2022 was arguably the hardest year on record for procurement teams worldwide. Unfortunately, the issues responsible for this aren’t disappearing with the coming of a new year, and some are only going to get worse. The constant pressure procurement teams have been under in recent years looks to be a new normal.
The good news is that, while this pressure is coming from multiple points, there is one area of investment that alleviates them all – data analysis. The bad news is that few organisations are directing funds towards technology and software, leaving procurement teams to stumble along in the dark.
Those who do will have an advantage over the rest.
5 obstacles for procurement in 2023
Procurious and Ivalua surveyed 170 procurement and supply chain leaders to learn of their concerns for 2023. Here’s what’s playing on their minds.
- Inflation. It’s been driving prices up throughout 2022 and it hasn’t eased as soon or as quickly as purchasers would like. Industries like construction have been particularly hard hit, with many in the sector focused solely on surviving. Inflation is likely to cause similar pressure throughout 2023.
- Supply chain disruptions. What impacted on supply chains in 2022 is likely to do so again in 2023. More lockdowns in major manufacturing hubs in China due to COVID-19; the war in Ukraine and its impacts on grain supply and energy prices; sanctions, embargoes and high fuel costs.
- An employee’s market. Australia may not have experienced the Great Resignation like the US did, but more industries are seeing a high degree of worker fluidity. Organisations need to do more than ever to retain their best talent, which isn’t only about investing in their careers and providing pathways, but demonstrating you hold the same values around ESG initiatives.
- Recession. Most world leaders are predicting a recession in 2023. This means a battering down of the hatches and fewer resources directed to innovation, technology, software and ESG initiatives. It means survival mode.
- Compliance & regulations. The world keeps spinning despite these headwinds. Investors, lenders and customers will still expect companies to take progressive steps and commit to ESG initiative, and governments and regulatory bodies will continue to tighten and refine regulations.
How data analytics can transform your 2023
Investment in data analytics will help procurement teams navigate the headwinds of 2023. Here’s how.
- To battle inflation, procurement teams are under more pressure than ever to locate the cheapest prices. This can lead to cutting corners and entering into contracts that are handy in the short term but cost us in the long run due to poor quality or ethical concerns. Data analytics can help you uncover the categories and products that are ripe for strategic overhaul. Learn where to focus limited resources so you can do your due diligence on market research. Get the good contracts that won’t burn you later.
- More is expected of procurement than ever before, but we’re not seeing an increase in personnel. We need to make sure that they’re attention is directed where it can do the most good. RPA is a great way to take mundane, repetitive tasks like data entry out of human hands (which aren’t good at it anyway) and allow procurement officers to focus on things they are good at, like strategic planning.
- With so many organisations in survival mode, initiatives like ESG get left by the wayside. But it doesn’t have to be this way. Data analytics can pinpoint which categories can be focused on for sustainable overhaul, allowing you to efficiently direct limited resources. Not only does this keep you aligned with the values of your investors, lenders and customers, but it keeps you ahead of ever-tightening restrictions and compliance needs.
Get the edge in 2023 with data analytics
Given the forecast, it’s tempting to batten down the hatches and enter survival mode in 2023. But, with many of your competitors doing just that, it’s an opportunity to invest in data analytics and gain an advantage. Many of the key pressure points to be faced in 2023 can be directly addressed by technology and software. Regardless of the short term, this is where procurement is headed anyway. Invest now, develop your capabilities in this area, and you’ll come out the other side in a very strong position.
