As the world continues to grapple with COVID-19, procurement professionals are looking to find ways to continue creating value. It’s clear that businesses need more resilient supply chains to continue fulfilling business procurement needs. Managers need to make most of the budgets availed to them by investing in the right people, technology, and processes. They also need to be aware of the software trends that will influence the procurement space soon.
Currently, there is a great shift from legacy software to more flexible SaaS and low-code solutions for application building. Procurement experts need to understand how these will affect their companies.
Here are 6 procurement software trends that professionals are preparing for in 2022.
1. Blockchain Technology in Procurement
Procurement experts are looking for value opportunities that could arise with blockchain technology. One key area being touted is the chance to increase visibility in supply chains by having information recorded on a blockchain. It’s still quite early in the blockchain evolution, but there are pilot projects already in progress.
Smart contracts could present a chance to conduct trustless agreements between two or more parties. Smart contracts are self-verifying and implementing the given instructions once conditions are fulfilled. This could affect international procurement operations.
In the future, payments made through blockchains could lead to a reduction in settlement fees while unlocking real-time settlements.
2. Digitization of Supplier Data
Autonomous procurement will eventually become a reality, where an organization orders goods automatically through artificial intelligence technology. AI systems can be built to track and decide on when and how much of each item to order. The biggest hindrance thus far has been the lack of or too much fragmentation of supplier data.
Now, procurement teams will look for ways to organize the information on suppliers, that is on other systems such as accounts payable so that it can aid automated procurement decision making.
3. Improving Supply Chain Resilience
Organizations will look to seal weaknesses in their supply chains that have caused shipping delays and rising costs in the past. Data will be crucial in this regard. Organizations will want to collect more real-time data on their logistical operations. Companies will make radical shifts from unsustainable procurement practices. For instance, if it becomes apparent that relying on an international supplier is no longer tenable, they will shorten their supply chain and work with a local one to reduce risk. Where relying on a single supplier is deemed too risky, the organization will look for other suppliers to work with.
4. Vendor Management and Collaboration
One way to improve supply chain resilience is to work with suppliers to build up their capacity. By sharing feedback, organizations can help their suppliers improve product quality as well as logistical capabilities. Big companies with sufficient budgets can set aside funds to train fragmented suppliers so they can standardize the quality of their produce. They can carry out training on improving logistics.
Relationships with key suppliers are likely to be strengthened and longer contracts are signed to deepen those relations. As opposed to negotiating for just lower prices from suppliers, the focus will be on building mutually beneficial partnerships. Companies will share information on what products they plan to introduce so that suppliers can prepare sufficiently to meet demand spikes.
Procurement departments will have more portals to help manage their vendors better. A portal creates a central place where all correspondence with a particular vendor can be tracked, and contracts managed. Vendors can update their catalogs and view tender opportunities.
Reliance on procure-to-pay systems will also help manage relationships with vendors. The software helps track the entire process of purchasing from ordering, confirming delivery, and releasing payments after invoice processing.
5. Procurement Will Become a More Important Role in Organizations
The continued reliance on data in procurement management has revealed numerous value opportunities there. Creating strong relationships with suppliers, minimizing the risk of shipping delays, and having stable and predictable prices are attractive value propositions. As such procurement leaders will play an important role in helping organizations fulfill their strategic goals.
For instance, an organization that seeks to minimize procurement costs might need to start a five-year road map to get there. It might need to choose between several options to get there including building its own parts, finding new suppliers, or even acquiring an existing manufacturing enterprise. The procurement department would have to provide empirical data on the various options.
6. Gaining More Spend Visibility through Analytics
Going into 2022, organizations will look to gain more visibility into their spending through e-procurement software trends with inbuilt analytics. E-procurement software that provides an analytics dashboard makes it easy to query data and have it presented in easy-to-consume graphs and charts. Organizations will optimize their spending by taking advantage of discounts and credit periods from suppliers. They will also look to eliminate spending that does not translate into value for the company.
The effects of the pandemic remain the main thing on the minds of procurement professionals. Creating more resilient supply chains remains an important priority. This will only be achievable by gaining a better understanding of supply chain vulnerabilities and acting accordingly. E-procurement software, including procure-to-pay solutions, can help automate processes, create proper records, and provide the chance to integrate analytics in decision-making. If your organization needs help in automating your procurement process, consult ProcurePort. We are the world’s leading provider of e-procurement solutions.