4 Major Procurement Trends to Watch for in 2020 | Future of Sourcing

ABOUT THE AUTHOR

Omer Abdullah

Omer is a co-founder of The Smart Cube and leads its business across The Americas. He also hosts The
Smart Cube’s Inside Procurement podcast.
Omer has more than 25 years of management consulting, global corporate and industry experience
across North America, Europe, and Asia.

Prior roles include A.T. Kearney (North America), Warner-Lambert (USA) and The Perrier Group (Asia-
Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA, and a BBA from the
University of East Asia.

4 MAJOR PROCUREMENT TRENDS TO WATCH

FOR IN 2020
With 2020 just in the door, progressive CPOs and their teams are planning for the year ahead. Here
are four major procurement trends to factor into your thinking.

1. Increased Volatility
With shifting trade tariffs and barriers, the unpredictability of Brexit and fluctuating commodity prices,
market volatility could be at an all-time high over the next 12 months.

As already complex global supply chains become even more unpredictable, finding ways to manage this
risk should be at the top of your 2020 agenda. What does this mean in practice? At a bare minimum it
means having processes in place to track suppliers, pre-empt problems and manage commodity-related
volatility.

The foundation is forward visibility and relevant market intelligence that can be translated into insights and
tangible actions.

In addition, investments in analytics and predictive modelling can go a long way to help in these areas. In
fact, there are tools specifically designed to help procurement organizations predict change and manage
the disruption in stride.

2. Ongoing Digital Transformation

There’s a strong chance that we’ll be talking about digital transformation for many years to come. That’s
because true digital transformation is an ongoing process. 
Digital has fast become an imperative for top-performing procurement functions. Those who find
themselves behind the times will need to play catchup this year, especially as the wider organization is
likely to be on its own digital transformation journey.

There is now more technology than ever before aimed at the procurement space. The trickiest part,
perhaps, is knowing which tools to choose and whether to opt for end-to-end services or a mix of best-of-
breed capabilities. It goes without saying that it’s essential to focus on tech for its value and not the tech
itself.

What’s best for your organization will depend on your specific circumstances. In general, we expect to
see big investments in tools targeted at spend analytics, SRM, contract management and risk
management in 2020. Underpinning this should be an emphasis on data: clean, quality data; high
visibility; and the ability to manage and dive deep as and where necessary.

3. Building Deeper Supplier

Relationships
At some point, you’ve almost certainly had a conversation within your department about building better
supplier relationships. Everyone agrees that it’s a strategic priority for procurement organizations. 
However, actually putting plans into practice is easier said than done.

We often see procurement organizations implement manual processes that are inconsistent across both
categories and supplier segments. In 2020, however, we expect to see a more structured and successful
approach adopted by the most forward-thinking and progressive departments.

This approach will begin with suppliers being segmented into tiers, separating those that are an integral
part of the supply chain, and are therefore truly strategic, from those that aren’t.

The next step will see the implementation of a set of measures and tools for each tier, helping to better
monitor strategic partners and improve relationships where needed.

You’ve probably heard this idea floated before, but the difference is we’re now at the point where the
technology and analytical capabilities exist to make the required processes both manageable and
economically beneficial.

Ideally, the result will be broader, more innovative open-book partnerships that foster deeper
connectedness between customers and suppliers.

4. Delivering Value Beyond Savings

Driving savings will always be a primary goal of procurement. It’s increasingly understood that
procurement organizations can deliver value that goes way beyond cost savings, cost containment and
cost avoidance.
The sophistication of the procurement function, and the available talent within the space, has increased
dramatically over the last few years. There have also been greater expectations placed on SG&A
functions in general. With C-level strategies demanding greater growth, faster innovation, tighter budgets
and increased competitiveness, 2020 is the time for procurement to really show how it can contribute to
wider strategic goals.

It is procurement’s time to shine.

There are many ways procurement organizations can do this, from increasing the speed of project
delivery and growing revenue through new supplier-enabled initiatives to directly participating in the
enterprise’s innovation agenda to help shape activities early.