Indirect Procurement Trends You Need to Know for 2019
If you're an indirect procurement director, the trends for 2019 will be a mix of what you've faced in the past as well as new twists on familiar challenges. We'll look at some of the top indirect procurement trends for 2019 and what they mean for your enterprise.
An indirect procurement director has to be aware of everything from social media reviews to trade tariffs to the latest technology innovations — and threats. Social media could focus on supposed flaws in a product or problematic aspects of the supply chain, leading to bad reviews or coordinated attack campaigns.
Tariffs are already raising prices on some imported commodities and products, and uncertainty will continue in 2019 as negotiations are carried out. To help address the potential for rising costs, an indirect procurement director can shift to strategic sourcing, looking for the lowest total cost of procurement and operation rather than simply the lowest purchase price.
Technology will deliver potential savings and innovation as well as threats. Smart and connected products can reduce operating costs significantly. But those products are also vulnerable to cyber threats. Cyber attacks, the fastest growing crime in the U.S., cost on average $5 million each. Companies spend on average $2.4 million to combat malware and web-based attacks, the two most costly attack types.
Need for More Supply Chain Transparency
In today's connected world, it's vital to know where products come from and with whom you're doing business. Even if you don't run afoul of government trade regulations, you could still lose in the court of public opinion. It's vital to know if any party to a transaction is on a sanctioned party list, or if the products are prohibited or restricted in any way. Otherwise, your company could be at risk of fines and sanctions.
New Technology is Upending Current Models
New technologies, from 3D printing to automation to artificial intelligence will make business as usual a thing of the past. With 3D printing, companies won't buy products and ship them. Procurement for some items may be as simple as clicking on the "print" button.
Automation and artificial intelligence are driving data-based improvements to existing operations. For example, warehouses could take inventory using drones rather than assigning staff to the repetitive task. Indirect procurement directors will have to understand new supplier capabilities and cost structures to make the most of these disruptive technologies.
Global Players are Changing the Playing Field
Notwithstanding the tariffs situation, China's influence continues to grow in global supplier markets as they expand their footprint through acquisitions. Also, look for companies in India, South Korea, the Philippines, South America, and Africa to make big moves in the U.S. market. There may be room for pricing leverage as well as product innovation from new suppliers seeking market share.
As your organization faces myriad challenges in 2019, from managing various risks to incorporating new technologies, it's never been more important to stay informed.
These indirect procurement trends and more will be front and center at ProcureCon Indirect West 2018, taking place at the JW Camelback Inn Resort & Spa in Scottsdale, AZ, this September. Download the agenda today for more information and insights.