Tradeshift’s New Year wishes for the procurement solutions and services marketplace 2022

For those of you who were following last year’s series of ‘wishes’ from expert tech and service providers in our market, we are kicking off the New Year with a continuing set of hopes for the year ahead.

Spend Matters has been collecting and publishing a series of predictions about procurement, supply and services trends over the years, and for this year we’ve framed the ‘wishes’ around how they’d like to see their markets evolve, whether that be in terms of software or service, workforce or talent, suites vs best of breed, or even the evolution of partnerships and ecosystems. Themes this year tend to be about sustainable procurement (thinking about COP26 and ESG — see our series on ESG here), antifragility versus the resilience we heard a lot about last year, collaboration and optimizing decisions with supply chain analytics and scenario modeling software.

Our series of wishes runs to mid-January, then our analyst Bertrand Maltaverne will wrap up with his own take on the key themes that emerge.

In no order of preference, other than by the date they arrived in our digital letterbox, today let’s hear the three wishes for 2022 from Christian Lanng, CEO and co-founder at e-invoicing, accounts payable automation and supplier financing experts, Tradeshift, also a Spend Matters 50ToKnow firm.

My three wishes 2022:

1. Buyer/supplier relationships get a reset

Lengthening payment terms hit suppliers hard in lockdown, and have continued to hurt them in recovery. Research from the Hackett Group found that large US companies took an average of 58 days to pay suppliers in their first quarters of fiscal 2021, up 5.5% from 55 days in the comparable period last year. Most large organizations recognize it is in their own interests to build a deeper understanding of their supply chains, including getting a handle on their “health” as well as learning more about the businesses that form each link in the chain. Businesses are also waking up to the fact that the supply chain is an ecosystem and that every organization has a symbiotic relationship with each other. There is a growing recognition that protecting their own interests requires them to consider the interests of the whole ecosystem. Innovation will accelerate in areas such as trade financing, which failed to provide sufficient support to suppliers through the pandemic. We’ll also see the use of B2B marketplaces continue to grow as procurement teams look to create more flexible and diverse supplier relationships. As organizations look to build a more collaborative relationship with suppliers, one wish for 2022 is that they stop to consider whether the systems they are deploying reflect not only their needs, but also the needs of the suppliers they depend on.

2. Automation unleashes human talent

Numerous commentators have expressed fears that automation will drive unemployment, but it’s actually happening the other way around. Automation is great at bringing order to the messiness that comes from exchanging huge amounts of information. It’s far less capable when it comes to negotiating with a partner or resolving a dispute. Automating necessary but cumbersome processes is one thing, but if you try to remove humans from the equation entirely, the system is going to break. And when it does (as we’ve learned over the last 24 months) it’s incredibly complex and costly to fix. As the adoption of robots and artificial intelligence grows across the board, businesses will find themselves in a race for human talent. They will quickly realize that their biggest procurement challenge doesn’t involve raw materials or components, but rather how to secure the expertise they need to innovate successfully and make smart, data-driven decisions to preserve the overall health, integrity and diversity of supplier relationships. Here’s a maxim I hope every business adopts in the coming year: Automate processes; humanize relationships.

3. Just in time becomes a footnote in history

Today’s supply chains, designed to deliver high returns at the expense of low inventory, low cash flow and low margin for error, were built on the assumption that decades of relative stability would never end. Plenty of people acted like they could predict the future, but barely anyone predicted this catastrophe or seemingly thought about the consequences to world trade.

The manufacturing sector has become addicted to just-in-time procurement, and weaning ourselves from this formula won’t be easy. It will require organizations to factor in additional costs, including increasing inventory buffers to cope with volatility. Supplier diversification is likely to add to the expense of raw materials. But this must be balanced with the probable costs of failing to address resilience which, after the last two years, should be all-too-easy to quantify. Research by McKinsey found that experts now expect a major shock to hit once every 3.7 years, thanks to factors such as climate change and geopolitical uncertainty. It is tempting to blame current supply chain issues on a system that is simply ‘rebooting.’ But such a narrow view of current challenges ignores deep structural problems that will resurface every time a crisis hits. Covid was a warning, not a one-off. My most fervent wish is that everyone stops trying to predict the future, and focuses their time more productively on preparing for it.

Thanks to Tradeshift, and look out for more solution and services providers wishes over the next couple of weeks, with an overall take on the series from our analysts at the end. See more wishes here.

See our analyst commentary from last year here.

And if  you are looking for procurement technology to help with your wishes for 2022, try out Spend Matters TechMatch℠ to benchmark and shortlist providers 

If you are looking for procurement services providers to help you with your 2022 decisions, look no further than our Procurement Services Market Landscape Directory.