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Watch the webinar, Sourcing in 2022: Juggling Disruptions, Sustainability & Modernization on-demand here.
Procurement professionals have had a lot on their plates these past few years, with new supply chain challenges emerging regularly to play havoc with even the most strategically laid plans of sourcing functions worldwide.
For many teams, 2021 saw the annual RFP take a backseat in favor of increasingly more routine sourcing and spot-buying needs. And, as the mitigation of environmental damage via the supply chain gains fresh momentum, time-poor executives are now struggling to balance resourcing alongside C-suite targets around sustainability and cost reduction.
As we enter the new year, procurement leaders will be wondering what's in store for the industry, what challenges impact their sourcing functions, and what trends might take hold in the near future.
In a January 2022 webinar, Keelvar's valued customer and leading global electro-mechanical system supplier, KK Wind Solutions, answered these and other questions during a panel discussion alongside Keelvar Founder & CEO, Alan Holland.
Centered on our recent Voices of Sourcing survey findings, the virtual event moderated by Owner & Managing Director of Buyers Meeting Point, Kelly Barner, saw an insightful conversation take place around sourcing challenges, priorities, and solution approaches in the current climate.
Below are three predicted trends and priorities for sourcing in 2022, as provided by our expert speakers. To hear more, watch the webinar in full on-demand here.
1. More Sustainability in Sourcing Practices
As more customers express a preference for purchasing sustainable products, it's of little surprise that one prediction is a greater focus on embedding sustainability into sourcing processes. Almost three-quarters (73%) of respondents to the 2021 Voices of Sourcing survey predict a strong rise in sustainability in sourcing over the next five years, although challenges for implementation remain:
The panel explained that there's a multiplicity of forces propelling sustainability up procurement leaders' list of priorities, with Scope 3 (supplier-related) emissions taking front and center stage of many sustainability related conversations today.
"Operationalizing sustainability will be a theme that consumes the procurement profession for years to come," explained Mr. Holland. "Scope 3 emissions are a term that not many of us heard of until a couple of years ago, and now it's trending across all social media sites where procurement is being discussed."
The panel noted how increasingly there's a need for businesses with supply chains to quantify the qualitative aspects associated with monitoring their sustainability, and more companies are making initial strides by identifying things such as the internal cost of carbon.
"If you have an internal cost of carbon, you have something to reason about when you're comparing offers from different suppliers," said Mr. Holland. "But you also need a toolset to reason about that information – and that's what sourcing optimization is perfect for."
In the view of Steffen Dencker, Director of Sourcing Excellence at KK Wind Solutions, the importance of sustainability has potential to become a natural part of procurement in the same way safety has.
"Many years ago, we started talking about safety, and suddenly safety just became a normal thing that you have to take very seriously," said Mr. Dencker. "Now we all talk about safety, quality, delivery, cost and sustainability is coming in.
"Maybe in the future, sustainability will come even higher in that order of conversation."
2. Shifts in Sourcing Team Skillsets
Despite the need to firefight many challenges, the panel agreed that it is a great moment in time for procurement and supply chain teams to capture C-suite attention. Keelvar's survey findings suggest that while there have been job losses in many sectors, more sourcing teams have seen their human resources grow or remain static than those who experienced workforce decline:
But as the importance of sourcing teams to their organization moves up the value stack, so do their responsibilities. This, according to the panel, could lead to more employees transitioning from traditional and operational sourcing work to more strategic roles.
"Sourcing in many companies is coming in higher on the agenda because we can create value," explained Mr. Dencker. "But with sourcing optimization and other e-sourcing tools in the market, traditional sourcing people that we have in roles today will need the skills to work more on a strategic and tactical level with less operational work – because we can automate that.
"I foresee that the skills of people inside sourcing organizations will need to switch up a little bit because we will need people who can manage technology," he said.
"There are so many things machines cannot do that humans are better at risk management, innovation, research. You want to save your [sourcing team's] time for these activities," added Mr. Holland.
Mr. Holland said that more companies may adopt modern sourcing automation and AI technology to improve talent retention.
"The more recent crop of graduates who are entering the procurement profession don't want to be doing tasks that they see as automatable or repetitive; they're rightfully interested in career paths where they can see themselves progressing and being more strategic within the organization.
"These 20-something-year-olds like to embrace technologies where automation is a key component. So your talent, attraction and retention program should be highlighting that automation is being embraced," he added.
3. Increased Automation, AI and Sourcing Tech Modernization
While sourcing teams will need to adapt their skills as they increasingly adopt and work with modern e-sourcing tools, the panel explained that it is essential for the tools to be flexible and allow teams to feel comfortable using them without overly heavy training and rollouts.
In Keelvar's survey, findings showed that technology adoption for e-sourcing, optimization, and automation still has much room for growth to have a bigger impact and help teams manage complexity. For example, although modernizing sourcing tech was deemed "very important" by 41% of respondents, almost one-third (32%) said they only use e-sourcing for 10% or fewer spends:
With 23% of respondents citing barriers to tool adoption ranging from being inefficient to too complicated to use, the need for e-sourcing simplicity is clear.
"I think e-sourcing has some baggage associated with legacy tools that became popular 20 years ago, but stayed in place for too long," said Mr. Holland.
"Now there's a new breed of more modern sourcing tools that have greater flexibility, a very high return on investment and they are quick to adopt. You can be up and running within a day or two – it's that fast to roll out these SaaS applications now.
"So, as the need for sourcing teams to be agile and responsive grows, the importance and relevance of AI and automation for that is ever-increasing. I see that accelerating even further," Mr. Holland added.
Watch the webinar, Sourcing in 2022: Juggling Disruptions, Sustainability & Modernization on-demand here.
Additional Resources:
- Learn about Scope 3 Emissions and how to reduce them in our eBook
- Download a copy of Keelvar's 2021 Voices of Sourcing survey report
- 27-page guide: How to build the business case for Sourcing Optimization
