an increasing reliance on suppliers and ongoing supply constraints, organizations are shifting their focus towards becoming the preferred customer. While best-of-breed solutions offer many advantages, they can create complexity for suppliers to navigate. Consequently, large organizations are actively working to support their suppliers in navigating this complexity, recognizing that efficient supplier relationships contribute to their own success.
- Transition from Traditional Software Categories: Traditional software categories such as GRC, multi-domain master data management (MDM), and middleware are expected to evolve over the next five to ten years. GRC capabilities will shift towards community models that pre-qualify suppliers, as ongoing monitoring proves costly and inefficient for both suppliers and customers. Multi-domain MDM will also diminish, replaced by next-generation tools that integrate data governance with front-end business processes, streamlining activities like supplier onboarding. The growth of standardization and APIs will foster solutions with point-to-point integrations that require less maintenance and customization, offering greater reliability and stability.
As we progress into the new year, these trends are poised to accelerate advancements in procurement and supply chain technology. Through these disruptions, we anticipate that enterprises, particularly those with complex supply chains, will strengthen their resilience and adaptability, effectively managing the challenges of change.
