Last week, I shared with you some of the BIG procurement trends that we at Ardent Partners, in conjunction with our sponsors, Beeline and Ivalua, shared on our Procurement: Big Trends and Predictions webinar that we host each January. There are a lot of trends in business, politics, society, and technology, and from these trends emerge a dozen predictions we have made for 2018. Today’s article is the first six of these predictions.
Big Prediction # 1: Increasing Trade Barriers
The protectionist rhetoric of recent years has taken hold in both trade policy and politics. Driven chiefly by anxiety and anger over immigration, free trade, stagnant wages, un- or under-employment, and the gradual decline of the middle class, populist movements have emerged across the United States and Europe. And they have begun to halt and reverse the decades-long course of globalization, a trend that imperils long-standing trade agreements.
Following the UK’s narrow decision in the summer of 2016 to leave the European Union (“Brexit”), British Prime Minister, David Cameron resigned, and pro-Brexit candidate, Theresa May, was elected to take his place and oversee the years-long process. The idea is to prioritize British economic interests, like preserving jobs for British citizens, not financing the debt of other EU nations, and limiting its exposure to the Syrian refugee crisis. If Brexit continues unabated (and all signs point to it), it will drastically alter the UK’s trade, taxation, and immigration relationships with other members of the EU.
Across the pond, Donald Trump rode a populist wave to victory in 2016 and won the U.S. Presidential Election. Upon taking office, he signed an Executive Order formally withdrawing the U.S. from the TPP, and has continued his pressure to lessen or destabilize current multi-lateral trade agreements (i.e., NAFTA). Trump has also railed against bi-lateral agreements with countries that have historically wide trade imbalances with the U.S., such as China. And the Trump Administration recently imposed a nearly 300% tariff hike on Canadian aerospace manufacturer, Bombardier, following a trade dispute with U.S. rival, Boeing.
If past events are strong indicators of future behaviors, look for the U.S. government to challenge and ultimately attempt to renegotiate trade relationships with rival and friendly nations, alike; to become more protectionist in its policies; and establish steep trade barriers at will.
Big Prediction # 2: Global Destabilization
Another prediction that Ardent Partners is prepared to make is more a continuation of the ongoing trend of global destabilization in 2018. It’s rough out there, and one needs only to turn on the telly for reminders. Civil wars rage in Afghanistan, Syria, and Yemen, simmer in Iraq and Libya, and threaten to reignite in Ukraine and the Caucuses. The U.S. has become increasingly and more directly involved in a proxy war with Iran in Syria, and operates perilously close to their chief patron, Russia. The U.S. has also decertified its nuclear agreement with Iran and, in a break with diplomatic tradition, recognized Jerusalem as the capital of Israel. Meanwhile, China continues its island-building campaign in the Western Pacific, while the U.S. and other nations continue to uphold the freedom of navigation through these waters. The U.S. and North Korea inch closer and closer to a war over its emerging nuclear and missile capabilities, while the threat of conflict with a resurgent Russia looms over the Baltics.
As if the world weren’t dangerous enough, the rise of vocal and unpredictable world leaders raises the possibility that a miscommunication and or misinterpretation of national intentions could cause a sudden conflagration and ultimately a major conflict. The threats of war, mass migration, worldwide economic collapse, and recession linger in 2018 just as they did in 2017. It is not a foregone conclusion that a major conflict will occur in 2018, although Ardent Partners predicts that the mere possibility or threat of such a conflict will have a destabilizing effect around the world. Watch carefully what transpires in the Middle East, Southwest Asia, and East Asia.
Big Prediction # 3: Commodity Inflation Slows, But Continues
Over the past few years, Ardent Partners analysts have been tracking commodity inflation and making various predictions. In 2016, we advised that because the price of oil and other commodities were so low, it was the time to not only buy but also “go long” on them. In 2017, prices started to tick upward and we advised that buyers ought to hedge. In 2018, we predict that the pace of inflation will slow but continue upward; but due to the volatility on the world markets lately, we advise to watch for sudden drops.
Big Prediction # 4: #MeToo Hits Big Business
2017 was the year that people had had enough. What started as a social media campaign to raise awareness of sexual harassment, assault, and rape in the workplace has grown into a worldwide phenomenon that has uncovered alleged sexual predators and harassers in positions of power that have exploited their power and influence. Women (and some men) have come forth in droves to share their stories and name names in the entertainment, media, and government industries, the military, and now the private sector.
Actors, directors, producers, comedians, journalists, congressmen, and other powerful people have been forced from power in the reckoning that continues. The problem is so pervasive and has emerged in so many facets of society that it appears that the movement has much more ground to cover. As more victims share their stories and name names, more victims feel empowered to emerge and tell their stories; because unlike before, people believe them now. It is safer to say #MeToo. Thus, 2018 will be the year that the movement impacts big business. Las Vegas casino and resort mogul, Steve Wynn, is the latest figure to be named and mired in controversy. There will almost certainly be more names, and it will continue to shock and sadden us.
Big Prediction # 5: Procurement Will Focus on Improving Alignment with Executives
Moving back to procurement, one thing that revealed itself in 2017 is that so many practitioners are poorly aligned (16%) or partially aligned (46%) with business executives. Just 38% of us are tightly aligned, and this number needs to increase in 2018 in order for procurement to better serve the business and respond to the business challenges that lie before them. The good news is that Ardent Partners predicts that procurement departments will focus on improving this alignment; it has to. Procurement teams that keep daylight between themselves and the greater business will struggle to be relevant and valuable; and there is no room in 2018 for anything less than a procurement team that is relevant and valuable. Procurement can only get better in 2018.
Big Prediction # 6: Cyber-Terrorism Hits
Finally, Ardent Partners predicts that a cyber-terrorism event will hit businesses in 2018, following years of such incidents and the increasing frequency and impact of these incidents. Although cyber security defenses are improving and people’s digital “hygiene” is improving, the bad guys tend to stay a step or two ahead of the good guys. As a result, the Global 2000 will face an increased risk of cyber attacks of greater sophistication this year. Moreover, business disruptions caused by these attacks will increase significantly and cascade into supply chains. And with the EU’s General Data Protection Requirements (GDPR) law coming into effect on May 25, 2018, there could be steep, multi-million dollar fines for enterprises that fail to secure customer data via-a-vis a cyber incident. As a corollary, Chief Procurement Officers, whose responsibilities increasingly include managing their supplier’s cyber/IT security risks, will be on point to manage more of this risk coming in from the supplier base.
As we said last week, whether you’re tracking supply risk, trade policies, technology innovation, or overall employment trends, 2018 is going to be an interesting year for our readers. Stay tuned for six more predictions we’ve made for 2018.
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