Proxima, Suppeco and SupplHi: New Year wishes for the procurement solutions and services marketplace 2022
Wrapping up our series of New Year wishes (rather than ‘predictions’) for the procurement, supply and services market for the year ahead (read more about it here) today we hear from Simon Geale, Executive Vice President at procurement and supply chain consultancy Proxima.
My 3 wishes 2022:
1. Capitalize on our relevancy
Throughout the past year, the procurement industry has been responding to a broader set of demands from both internal and external stakeholders. Top of the wish list for us is that this continues, we capitalize on our relevancy and continue to make significant impact to businesses and the world at large. One thing that isn’t in doubt is that there are more challenges ahead in the coming year, and we will continue to be presented with surprises and new problems to solve. Procurement teams have demonstrated their ability to adapt to these challenges and even to learn to thrive on them. This must continue as we look to a bright future in 2022.
2. A longer-term vision for procurement delivering positive change
We must also look beyond the coming year and be committed to a longer-term vision for procurement’s impact on society. Wish number two for the coming year is that we all double down on our commitment to delivering positive change. Whether it is through tackling Scope 3 emissions, delivering on DE&I or embedding social value into the supply chain, we are a vehicle for positive change. Businesses are identifying the power of procurement to deliver on commitments that they have made around their contribution to society. This isn’t a quick fix, but it is a commitment that starts now. Together we can do something meaningful.
3. Ensuring we have a workforce with the broader business acumen to solve new challenges
Finally, and perhaps most importantly, is the people who make procurement. The world has changed, our world has changed, and we are having to adapt to emerging business challenges at a rapid pace as well as manage our careers, relationships and well-being. Ensuring that we have a workforce with the skills and broader business acumen to solve these problems is key moving forward. With global supply chains still suffering, new Covid variants emerging but also more innovative ideas and solution popping us, it is more vital than ever that procurement teams are seen as go-to business advisers. An emphasis on attracting and nurturing the best talent is key to delivering on this in 2022.
Today we also hear from Sheldon Mydat, Founder and CEO at cloud-based supply chain relationship development platform, Suppeco.
My 3 wishes 2022:
1. Procurement’s higher ground
As technology grabs the flat lands of an increasingly automated and transactional function, an evolving procurement capability will settle into the “higher ground,” where newly honed relationship skills will seek out strategic gains in key areas of relationship-based co-resilience as well as a relationship-driven sustainable supply chain.
2. Hard-coded relationships
Relationship value at the top line — innovation, meaningful collaboration, shared R&D, shared values, thought leadership, to name a few, will become increasingly empirical and substantive in output nature, and thus will be more likely to be “banked,” contributing to hard-coded annual value targets alongside more traditional contract savings targets.
3. Relationships are the backbone of success for ESG in supply chains
Relationships, in terms of driving visibility and resilience in supply chains have now earned their prominent status (ironically thanks to the pandemic). Imposing ESG legislation upstream into the supply chain will continue to prove ineffective. Whereas collaborative engagement deep into the supply chain will prove to be by far the most meaningful approach capable of achieving the required results.
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.
My three wishes 2022:
1. Industry-specific sustainable supply chain approaches to bridge financial and industrial perspectives
New regulations are pushing management of a sustainable supply chain further than ever before. 2021 saw the German Parliament pass the Act on Corporate Due Diligence Obligations in Supply Chain and the European Commission announcing a draft legislation on mandatory due diligence. In the meantime, France and the Netherlands already have “partial” legislations on due diligence in place.
On one side, the emerging regulations on supply chain ESG mainly target large buying organizations that need to commit to improving their supply chain sustainability performances. However, in order to plan and monitor this kind of activity with an industrial politics perspective in place, these organizations need funding for their supplier bases.
On the other hand, Banks and Insurance Co. are building new “green finance” programs (e.g. Green Reverse Factoring and Green Loans) and demanding specific parameters for assessing the ESG sustainability of their customers.
The regulatory forces will push for fast-paced changes, and in 2022 the financial and the industrial perspectives will require a solid bridge in order not to waste inputs and outputs on sustainable supply chains.
Our wish is for increased adoption of industry-specific approaches to measure and improve ESG sustainability within specific supply chains, including industry-specific guidelines on how to assess suppliers’ ESG performances. Generic and over-comprehensive approaches are easier and faster to define, but extremely complex to adopt. They do not take into consideration the characteristics of a specific supply chain, typically characterized by the presence of small and medium enterprises (SMEs), which not only are the real engine of the industrial supply chain, but which often account for up to 90% of it.
2. A pragmatic tracking of carbon emissions in complex supply chains
The new regulations are not only limited to the social or human rights areas but are also tackling environmental protection and carbon emissions. One of the clearest examples of this new direction is the 2021 ruling against Shell by a Dutch court, which requested the company to reduce its emissions by 45% by 2030. This bold and significant move is a clear step towards considering buyer organizations as more and more responsible for the environmental performance of their supply chain. Moreover, the responsibilities taken on by large corporations committing to the Science Based Targets initiative (SBTi) require the assessment of the often-cited Scope 3 emissions; these emissions – in many cases – strongly depend on the supply chain.
With Scope 3 carbon emissions accounting for more than 80% of the total emissions of the majority of buyer organizations, and with less than 1% of suppliers having completed an ISO 14064-1 or ISO 14067 certification, we wish 2022 will bring forth a collaborative and pragmatic approach for joint estimates of GHG emissions of suppliers operating in the same industry.
There is no time for ballistic calculations on all potential suppliers, especially for those involved in simplistic operations – such as the utilization of company cars or office spaces. Hard-to-abate categories of supply should instead be prioritized, without fearing to face complex supply chains. Foundries and forges, for example, are at the heart of many industry verticals and require a pragmatic and quick calculation in order to promptly move to action. Discussions, commitments and monitoring of carbon emission reductions will largely benefit the industry as well as buyers.
3. More collaboration across industry verticals
As implied in the previous two wishes, in 2022 we ultimately wish to see more collaboration across industry verticals. Digitalization and ProcureTech excellences are key enablers, but the entire supply chain needs to be onboarded. Several promising initiatives became more visible in 2021 – such as the Catena-X initiative in the Automotive industry, or the Aura Blockchain Consortium in the luxury industry – and more will come. Collaborative approaches require global supply chain leaders to be front runners and invest in new solutions, while also being able to step back when needed, to get more benefits for the entire supply chain. A real “coopetition” model where benefits largely outweigh risks.
If we want to achieve a more sustainable supply chain and to boldly reduce the carbon emissions of complex supply chains, we must realize that no individual buyer organization can do so by itself. We need to push for more engagement and collaboration among buyers and suppliers, in a healthy and transparent way.
We can now look forward to an overall take on the series and the key themes that emerge from our analyst Bertrand Maltaverne.