6 key procurement trends to look out for in 2023


6 key procurement trends to look out for in 2023

As we head deeper into 2023 after two years of supply chain chaos, it seems that the only thing that is certain is more uncertainty and, as always, Scoutbee has its finger on the pulse. On February 9th, in collaboration with our partner GSES, we hosted a  webinar – which may or may not contain mild swearing – on The Hackett Group’s CPO survey, which focuses on significant changes in priorities in procurement, what’s new, and what’s vanished, and we asked if there really is any sense in making predictions anymore.

More than 350 procurement professionals gathered online for the lively, interactive session, ably moderated by Scoutbee’s SVP of Global Marketing, Roger D. Blumberg, with experts in the field, Chris Sawchuk (The Hackett Group), Kelly Ruigrok (GSES), Jason Busch (Spend Matters), and Michael Cadieux (Procurement Foundry) providing valuable insights. In case you missed it, we’ve compiled six of the key takeaways here.

Investment in good technology is crucial

Jason Busch predicts that procurement’s tech investment will focus on three main areas in 2023:  

  1.   Core source-to-pay plumbing: how do you manage demand, procurement intake, and spend planning? How do you manage specific categories across source-to-pay, or mega-categories like SaaS?
  2.   In the long term, procurement will be investing in supplier management technology. This is not just about risk, but also supplier search, onboarding of suppliers, and managing supplier data.
  3.   Direct procurement: this could be an overlay on top of source-to-pay or it could be standalone investments but so much of the challenge in today’s market is direct spend. “Direct is a huge animal you’ve got to lasso.”

In addition, with higher employee performance expectations but no corresponding increase in headcount – procurement is currently seeing 10% additional workload year on year but only 3% additional headcount, as Chris Sawchuk emphasized – this gap must be filled by technology.

Jobs in procurement are (for the most part) safe

Although “If you suck, you suck and you’re out!” as Michael Cadieux rather bluntly put it. However, if you’re good at your job, you’re most likely safe but the pressure to do more with less without being given any additional resources is a critical issue.

There will be a shift away from going out to buy expertise to building it within the organization, so it’s up to companies to make sure they have all the skills they need in-house. Teams need to have the knowledge to digitize, optimize, and gain insights into the supply chain.

However, even though a lot of organizations claim to be spending money on talent management, there’s scant evidence of this on the ground, with numbers way down for conferences and certifications.

ESG is not going away

According to The Hackett Group’s CPO report, ESG took a nosedive this year, falling from number four to number ten on the list of priorities. Nevertheless, this topic is not just going to go away like it did during previous recessions. As Kelly Ruigrok points out, the increasing number of laws and regulations surrounding ESG means that organizations will really have no choice but to prioritize it.

In addition, ESG is the focus of a lot of buyers’ questions and RFPs, creating traction between buyers and suppliers. In 2019, ESG was the focus of procurement directors and teams. In 2023, interest has shifted to board level. If the board makes it a priority, it trickles down into the rest of the organization and procurement contract management. The entire company needs to have ESG knowledge and, that way, it becomes embedded in the way we do things going forward.

Be sure to sign up for our next webinar – Balancing ESG in times of price increases – on June 6, 10 AM ET / 4 PM CET, where we’ve lined up another stellar panel for you: Alexandra Tarmo (Unilever), Dawn Tiura (SIG), Bertrand Maltaverne (Spend Matters), and Cristina Stanca-Mustea (Scoutbee). Click here to save your spot!

Battling recession and inflation

CPOs need to “relax and take a breath,” says Michael Cadieux. Try not to overreact or knee-jerk react to what’s happening in a geopolitical context because some economies are being hit harder than others. You have to be able to prove your value and, if you don’t know what that is, you’re dead in the water already.

His other advice? Maintain good relationships with your suppliers (although he framed it in rather more colorful language!) – you’re going to need them when we emerge on the other side of this in around 14 months – and hold onto your good staff. If you don’t, other innovative organizations will snap up your talent and charge you twice what you’re paying in payroll.

Managing black swans

We asked Jason Busch if there really is any sense in making predictions anymore. He believes that there’s a difference between making predictions and mapping long-term trends. If you look at the move to electric vehicles, to green energy, to the downstream influence of energy costs – the price of aluminum is up 14.5% in the last three months – there are long-term trends that are hard to dispute, and you can factor these into your decisions.

In the short term, it’s about having as much data as possible at your disposal – AI can help here. Put it in context, integrate it with your systems and, most importantly, be able to execute based on that data. Your data should include the local supply market and new suppliers but also keep an eye on those long-term trends.

For our final, wrap-up question, we asked Chris, Kelly, Jason, and Michael:

What can procurement leaders do to defend their teams and maximize procurement value in 2023?

Here’s a quick summary of their answers:

  •   Be sure that you’re a frontrunner, not a follower, when it comes to ESG.
  •   Cost discipline will be a core focus area.
  •   You’ve got to put your commodity and category strategy in financial terms.
  •   Choose your tech wisely – think about sure bets which are going to pay off and about the timeframe for that payoff.
  •   Stay out of the headlines!
  •   Leverage your available assets and learn how to evaluate value outside of hard savings.
  •   Invest in talent.
  •   Invest in technology.

You can re-watch the webinar here.