While the UK referendum and US election rocked the boat across industries after a sustained period of growth, there are still plenty of things we can be certain about going into the new year: procurement is set to become more strategic and collaborative than ever.
From supplier issues and strategy selection to cost reductions and sourcing stakeholders, we take a look at some of the biggest challenges facing procurement in 2017, and share tips for creating a solid strategy around them.
Solidify your risk management
With supply chains becoming more and more complex by the year, risk management can no longer be considered an afterthought. Instead, in needs to be built into the core of your procurement strategy, starting with compliance and strategizing outwards to take financial risk, sustainability, ethics and labour issues into consideration at every tier of the supply chain.
Create an overall picture of the risks involved in any partnership before going to suppliers. Be sure to include how you will assess and measure risks as you go along. Don’t be afraid to integrate risk management initiatives into your strategic sourcing process, and ensure that you work closely with all suppliers to collaboratively detect and neutralise risk-related factors.
Beware black swans
2016 was filled with black swans - and 2017 seems likely to follow suit. In risk analysis, black swan is any event that is entirely unprecedented and unpredicted, yet causes major ripples. From political shifts to game-changing technological innovations, these events have dominated the headlines in 2016.
Black swans have the potential to affect all industries, meaning that it’s more important than ever to stay flexible with your procurement plans. Make sure your supply chains are ready for anything by having processes in place to respond quickly to changes in a supply chain. This could include an accessible network of backup sources and suppliers, or having short-term in house services in place to fill the gap between suppliers.
Seek out innovation
2016 saw a significant increase in the number of companies diversifying their products and services, remaining competitive only by accelerating and expanding their own technological advances. 2017 is not the year to get complacent about your place in the market.
Instead, invest some time and funding into research and development, considering different directions that your business could move in, and the relevant supplier networks that you would need to rely on in such a case.
As for your current suppliers, take advantage of strong relationships to innovate collaboratively. Supplier-led innovation is an emerging trend for 2017, so get in early and take the necessary steps to work it into your strategy in advance.
Invest in diverse talent
2016 saw an increased awareness of the importance of working with a diverse range of suppliers, including startup companies, women-owned companies, and minority-owned companies.
Not only will replacing some of your tried-and-tested suppliers with less-known innovators give new talent a well-earned boost in the business world, but it will allow you to take advantage of new perspectives and new audiences.
For example, with women driving 70-80% of global consumer purchasing through their own buying power and their extended influence, including women-owned businesses in procurement decisions could allow this significant market to be represented and reflected amongst their own audiences and consumers.
What are the biggest challenges your procurement strategy is facing this year, and how are you planning to tackle them? Join the discussion on our LinkedIn page.