Procurement went through some major changes in 2020 with the pandemic accelerating the use of AI and automation in the industry to cope with the extraordinary situation worldwide. Businesses were forced to adapt and move away from the traditional way of doing procurement. Additionally, the disruption induced by the pandemic also pushed the industry leaders towards exceptional innovation to make their processes leaner and more efficient. Based on all the changes that we saw the industry go through in 2020, here are some of the major changes we see emerging in the procurement industry in 2021:
In the upcoming year, process automation such as the Kloeckner AI is set to be widely used in the industry to automate high-volume repeatable tasks and increase productivity. Such systems will also be utilised for daily and project reporting. Process automation allows employees to focus on critical work instead of becoming bogged down in paperwork. It can further increase the productivity of procurement teams by maintaining complete and accurate digital records.
Integrated Data Ecosystems
Integrated data ecosystems such as electronic data interchange (EDI) may become even more popular in the coming year as the industry realises the various benefits of such ecosystems. These systems can automatically exchange commercial information, resulting in automated purchasing processes. Such ecosystems can cut transaction costs by 50% and are pivotal in increasing the productivity of procurement teams. Procurement leaders will see the potential that such systems have for procurement and will use them to increase productivity and efficiency. We expect to see a significant increase in demand for such integrated data ecosystems in the year ahead.
To thrive in the digital age, especially with the pandemic, firms must digitalise. Switching to digital procurement is no longer optional due to the various restrictions imposed because of the virus and procurement leaders understand how essential it is to implement digital procurement functions. It is even possible to automate repeat purchases from various online marketplaces such as the Kloeckner Shop. In 2021, we expect to see more companies digitalising their procurement processes by choosing the right technology for their teams. This accelerated pace of digitalisation is only set to increase in the upcoming year.
Transparent Supply Chains
The pandemic has disrupted supply chains all over the world, as borders closed, and movements were banned. This caused delays, leading to increased costs, missed delivery times and cancellations and an overall reduction in productivity. Having a transparent supply chain can eliminate such delays. Transparency helps procurement leaders predict delays in uncertain environments and find other relevant local suppliers to make up for shortfalls to avoid projects being disrupted.
Building end-to-end transparency into a supply chain can lead to procurement becoming a smaller and centralised function with increased collaboration and transparency at every level.
Sustainability is another emerging trend, not just in procurement, but across various functions, as it is the need of the hour. With various schemes promoting sustainability, the focus on environmentally friendly solutions has never been clearer. Procurement, too, will tilt towards sustainability, as businesses will source products and services that are as sustainable as possible, have a minimal environmental impact and promote positive social results. Additionally, moving reports to a digital format will reduce the amount of paper needed by each company, which will benefit the overall industry by making it greener.