2021 Procurement and Supply Chain Predictions from the market — EcoVadis and Ivalua

Last year at the end of December 2019, we ran a series of predictions about procurement and supply chain trends for 2020 from expert tech and service providers in the market. Read about those predictions here. But who could have foreseen what happened in 2020!

This year, the market provides its predictions again, and of course the best learnings for the future come from looking back. Let’s look at what corporate social responsibility (CSR) and sustainable procurement experts EcoVadis has to say:

Redefined resiliency will shift sustainability approaches from just-in-time to just-in-case

Throughout the coming year, we’ll see many interesting shifts in the supply chain — from blockchain losing its luster, to a heightened focus on human rights and workforce diversity at the brand and supplier level. One of the most critical changes we’ll see is that organizations will prioritize Scope 3 (value chain) emissions reductions to drive lasting climate action and avoid future costs more than ever. This is a result of the increase of corporate and social initiatives, new regulations, and more companies realizing that making a tangible impact requires reduced emissions across the value chain.

We’ll also begin to see how redefined resiliency following COVID-19 will shift sustainability approaches from just-in-time to just-in-case. In 2021, more organizations will discover that supplier diversification and near-shoring don’t address the core of the issue. Real resilience requires organizations to revamp their sustainability management programs with a focus on supplier relationships, continuous improvement and long-term performance. Next year will be an exciting year of growth and innovation as we continue to move toward a more responsible supply chain, and we’re looking forward to helping companies get on board.

Sylvain Guyoton, senior vice president of research, EcoVadis

Ivalua

Last year Ivalua, whose cloud-based procurement technology manages all spend and suppliers across the S2P process, predicted a higher focus on sustainability for 2020. This year it retains a focus on sustainability, but hones in more on the need to support businesses after the pandemic with speedy payments and rooting out poor labor practices as key areas to watch in 2021.

Focus on environmental practices will return

At the start of 2020, sustainability initiatives were picking up steam, but COVID-19 slowed progress as 60% decreased their investment in sustainability initiatives. But, on the geopolitical stage, sustainability will be a major issue in 2021, with the Climate 21 Project in the US set to be backed by President-elect Joe Biden, and the UK pledging to wipe out its contribution to climate change by 2050.

As sustainability continues to be a focus, organizations need to ensure they are following green practices, but 93% of UK businesses claim it is challenging to gain visibility into suppliers to track the environmental impact of their supply chains. Businesses must address supplier visibility issues and make sure they are putting the right tools in place to drive environmental change internally and beyond, empowering suppliers to do the same.

Organizations will need to support smaller suppliers with prompt payments

Supplier failure — particularly among small businesses — will be a major risk for organizations in 2021 as COVID-19 and Brexit continue to cause disruption in Europe. Failure of key suppliers could prevent organizations from delivering the products and services they need to customers, so they must provide transparency into when suppliers will be paid, and pay them on time to give them a fighting chance to survive. This will boost the wider economy while building strong relationships with suppliers — helping organizations to collaborate more effectively and work together to find new revenue streams.

Organizations will face increased pressure to root out poor labor standards

This year’s UK government report on modern slavery found more than 10,000 potential victims were identified in the UK. And an indirect supplier of fashion retailer, Boohoo, was reportedly paying workers less than the minimum wage. Next year, businesses will likely face more pressure to identify modern slavery not only in their suppliers, but in their suppliers’ suppliers too. As such, organizations need to improve visibility into labor practices across their supply chain in 2021. This will help firms identify responsible practices for direct suppliers, and for indirect tier two and tier three suppliers, reducing their risk.

By scrutinizing suppliers and their partners, organizations can put policies in place to ensure they only select those with the best labor standards. This will make a clear statement that exploitative practices won’t be tolerated, while also making high labor standards a key differentiator for suppliers looking to work with you. In turn, this will force other suppliers to follow suit and become a real force for change.

Ian Thompson, UK General Manager, Ivalua

Thanks to EcoVadis and Ivalua, and look out for more solution provider predictions over the next couple of weeks, with an overall take on the series from our analysts at the end. See all of the vendor predictions here.

*Please note that the order of vendor predictions in this series is based entirely on the order in which they dropped onto our digital doorstep, nothing more.