Internet-enabled companies have been disrupting the procurement consulting industry from top to bottom, and this trend will continue into 2022. Procurement consulting firms that aren’t careful will find themselves left behind as the market changes and the expectations of clients change with it. Here are six trends reshaping procurement companies in 2022
1) Rising Expenses
As companies get leaner, they’re also getting less transparent about how they spend money. This means it can be hard for procurement professionals to get actionable insights into how their company spends its money. And if you can’t determine where your dollars are going, then you’ll have a harder time controlling your expenses. As companies become more risk-averse in an uncertain economy, many are turning to new technologies to help them cut costs while improving transparency—leveraging their employees’ buying power while increasing oversight of sensitive company data.
2) Increasing Competition
There will be a huge increase in competition as technology reduces barriers to entry. One of those barriers is expertise—the cost of having someone from outside your company give you advice will drop considerably. In addition, as everyone’s business knowledge increases, your customers won’t view a procurement expert as a luxury anymore. They’ll expect you to have one on retainer and use them for everything from choosing a new system to making decisions about strategy and where best to spend their budget. The good news? More customers will want more services from you, increasing sales opportunities for your procurement consulting firm.
3) Rising Requirements
According to Gartner’s research, IT spending is slated to exceed $3.5 trillion worldwide in 2017, an increase of 3.2 percent from 2016. Growth is expected to continue over 2018-2022, with IT spending reaching more than $4 trillion. To capitalize on new technology, organizations must allocate their financial resources appropriately. One way they’re doing that is by increasing contract requirements for suppliers of all sizes. This means that more attention is being paid to detail when addressing supplier complaints and the quality of materials used in finished products.
4) Supply Chain Risks
As it stands, many companies are ill-prepared to deal with supply chain risks. Even if you have a disaster recovery plan in place, don’t assume that all of your suppliers have one too. This means that when disaster strikes, you might end up having to hunt for new suppliers or struggle through whatever damage was done. To reduce your risk of becoming suddenly indisposed in future disasters, review your contingency plans regularly and ask yourself whether each supplier is adequately prepared to deal with any problems. With luck, they will be; but in case not, they may be more willing to help you keep your business running smoothly when disaster inevitably strikes again.
5) Data Security Concerns
A key trend that will reshape procurement is data security concerns. No longer are companies just worried about theft of trade secrets or price lists; today, they must protect personally identifiable information (PII), health care information, and other highly sensitive personal data. The first step for businesses is to gain visibility into what personal data is stored where throughout their organizations. Once you know exactly what PII your company stores, devise a strategy to make sure it’s adequately protected.
6) Decreasing Budgets
According to consulting firm The Hackett Group, nearly one-third of all procurement executives surveyed reported their organization’s budget was less than it was in 2015. This means that fewer firms are willing to invest in outsourcing work to third parties like procurement consultants. Decreasing budgets will mean greater competition for small businesses and startups without an established customer base or impressive track record. Thus, it is crucial that these companies start planning for their growth now; otherwise, they risk losing out on key contracts altogether due to increased competition from larger firms.
Conclusion
We have just covered a brief overview of procurement consulting firms and how they reshape procurement companies in USA. As you can see, procurement has a profound impact on a business at all levels. It is a complex process that requires constant monitoring and adjustments. Keep these points in mind as you think about your business’s future success!