Top 5 Procurement Trends

What New Factors Are Changing Procurement Today?

PurchTips Edition #435

It’s been an active few years in the evolution of procurement.  Here are five current trends that are reshaping procurement:

Top 5 Procurement Trends

  1. Inflation. The US Producers Price Index – a key measure of inflation for corporate purchases – has risen 4.8% from October 2017 to October 2018 for all commodities. The rate is even higher – a whopping 6% – for industrial commodities. This has meant that it’s been more difficult than ever for procurement professionals to achieve coveted cost savings.  Procurement must continue to innovate and update its practices and technology to battle the seemingly irresistible force of inflation today.
  2. Trade War-Era Procurement. The past year has seen one of the most brutal trade wars in recent memories, with governments of various countries slapping tariffs on imports from other countries. This has caused immense upward price pressure and has left procurement professionals scrambling to find new and more affordable sources of supply, both domestically and in emerging low-cost countries.
  3. Procurement Platforms. While the idea of different procurement software modules being united by a single provider isn’t new, it’s continuing to be refined to perfection. Thanks to mergers and acquisitions, the procurement field now has several choices of offerings that combine former “best-of-breed” applications into integrated “procurement platforms.
  4. Guided Buying. Procurement leaders have realized that procurement is often too confusing for end users and too resource-intensive for providing adequate levels of personal assistance.  As such, guided buying is a technological concept being pursued.  Imagine a world where it’s as easy to identify, evaluate and place an order with a great industrial supplier as it is to say, “Siri, show me restaurants nearby.”
  5. Cognitive Procurement. If you recognize guided buying as a near-term possibility, you can’t ignore the developing broader use of artificial intelligence in procurement.  Artificial intelligence has the potential replace much human involvement in procurement in the future, contributing to more informed decisions, in less time, and with less cost.

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Copyright 2019. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By Charles Dominick, SPSM, SPSM2, SPSM3