‘To boldly go’ — An analyst’s view of the 2022 vendor wishes for the procurement solutions and services market
In my role as a Senior Analyst for Spend Matters, I see a lot of news that affects people and businesses, and I see the developments that happen in procurement technology and what procurement practitioners face on the job every day. And to start off the new year, I’m seeing more insights from the vendors in this space thanks to our “wishes” series, where vendors have shared their views for 2022.
New Year’s resolutions are a traditional means of thinking about what we would like to do differently. Whether making resolutions works or not is strongly debated!
However, looking back at 2021 and 2020, it would be futile and irrelevant to make predictions considering the world of volatility, uncertainty, complexity and ambiguity world (VUCA) we live in today. Therefore, at Spend Matters, we thought that asking fellow procurement and supply chain professionals about their wishes for the market for 2022 would be a more appropriate way to understand where the procurement world should/could/has to go. Like the Star Trek crew, the procurement world should explore and “boldly go” toward tough challenges.
We were delighted to receive a massive amount of feedback from procurement tech and service providers, totaling 30+ sets of wishes, which we condensed and published in a series of articles that you can read here: New Year wishes for the procurement solutions and services marketplace 2022.
We are now, with the end of January looming, closing this series by providing a wrap-up, and Spend Matters has our own analyst take on the key themes that emerged.
Wishes — sustainability, resilience and supplier relationships are top-mentioned themes
It is no surprise that most of (if not all) the contributions that we received mention that the past two years are a potential tipping point for society. The magnitude of what society went through can play the role of a wake-up call to reconsider what our world turned into. It is because we all experienced first-hand, at home and work, the consequences of the interconnectedness, interdependence and fragility of today’s world that we had, for the most part, ignored (willingly or not). The positive thing is that this creates a shared sense of urgency, a condition for genuine and sustainable change.
Looking at procurement and supply chain management, the past two years can be the catalyst that we all have been waiting for, and that will put procurement under the spotlight and fuel business cases for more recognition, resources and tools.
That explains why the most-often-mentioned theme in our series is the global sustainability imperative and how procurement can massively contribute to tackling the many challenges ahead of us. Supply chains shape the world we live in. They have a tremendous impact on society, beyond traditional stakeholders. It is why so many contributors to our “wishes” series highlighted that it is now the time to be really serious about ESG, that fancy pledges and ambitious and (often unrealistic) targets are not enough. Greenwashing is not the way — concrete actions are urgently needed to tackle the many aspects of ESG and daily life (emissions, labor conditions and so on).
Supply chains can be and should be used as a force for good and serve a broader purpose, changing the focus of organizations from being the best in the world to being the best for the world.
Of course, one needs to be pragmatic and root these global objectives to a company’s own performance and survival. It is why the second-most-mentioned theme in our series is resilience.
Business continuity took a new meaning and an organization’s ability to recover as fast as possible from a “shock” in its supply chain became paramount in 2021. Many paid the hefty price of years of “design for low(est) price.” (See our Design for Supply [DFS] series here.) The (hyper-)efficiencies race transformed supply chains into a global web of interconnected elements and planted the seed for (hyper-)fragility within it.
Organizations wanting to transform their supply chain from being their Achilles’ heel to a strength are revisiting old ways of doing things (just-in-time, sourcing strategies, to name few) to create a certain elasticity in their supply chains by increasing flexibility and redundancies. However, elasticity has its limits. One of them is related to the fact that resilience requires knowing in advance what kind of stress/shock you will be subjected to. Therefore, we believe that the new edge that businesses need resides in antifragility.
Antifragility — The next level of competitive advantage
Antifragile companies thrive when unexpected events happen because they have developed an ability to adapt and turn them into opportunities for growth. Such organizations are masters at sensing, responding and learning.
Also, whereas resilience is mainly about operational strategies/playbooks put in place to cope with predictable events, and also because antifragility aims at developing innovative responses to unpredictable circumstances, antifragility is more about building the right organizational capabilities (like agility, adaptability, cognitive and ability).
Relationships play a crucial role in building resilience and antifragility because one organization’s future is, more than ever, dependent on a vast network of partners. And, here again, 2020 and 2021 showed the strong correlation between how companies made it through and how they approached supplier relationships.
Such organizations go beyond the traditional spend-based (ABC, Pareto) segmentation of their suppliers. They also go beyond the golden rule of relationships (that is “me” centered) and apply the platinum rule (that is “you” centered). They understand that not all relationships are the same and that there are massive benefits to being a customer of choice, and that it requires a focus on supplier experience.
This is because relationships are two-way streets. Procurement cannot force the door open. Stakeholders, partners and suppliers will let procurement in as long as they see procurement as a customer/supplier of choice (and not a squeaky wheel).
Sustainability, resilience (and, by extension, antifragility) and supplier relationships are the three themes most often mentioned in our wishes series. The next logical question pertains to turning wishes into achievements.
Capabilities to make your wishes come true
We have already mentioned several elements that will enable organizations to evolve. And, to make their wishes come true, all they want (and need) for 2022 revolves around enhanced capabilities. These capabilities cover many areas, but we want to highlight a couple of them that are technology-related and -enabled.
Visibility is one of them, and it is a condition to awareness which is, itself, a condition to actions. Visibility into a company’s supplier base is a critical element. Business realities and increasing regulatory requirements push organizations to know their tier-1 suppliers and their tier-x. Therefore SXM (as we call the broader supplier management fields of SRM, SIM, SPM, SPRM) is, more than ever, a domain where organizations are investing resources and where technology can provide support to gain visibility into supply chains.
Decision-making is becoming more and more complex, so there are multiple trade-offs to consider. The need for fact-based, cross-functional, cross-process, cross-systems, real-time and closed-loop processes is stronger than ever before. It is also an area where technology can enable organizations to do things that were previously impossible and it can break down silos.
Technology has made such massive progress in sensing, learning and recommending that it is now possible to consider it as a colleague or consultant, not just an “admin” for simple task automation.
For example, digital twins/control towers (monitor, understand, predict, recommend, redesign/adapt, learn) are the next steps in scenario planning to continuously track (always-on) physical (goods), information (data) and financial flows to build new knowledge through analytics/AI and/or to run simulations.
Of course, it is also essential to understand the limitations of the current technology offerings and distinguish the “too good to be true” from what actually works and makes sense in a certain context. On that front, this is and has always been what we strive for at Spend Matters.
Also, like all participants of our wishes series, we believe that procurement plays a central role in shaping (saving) our world and that there has never been a better time to show what impacts we can all have. Our recent ESG (and other) content illustrates this, and in 2022, we will continue to cover these crucial topics.
Now is the time to make a difference.
Procurement people, live long and prosper!