Worldwide climate change and resource shortage – In all industries, climate-smart SCM should become a central part of management starting now. Organisations must consider climate risk and readiness in SC planning models and search for alternative materials and resources. Elaborate on new practices to fortify the supply and reduce disruptions to position for the ever-changing physical environment and other SC risks correlated to global climate change.
The disruptive climate impacts on the SC due to natural disasters result in alterations in quality, raw material availability, commodity price volatility, and altering workers’ health due to climbing temperatures. The dependence on raw materials found in countries usually ten to be struck by extreme climate events. They must associate with suppliers responsible for climate awareness and actions, offering them the same benefits and access to technical and management skill-building.
Suppliers located in territories with policy commitments to transition to low-carbon economies are probably fast-tracking their aid to global buyers’ vision of climate-smart SC. According to the World Health Organisation (WHO), by 2030, productivity losses linked to heat-related workplace disruption and injury could cost trillions.
Optimising working capital and comprehending cost savings – Driving valuable benefits to a company is a central Procurement element that will endure significantly now and through 2025. However, Procurement leaders are looking to achieve such objectives in new ways. Enhancements to real-time data availability grant more dynamic decision-making, supporting cost savings and allowing Procurement to handle cash-cost effectively.
Automation technology adoption across the Value Chain – Technological advances are catalysing the digitalisation of SCM, modifying how goods and services are produced, delivered, and facilitating the creation and sharing of SC data in new ways. Businesses are digitally transforming the management of their SC by piloting and employing technologies, such as Blockchain, Machine Learning, and Augmented Reality, to traditional SCM activities. Automation and advanced manufacturing have considerable impacts on SCs.
SC is becoming much more transparent as workers, suppliers, and communities get into ever more complex technologies and manage them to generate and share information about environmental and social performance.
These modifications will likely have several consequences for Procurement managers: altering the supplier base as some suppliers implement innovative technologies. In contrast, others are set aside, changing the panorama of common labour-related problems in SCs.
Rationalising the supply base – Procurement experts state that decreasing the number of suppliers and third parties in their SC is a high priority for 2023. Simplifying SC originates good business organisation and can help to diminish uncertainty and risk; SC leaders will operate with fewer suppliers to generate the conditions where supplier partnership, traceability, and supplier-enabled innovation can succeed.
Upgrading risk forecast and management – Risk mitigation will remain dominant for Procurement leaders during 2023. Still, the methodology for achieving it is transforming due to legal obligations and shareholder expectancies for risk diagnosing. Procurement heads will require to leverage more hi-tech tools, triangulate info and data from more sources, and skim through risks in the SC multi-layered.
The number of tools and technologies on hand has remarkable growth to support SC risk outcomes. These include sustainability, human rights, risk elements, and environmental and ethical monitoring. Procurement leaders are working to comprehend and evaluate these tools’ competencies best, pondering incorporation and interoperability with present systems across the company.
Affording strategic insight to the business’s top levels – Recent research reported that CEOs ever more consider Chief Procurement Officers (CPOs) to support business agility through anticipation, differentiation, and innovation with suppliers and value market dynamics. In 2023 and beyond, the CPO’s role should focus more on business strategic foresight, recognising change powers and uncertainty, and transforming SC vulnerable signs into valued business intelligence. These researchers also found that CPOs among high-revenue-growth organisations are expected to develop Procurement in their company as a more strategic, cooperative approach when data is used.
Innovating and collaborating with suppliers – Supplier relationship management is at the core of multiple top Procurement companies nowadays. Procurement teams will ever more consider suppliers for innovation in processes and products and to partner in mutually beneficial areas. For instance, businesses define opportunities to reinforce Inventory Management and Demand Planning with suppliers. Others underline a need to boost supplier development platforms to accomplish public-facing sustainability objectives as science-based climate goals.
Massive-scale human migration – Transnational labour migration is an established trend. In recent years, it has escalated into an enormous movement with more than 240 million people living outside their birth country, the most significant number of forcible expatriates ever recorded. People are pushed to run away from their homes due to current conflict, persecution, and violence every minute,
Migrants are particularly exposed to labour exploitation due to limited legal protection, language barriers, and lack of formal networks. Internal migration within countries also contributes to changing labour dynamics and is projected to increase, shifting economic potential within countries. The challenges are for businesses trying to support human rights throughout their global SC.
Automation will displace significant numbers of workers and increase volatility in SC labour dynamics. Companies need to evolve their approaches accordingly. For instance, companies sourcing from regions impacted by mass migration can re-direct resources to participate with industry equals and cross-border mates, involving government, employers, and labour unions, to strengthen legal frameworks and persist on better execution of labour laws.
Shifting consumer demands and changing Market demographics – Improvements in digital technology have facilitated high-level personalisation in marketing and goods design and encouraged the rising on-demand economy. Consumers spend billions on on-demand services such as transportation and online marketplaces; companies place sourcing and finished goods manufacturing nearer to end customers. By 2025, multiple SC might move from global goods and services flows to local, regional and national networks of suppliers and buyers.
Strengthen Supply Chain transparency and disclosure – Regulations influencing SC transparency are likewise uncertain; legislation might be rolled back in some jurisdictions but reinforced in others. For instance, France implemented the “duty of care” law, demanding French organisations to employ due thoroughness plans to deal with environmental risks and human rights.
In a high-level uncertainty environment about the global trade future and the parameters that outline mandatory business disclosures about sourcing practices, innovative SC leaders can prepare for a diversity of likely future scenarios by enriching both SC and visibility practices. Heightened transparency will support SC leaders if political changes toward economic nationalism alter global trade.
Responsible regional Sourcing Hubs – Development in new markets and demographics to meet customer demands for customised-on-demand products and services will call for recognising how to cope with new consumption models and inclinations, supplying services and products in unknown sites. In response, SC heads will have a chance to develop agile, regional supplier networks that could meet both commercial opportunities and sustainability targets.
Digitalise supplier assessment and engagement – With more data about SC generated and circulating than ever; SC heads can reconsider how they gather and translate such data. They will need to polish the SC info that is decision-useful in an ocean of available data and dashboards; they will also necessitate reassessing which data they need to decide on and how it is collected.
SC Automation and Auditing could be disrupted; however, it can be beneficial for reinforcing responsible factory re-education programs, remediation processes and unmanageable labour issues such as working hours, wages, and safety, probable to be replaced by new challenges such as reliable SC workers down-sizing and reskilling them.
Summing up: the Supply Chain of the future must re-design SC to succeed in 2023; leaders should get ahead of significant changes which will disrupt their SC and focus on evolving their SCM approaches correspondingly. Be a part of shaping the SC future, in which SCs support human rights, women’s empowerment, inclusive economies, and climate resilience on a global scale.
Are you taking well-defined steps to plan your Procurement priorities for 2023?
Dave Food
M: +44 7775 861863
Photo by Scott Graham on Unsplash