As part of our ongoing series on what procurement technology providers see as the biggest challenge for procurement in 2016, we recently spoke to riskmethods to hear its thoughts on the topic. Heiko Schwarz, riskmethods founder and managing director, pointed to increased external risks, globalization and regulation compliance as the main issues procurement and supply chain managers will have to tackle in the new year.
These three major trends will expose organizations to risks in 2016, Heiko said. External risk will continue to be an issue. For example, extreme weather such as rain or snow storms will expose and disrupt supply chains even more than in the past, he said. Political risks have been a growing trend for years, but will continue in 2016 as well, he added.
Globalization is also pushing enterprises to search for new suppliers in countries or regions they probably have not worked in before. Procurement’s scope in the last year has dramatically changed, going from a “domestic-centric” view to a more global one, Heiko said. Specifically, he believes we will see movement away from China as the cost of operating there continues to rise. China is no longer a low-cost sourcing country, and this is putting pressure on companies to move to new areas, places such as the northern regions of Africa, he said. This globalization push will put increase supply chain complexities in 2016.
The third major trend for procurement in 2016 Heiko pointed to is the growing demand of regulation and standards compliance. Supply chain risk management is now an absolute necessity to ensure this compliance. We have seen this already, for instance, with the influence of the Dodd-Frank Act and the enormous pressure it has put on supply chains, he said.
The refugee crisis in Europe will also present new risks and challenges for supply chains and procurement this year as well, he added. Situations like Germany imposing stricter border controls because of the influx of Syrian refugees will influence global trade in 2016 even more than it has up until now, he said.
Additional Thoughts on the Year Ahead
Heiko said riskmethods will be adding new products to its portfolio in 2016 to answer the growing demands of supply chain risk management. The company also plans to launch a new module that will help companies receive automated suggestions on where and how they can reduce risk exposure in their supply chains, he said. Additionally, riskmethods is making a major investment to “win the U.S. market” in 2016, Heiko added.