Procurement Priorities Defining 2021

Procurement is a critical industry that requires resilience and crisis preparedness in order to remain efficient in the aftermath of a crisis. The best way to meet procurement challenges is by anticipating the priorities emerging in the market. In 2021, these priorities are risk mitigation, cost optimisation, Supplier Relationship Management, digitalisation, and CSR initiatives.

The consulting industry is a reflection of the business landscape. With the rapid changes in the business landscape, the consulting industry also morphs to meet the new challenges it presents. 

This means that a consultant’s work never stays the same; they are challenged to envision a new future for each critical business function. This also means that ideas that were cutting-edge just a few months ago, may no longer be relevant.

For this purpose, it is important that consultants place special emphasis on frameworks that support a business regardless of the specific solutions that are leveraged at any time.

This means that measures that ensure the utmost level of operational efficiency must be prioritised. This helps businesses recognise areas of improvement that can add value.

On top of these frameworks, future market priorities must be assessed. This helps companies get ahead of the curve.

Following the global health crisis of 2020, 2021 is a critical year when it comes to planning ahead for a volatile market. This is true for every business process, but it is especially critical when it comes to procurement. 

The COVID-19 vaccine rollout has highlighted several inefficiencies in procurement and distribution networks around the world. The storage specifications of certain vaccines, the shortages in some areas, and the wastage in others have made the impact of inefficient procurement painfully clear. The real-life impact of these is just as clear. 

As businesses progress through 2021 and continue to learn lessons from the crisis of the past year, some key priorities are emerging in procurement. 

Risk mitigation

Recognising and mitigating risks is more important in a world post-COVID-19.

The global business landscape cannot afford to make the same mistakes again.

Risk mitigation strategies in 2021 will take on a multi-dimensional approach. There will be a more concentrated effort in using the right technologies and improving transparency.

Cost optimisation 

Cost-cutting efforts are often taken for granted in the current landscape. Companies do not often make a targeted procurement strategy to achieve cost-cutting. 

Priming procurement to meet business goals involves a strategic process through which cost optimisation can be sustained.  

To achieve this, the focus needs to shift from cost-cutting to building greater value. The latter will produce the former in time. 

Supplier Relationship Management

There is an essential relationship between a business and its suppliers. 

As UK general manager of Ivalua, Ian Thompson, said recently, ‘Transparency into when suppliers will be paid, and [sic] pay them on time to give them a fighting chance to survive. This will boost the wider economy while building strong relationships with suppliers’. 

Collaborations of this nature support an entire organisation and to do so effectively, businesses need to be managing their relationships with care. Given how important uninterrupted supply chains are in a crisis, in 2021, businesses will focus more on this part of their procurement activity. 

Digitalisation 

Cloud-based data accessibility will be on the rise in 2021, as will AI-supported software and hardware processes. Machine learning is on the rise, and with it comes an increased dependence on these technologies to fulfil specialised tasks. 

Given how sophisticated end-to-end procurement solutions are today, there are more opportunities and scope to add value to consultancy.

The technologies businesses choose and how we leverage them are critical at this juncture. 

CSR initiatives

Consumers in the information age are more active than any other consumer group before them when it comes to finding companies that reflect their values and beliefs.

This means that it is no longer enough to complete a one-off project in the name of social responsibility. Social responsibility must be a part of every decision that is made.

With the rising threat of climate change and greater pressure on corporations to take responsibility for wide-scale environmental destruction and how they use labour, ethical and green procurement processes are long overdue. 

There is no doubt that as the year progresses more pressing priorities may emerge. These elements underlie other developments that emerge and will continue to influence the way the business environment works.

Learn more about these trends by exploring a quick resource on green procurement.