A crumbling of economic driving forces in the west is posing challenges meaning CPOs must adapt their 2023 agendas quickly, new research reveals.
Supply management experts Ardent Partners has published 15 predictions CPOs must consider this year “in a new economic era and one that poses new and sizable challenges for procurement leaders.”
Ardent Partners suggests procurement is entering a “more office, less remote” phase with staffing – predicted as a major challenge.
“Staffing will remain a major challenge for most procurement organisations who will rely on more automation and outside services to support their 2023 plans,” Ardent Partners founder and chief research officer Andrew Bartolini highlights.
Bartolini said operationally CPOs are dealing with a workforce in a default “disturbed” mode with most working remotely. He said there will be a drive towards more office time.
“Ardent believes that a large number of CEOs at large corporations will point to a productivity gap created by the hybrid workforce and increasingly call for mandated office time (3 or 4 days). Mid-sized companies, afraid of alienating and losing staff, will be slower to follow,” he says.
With the Ukraine War lingering on, more economies will bog down in the face of political conflict and violence,” Ardent says.
An acceleration in de-globalisation accelerates and slowing of cross-border trade, investment and immigration are expected.
“Putin’s invasion of Ukraine has emboldened China and there are now frequent and highly-public displays of tension between the U.S. and China,” Ardent says.
“These two countries remain deeply, entangled economically. But they are also economic adversaries and political and philosophical foes; for example, Taiwan remains a major area of conflict.”
On supply chain disruptions, a push for onshoring is expected to advance in 2023 but will be slow. “It will only happen in select industries (in the near-term) that have gained government attention, investment, and protection for economic independence and/or national security reasons,” Ardent says.
Savings to remain a top priority
In 2022, the number of CPOs prioritising savings nearly doubled compared to the previous year according to Ardent research.
However, it also found actual and targeted savings rates saw a significant drop due to inflation and production capacity.
Although savings is not an ideal indicator of procurement’s value, it will be crucial for finance and executive teams in 2023, making it imperative for CPOs to remain vigilant for significant cost-cutting opportunities, the research highlights.
Procurement to join forces with accounts payable
Enhancing communication and integrating intelligence into the core processes of accounts payable and procurement has brought significant potential to improve performance of a unification of both business areas, Ardent says.
Its research highlights that supply management systems that automate the entire source-to-settle process can serve as a platform to bridge the gap between procurement and accounts payable.
Despite the untapped potential to streamline B2B payments, the financial challenges of 2023 will prompt a more aggressive pursuit of this opportunity is predicted.
A new way for category management
This year is predicted to see a move into the development of “deeper category management capabilities” by CPOs.
“More sourcing and procurement teams, in collaboration with their business stakeholders, will work to develop strategies that define how the different spend categories should be managed to the benefit of the enterprise,” Ardent says.
It recommends a shift in how strategies are rolled out based on factors including:
- how the category is used
- where and by whom it is used
- the amount of spend
- how the category is procured, used, and/or managed
- the level of strategic or operational importance
- supply market characteristics (type and location of suppliers, etc.)
- category characteristics (size, on-hand inventory requirements, etc.)
- contract type and supplier relationship desired