Pactum and Anaplan: New Year wishes for the procurement solutions and services marketplace 2022

Our series of New Year wishes (rather than ‘predictions’ following the unpredictable events of 2020/21) for the procurement, supply and services market for the year ahead (read more about it here) runs from mid-December to mid-January. At the end of the series our analyst Bertrand Maltaverne will wrap up with his own take on the key themes that emerge. Wishes are published in no order other than when they are received in our digital postbox.

So continuing this year’s series of wishes from expert tech and service providers, we hear today from Martin Rand, CEO and co-founder of contract lifecylce management specialist provider Pactum, one of Spend Matters’ Future 5s.

My 3 wishes 2022:

1. Enterprises to invest more in  AI, intelligent automation and RPA

As we enter 2022 and get into the next economic cycle, enterprises worldwide will increase their investment in applied AI, intelligent automation, RPA and other edge technologies to identify and tap into new sources of value. The majority of businesses are prioritizing  AI: 83% of businesses say AI is a strategic priority for their business today, having increased their budgets for  AI and machine learning year-over-year since 2019. C-level executives will allocate their strategic investments in 2022 with a view to improve both their operations and their bottomline. In this regard, RPA can deliver immediate savings of up to 40% and deliver an estimated ROI of between 30% and 200% in the first year alone. Early adopters of technologies such as Intelligent Automation can reap huge improvements in business margins from the get-go, but also enjoy sustainable margin performance as they can build on the capability to reduce operational costs brought in by automation. Research by KPMG shows that 17%–40% of value in deals is lost due to inefficient contracting. A value increase of even 400 basis points in supplier deals represents at least tens of millions of dollars for a typical Fortune 500 enterprise — and  AI can help unlock that value.

2. Sustainability criteria will take priority for businesses

When negotiating with their suppliers and service partners, sustainability criteria will be even more prevalent for those agreements helping enterprises achieve their decarbonization commitments. A growing number of enterprises are committing to achieving ambitious climate goals by 2030 (the number of Fortune Global 500 companies who have either achieved a climate goal or are publicly committed to doing so by 2030 has grown from 6% in 2016 to 30% in the first half of 2020). In 2022 we will see more and more business leaders address the environmental impact of their value chain as a point of competitive advantage. Since supply chain emissions are 5.5 times larger than a company’s direct operations, decarbonizing supply chains isn’t just the right place to start materializing those corporate climate commitments, but also a sound business decision: 40% of the emissions across the eight major supply chains can be eliminated with measures that bring cost savings or are at costs of less than €10 [~$12.10] per ton of CO2 equivalent. Enterprises can leverage AI, autonomous negotiations and other digital procurement solutions to address zero emissions targets at scale. We are already seeing strong demand for ESG-related terms to be prioritized in the autonomous negotiation of supplier agreements for some of our Fortune 500 clients in retail and logistics industries, for example. They want to ensure their suppliers are measuring their own carbon footprint, optimizing their route planning, using eco-friendly fuel sources or relying on clean energies for example to power their factories and vehicles.”

3. Procurement professionals will cement their role as strategic business partners by leveraging the latest advancements in artificial intelligence and enhancing supplier partnerships

Research shows that suppliers have proven to be instrumental in enterprise recovery and that they also hold the key for businesses to harness successful product innovation that in turn boosts revenue. With the help of  AI and other emerging technology, leading procurement teams will be able to better collaborate in real time with suppliers, ensuring enterprises can recover and ultimately thrive during uncertainty. We’d like to see more businesses and suppliers benefit from the value autonomous negotiations are already creating for our clients across industries. In our experience, when procurement teams and their business’ suppliers come together with a shared goal of reaching mutually beneficial agreements, they are both better positioned to mitigate risk and create opportunities for growth at scale. By leveraging their IT investments, current and upcoming, in artificial intelligence, procurement teams can drive a positive impact across the enterprise that goes well beyond cutting costs. Applying AI to key areas such as strengthening supply-chain resilience, designing category value-creation strategies, and investing in supplier partnerships and innovation will help procurement professionals counter some of the worst effects of the crisis at hand as well as let their business prosper in the future.

If you are looking for tech to help with your procurement goals for 2022, try out Spend Matters TechMatch℠ to benchmark and shortlist providers 

Today we also hear from Evan Quasney, Global Supply Chain VP at a‌n ‌intelligent‌ ‌forecasting‌ ‌platform‌ Anaplan‌‌, a Spend Matters 50ToWatch. ‌

My 3 wishes 2022:

1. Leaders will reinforce global supplier networks by breaking down data silos

Tons of valuable data exists between the many suppliers and vendors businesses work with. A global automaker, for instance, may leverage separate suppliers to meet the needs of their factories in separate locations – state-to-state or even country-to-country. The information sourced from these various suppliers is leveraged to make critical decisions around production, inventory and sales, but often this data lives in siloed spreadsheets or tools. This lack of visibility makes it impossible for procurement leaders to identify risks, potential points of failure, or opportunities for cost savings across their supplier ecosystem. In the year ahead I hope procurement and supply chain leaders will work to break down those network silos. Cloud-based solutions can help these leaders pull data from suppliers around the world into a single environment that can be automatically updated to reflect a more real-time view of the entire network. This will be critical as global businesses look to bake more agility and resilience into their supply chains after two years of constant volatility and disruption.

2. Demand sensing will help companies navigate artificial spikes in demand

Over the past few years, we’ve seen a drastic increase in shipping times. According to flexport, transpacific eastbound shipping times went from 45 days in March 2019 to a record 106 days in September 2021. Between an increasingly congested global supply chain and the rise of omnichannel shopping, it’s been difficult for leaders to strategically manage demand and inventory planning. But now companies have another, somewhat novel, hurdle to address: the virality of products driven by TikTok and social media trends. We saw many instances of this play out in 2020 and 2021 where a product’s popularity would spike unexpectedly and then sell-out instantly. Sellers would rush to restock in the hopes of catching more sales, but by the time inventory was available — because of shipping congestion — the trend would have passed and those sellers were stuck holding on to extra inventory, and extra costs. I think we’ve learned a lot from these instances, and in 2022 I hope more businesses will look to break free of this reactive cycle by leaning into the capabilities of demand sensing, where leaders can scour social media for product mentions, analyze their influence, and better anticipate trends in order to more accurately predict demand.

3. Leaders will realize the role of technology in navigating unexpected climate events

There’s no question that extreme weather events are impacting global supply chains – just look at the impact a freak storm in Texas and a draught in Taiwan has had on our global chip supply. My hope as we head into a New Year is that leaders will recognize the role data and technology at scale can play in helping their business anticipate and withstand these climate-change-fueled events. The cold goods supply chain is a great example of how this comes to life. All cold chain warehousing requires constant energy at all times or you risk every product you store going to waste. Leaders here can leverage technology – like Google’s Supply Chain Digital Twin, for instance – to model out their operations and identify potential points of failure across their network of warehouses so they are prepared to pivot operations quickly if and when a weather-driven outage occurs.

Thanks to Pactum and Anaplan, and look out for more solution and services provider wishes/predictions over the coming week, with an overall take on the series from our analyst at the end. See more vendor predictions and wishes here.

And 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.