While the procurement industry is consistently evolving and shifting, 2021 begins after a truly unprecedented year. In 2020, Chief Procurement Officers and their teams were forced to face massive disruptions, extreme threats, and entirely new challenges brought on by the COVID-19 pandemic. By and large, procurement leaders worked valiantly to ensure business continuity, build supply chain resilience, and prepare their enterprises for the next economic phase. Against this backdrop, procurement has never been more important to business operations and business results. We continue with some key procurement predictions for the year.
Prediction: Procurement Performance Management, More Important than Ever
On their earnings calls in 2021, CEOs will begin to sound like their CPOs as they stress the importance of operating with strict financial discipline, maintaining a maniacal focus on cash, managing costs, renegotiating contracts around the world, and localizing supply. The CEO’s renewed focus on procurement ‘work’ will place CPOs (and their teams) and the performance that they deliver under much greater scrutiny than in recent years.
That means that in 2021, it will become significantly more important for procurement departments to be able to actively monitor and track performance across the full-scope of activity. This will lead to increased investment in performance management resources including automated tools that capture project level activity and performance and translate that into broader, comprehensive organizational impact.
Prediction: Enterprises Begin to Rethink their Global Supply Chains
Given the events of 2020, Ardent Partners believes that it is inevitable that a majority of procurement organizations begin to rethink the designs of their global supply chains. Driven by a significant rise in “nationalism” and larger concerns for the level of security risk that is posed by having certain items manufactured abroad, there will be a push to localize large portions of some supply chains. Regulatory/legislative involvement will be a driving force for some industries, with mandates for changes with defined timelines enacted. Other enterprises will look at risk diversification as the primary reason to make changes.
Given the state of the economy today, Ardent does not expect aggressive changes to start in 2021. It is more likely that supply chain shifts are slow and gradual due to the switching costs involved.
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