12 Popular Procurement Trends in 2022 & Beyond

66% of CPOs surveyed in the 2022 Procurement Leaders CPO Compass that they expect supply chain volatility to persist in 2022. Oddly enough... we believe we have our silver lining here.

Rooted deep within the likely instability and volatility of the global supply chain Kodiak Hub believes there is a somewhat constant variable and a bright future for procurement.

Procurement as a function is finally getting the recognition that they deserve. 

With 2021 behind us, we bravely walk into a new year with a new outlook, breathing in deep breaths of hope & opportunity. 

But, before we hurdle into the trends, challenges & opportunities that await Procurement in 2022, let’s briefly visit how Procurement looked in 2021 in order to better understand the current state, and future playing conditions.

Not sure if you heard about it, but 2020 brought us a Global Pandemic in the form of the COVID19 crisis, 2021 has brought us the ripple effects; supply shortages, fluctuating prices, broken supplier contracts, lack of alternative supplies, and little time left over to focus on anything else than the day-to-day operations of supply chain management.  

The pandemic was a trend that no-one spotted, and it’s impact has had lasting effects on the daily lives of so many; personally & professionally. 

The unprecedented and unpredictable playing field caused by the pandemic, geopolitical events and other factors have made the art of ‘trend-spotting a bit ironic at this point.  

It’s likely that the aftermath of the last 2 years will continue to linger in the new year.

66% of CPOs surveyed in the 2022 Procurement Leaders CPO Compass that they expect supply chain volatility to persist in 2022. 

CPO's Supply Chain Volatility: 12 Popular Procurement Trends in 2022 & Beyond

 

Oddly enough... we believe our silver lining lies here in the statistic above

Rooted deep within the likely instability and volatility of the global supply chain we believe remains a somewhat constant variable and a bright future for procurement. 

Procurement as a function will finally get the recognition that it deserves. 

Pressures on sustainability, risk management, productivity and supply have highlighted the importance of procurement. Regardless of how you’ve fared during these two tough years, your procurement team’s stock is rising in your organization, and rising fast. 

Procurement Recognition: 12 Popular Procurement Trends in 2022 & Beyond

Procurement teams have been a crutch to lean on as supply chain complexity continues to surmount. 

This may very well lead to a well deserved shift of Procurement’s place in the broader value chain. A new beginning. A fresh start.

Value Chain Shift: 12 Popular Procurement Trends in 2022 & Beyond Procurement in transition could lead to more CPOs getting appointed to the leadership teams, capturing the attention of the board and potentially even increases in budget for personnel, projects & technology. 

More organizational influence and piece of the budget makes 2022 and beyond great years of opportunity for transformational activities in procurement

As the proverb goes, taken from the works of the late Stan Lee’s Spiderman, “With great power comes great responsibility”. 

As procurement shifts to an increasingly central figure in the broader value chain, so will the pressures on procurement to drive multi-dimensional value. New pressures will bring new challenges driving new strategies, projects and ways of working. 

As I typically say, if you want to spot the trends, first identify your challenges, therein lies the opportunity. 

Screenshot 2022-04-28 at 08.30.33

With no further adieu, buckle your seatbelts, check your rearview mirrors, and test your turn signals, we’re ready to race off into the:

Procurement Trends of 2022 and beyond!

 

Trend #1: Supply Chain Tier-Mapping 

Driven by the megatrends such as globalization, and sustainability; supply chain tier-mapping has been a top concern and focus area during 2021 and will remain a trend in 2022 and beyond.

As supply chain complexity grows, so do the tiers of supply networks, increasing the complexity of transparency & visibility beyond tier-1. 

Trends in supply chain tier mapping

A flash survey by Deloitte show that Procurement Teams are lacking visibility beyond tier-1 suppliers.Lack of visibility beyond tier 1 suppliers

Better supply chain visibility could have aided teams to react quicker in response to the pandemic effects, and better allocate resources, or foresee disruptions in the further tiers of their supply chains. 

Tier-Mapping & Transparency is no longer a ‘nice-to-have’ as it’s also being reinforced by emerging legislation. 

Lieferkettengesetz - in English “The Supply Chain Act” - is a German Law that was passed in Feburary 2021. This law is just a drop in the sea of legislation that is enforcing a need for increased supply chain transparency, and provides a concrete example of why supply chain tier-mapping will continue to be a focus for 2022 and beyond. 

This act aims to enforce sustainable business practices within the broader value chains of large German organizations. Legal requirements of this act force companies to take responsibility for their global supply chains with enhanced due diligence, corporate governance and to have a means for reporting upon violations within various social, environmental and financial criteria (Prewave 2021).The Supply Chain Act: Lieferkettengesetz

The Supply Chain Act comes into force within Germany at the beginning of 2023 and affects companies with at least 3000 employees. Global organizations with complex supply chains are therefore the most affected. From 2024, companies with more than 1000 employees will also be affected.

 

Trend #2: Supplier Diversity

One of the many desired outcomes of enhanced supply chain transparency and tier-visibility is to increase Supplier Diversity. This was a trend Kodiak Hub identified in 2021, and will remain a trending issue in 2022. 

Taken from the 2022 CPO Compass survey by Procurement Leaders, it was reported that;

“Almost four-fifths (79%) of CPOs indicate they will seek to improve supplier diversity and inclusion by tracking their expenditure with Tier-2 diverse suppliers in 2022, while 62% plan to revise supplier selection criteria to enable more diverse enterprises to win business”.

The majority of procurement teams Kodiak Hub has the opportunity to speak with on a daily basis are referencing Supplier Diversity as a main focus area for ESG reporting. 

As per our evaluation at Kodiak Hub this trend is being driven primarily by multinational companies in North America & the UK. 

Supplier Diversity:12 Popular Procurement Trends in 2022 & Beyond

Increasing inclusive spend starts with better visibility into which suppliers are in fact diverse, and that all starts with more streamlined classification and information management. 

By definition, a diverse supplier is “a business owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group” (CVM 2019)

Some common examples of diverse suppliers would be small-business enterprises (SBEs), minority-owned business enterprises (MBEs), and woman-owned business enterprises (WBEs). 

In a predominantly white, male, industry; executive procurement, sourcing & supply chain management roles have long lacked diversity. This is far from a positive attribute, and has - in some cases - created a direct correlation for lacking supplier diversity. Executive diversity in procurement, sourcing & supply chain is on the agenda in many global organizations as it has been a spotlight topic for the past 10-15 years. 

 

Lacking Diversity in Procurement could permeate into supply chainsThis same shift needs to be mirrored at scale, by reviewing diversity of existing supplier bases & enrolling initiatives to improve upon supplier diversity. 

A big focus in 2022 will surround Creating shared value & economic impact at scale. Enhanced supplier diversity is a great way to live up to CSR & ESG initiatives.

Inclusive spend, and “Supplier diversity benefits underrepresented businesses, but it also uplifts the communities where those businesses are located through job creation, increased wages, and tax revenue. (CVM 2019). 

 

Trend #3: Enhanced 3rd party Due Diligence & Market intelligence

Kodiak Hub has seen an increased number of inquiries during the last year to better enhance supplier due diligence via instant 3rd party insights. 

The age of Data and information is here, and it’s significantly contributed to the availability of 3rd party risk insights that can help procurement and sourcing teams to engage, or not engage, with suppliers based upon their existing risk profile. 

When it comes to enhanced due diligence via 3rd party intelligence, it’s not just about making sure you have information at hand, but that you have accurate & relevant information at hand. 

Kodiak Hub provides Social, Geo-political, Environmental, Media and Financial risk insights to our users. These insights are natively integrated in the user interface in Supplier Scorecards, giving our users a 360º view of 3rd party due diligence data all in one place. 

 

Better Supplier Due Diligence: 12 Popular Procurement Trends in 2022 & BeyondSome solution providers are making names for themselves making the availability of information and market intelligence their primary value proposition as ProcureTech providers

Looking at this Market Map (below) courtesy of DPW, we see vendors such as Beroe, Craft, Owlin who have seen significant upswings in their notoriety and adoption during the past 2 years as procurement teams are starved for relevant insights and knowledge about their suppliers. 

 

Better Market Intelligence: Procurement Technology LandscapeMega Trends including Globalization will only continue to color the complexity of global supply chain networks, and therefore 3rd party due diligence and market intelligence will continue to be a trend in procurement during 2022 and beyond.

Enhanced Availability to data and information can also increase one’s ability to address trend number 4 on our list

 

Trend #4: Supplier Discovery & Alternate Supply Sources

Modern solutions for supplier discovery leverage basic automation and AI automation to help find & select suppliers fast.

Emerging solutions like ScoutBee, Tealbook, and others offer discovery functionality that allow users to predefine their criteria for search, based upon various supplier attributes. Utilizing advanced AI-driven database technology you can search much like searching on Google, or target your scope of search.

This gives procurement & sourcing professionals access to the same kind of search tooling sales & marketing teams have had for years in order to prospect new leads, or target campaigns, but instead of finding leads, procurement can take advantage of this technology to find new suppliers.

Better supplier discovery just like in sales tools from Zoominfo & LinkedInThe Pandemic has highlighted the fragility of a global supply chain where there is an over-reliance on a single-source supply. Agile procurement, and the ability to quickly find latent suppliers who can fulfill an alternate supply order is very important to manage risk & have mechanisms to ensure that suppliers won’t impact your own business’ continuity. 

The ability to keep inactive, but approved, suppliers on file is always beneficial when your procurement organization needs to find alternate supply sources fast. This kind of supplier registry functionality comes standard in most SRM solutions, including Kodiak Hub.

Dynamic supplier registries are a must have

 

Trend #5: Supplier Performance Management (SPM) Technology

This was a point on Kodiak Hub’s list of Trends for 2021, and seems to remain a key area of focus for procurement teams in 2022 as well!

As seen by the Graphic (below), from the 2022 Procurement Leaders CPO Compass Survey, SPM tops the list of data & technology solutions that CPOs plan to invest in during 2022. 

Supplier Performance Management: Procurement Trends

It’s no wonder… 

Supplier Performance Management can be time consuming, data sources can be unreliable and spread out, evaluations can be difficult to distribute and gather, and the solutions for tracking, visualizing and managing supplier performance primarily reside within good old spreadsheets & email.

At the same time, supplier performance is a great indicator of overall supply chain performance and therefore an incredibly important area for procurement teams to follow up on. 

Many broader S2P suites offer Supplier Performance Management and Evaluation capabilities. At the same time, the emergence of best-of-breed solutions within SPM will likely help this trend to take shape during 2022. 

Best-of-breed solution application continues to emerge as a leading method of ProcureTech adoption, which leads us nicely into Trend #6

 

Trend #6 ProcureTech Trifecta

It’s been ringing in our ears for the past 5 years, but the best-of-breed approach for building procuretech ecosystems is one we see continuing to make an impact in 2022 and beyond. 

Best-Of-breed procurement tech

From the same CPO Compass survey quoted earlier, it was found that 59% of procurement functions are targeting a best-of-breed approach to technology adoption in 2022. 

This is no real surprise, as there are some obvious driving forces behind the best-of-breed approach to procurement technology. 

This is what we like to call the ProcureTech Trifecta: 

Procuretech Trifecta

  • Point, Niche or Best-of-Breed solution providers are maturing as modern technologies also mature within their capabilities.
  • VC Capital is flowing into the Procurement Technology Category aiding emerging technologies and vendors to grow their business and solution capabilities. We see this as the Growth rate of procurement software from 2020 to 2021 in EMEA was 186% second only to Cyber security, according to Dealroom & Speedinvest.
     
  • The Last leg of the TrifectaYOU…. Procurement practitioners from large multinational companies are fed up with outdated, legacy and homegrown technologies, managing processes and projects in Excel & Sharepoint. When it comes to all-in-one procurement solutions, you’re starting to realize they don’t have all you want. Subsequently, procurement teams are starting to turn towards Growth and Startup Vendors who are often providing best of breed solutions to fill gaps, and create more agile procurement ecosystems.

Moving on to trend #7.

 

Trend #7: Next-Gen Talent

Millennials or Gen Y, as they’re now known, who everyone loved to poke fun at 10 years ago are starting to fill prominent line and global management positions in your procurement organizations.

These Next-gen stakeholders have technology & sustainability running through their veins, but they’re also not easy to keep tied down in one place.New Generation of Talent in Procurement

Procurement is currently in a transitional phase, organizationally; we’re entering the age of the specialist. 

This is particularly true in procurement functions focused on digital, risk management and sustainability. 

The age of the Procurement Specialist

2022 will bring us functional remodelling, where networks of specialists and supporting roles will work parallel, directing traditional procurement staff driven by broader insights and initiatives. 

In the CPO Compass Survey it was found that nearly half of respondents plan on creating new roles & responsibilities during 2022. 

Obviously, the past 2 years have been an odd time to build and motivate teams, having to locate and hire talent with onboarding primarily taking place in a digital context.

Seen in the graphic on screen taken from Work: Reworked, the majority of leaders have found these past years of working from home as something that has boosted productivity, but has had a negative impact on team culture. 

Procurement Specialist: Trends in Procurement

Working from home and digital culture may not be a huge deal for younger talent as there is a certain level of comfort with interaction in a digital context. 

At the same time, solely digital experiences can hinder free flowing group conversation, collaboration and the extra 5. Those (sometimes) very valuable minutes following the adjournment of a meeting, on the way out of the meeting room, or on the walk to the coffee machine. 

This may seem minute, but these can be vital opportunities for passing on knowledge and experience from procurement practitioners who have been at the job a whole lot longer than your Next-Gen talent. 

Drawbacks of a Hybrid or Remote work culture

While next-gen stakeholders may have more inherent technical and analysis skills, your procurement team’s veterans are most likely more well versed in interpersonal skills from years of traditional category management, supplier relationship management, tendering, negotiation, and supplier development. 

This is simply the new normal; working in hybrid formats, evolving from teams of generalists to teams of specialists, learning to knowledge-share in a digital context, and welcoming a younger workforce generation. 

It’s a Brave new world, and that calls for a Fresh New Beginning. 

 

Trend #8 Improved Mobility

Mega Trends such as Data, Technology, Hybrid workforces and Industry 4.0 will increase the need for mobility in procurement teams and solutions. 

We have computers in the palm of our hands. Why wouldn’t we also carry around procurement insights in the palm of our hands?

Technology Trends in Procurement

The appification of our personal lives will continue to spill over into our business solutions in a similar fashion. 

A perfect example of this is two innovations that have been birthed in the past 2 years at Kodiak Hub rooted in customer demands for increased mobility. 

In 2020, KodiakHub launched a mobile application for viewer users called in(VIEW) which gives access to supplier lists, scorecards, notes, data, information and documentation all from the palm of a user's hand.

Improved Mobility Procurement

During 2021, we relaunched our on(SITE) audit app in an iOS mobile format. This was previously only compatible on iPad or desktop, but out of request of increased mobility during on(SITE) visits, we relaunched for mobile users as well. We’ve already seen an upswing of nearly 60% in usage of the application since relaunching in mobile. 

As procurement and sourcing becomes increasingly hybrid and self-serving, you can bet on solutions to follow suit with increasing mobile features. For supplier facing technologies this will likely also increase engagement by making experiences mobile friendly. 

 

Trend #9: Integrated Ecosystems

In 2019, 78% of Procurement Leaders responded to a PwC survey that they planned on investing in at least 3 digital procurement solutions between 2020-2022. 

If this is true, 2020 & 2021 have been 2 years of great selection, implementation and adoption of modern procuretech solutions. This will continue to persist during 2022, as we see the market cap for procurement technology continues to grow.

Integrated Ecosystems Procurement

As the Maturity in procurement team continues to grow and more solutions are adopted, it’s only a matter of time until the focus shifts from adoption to integration. 

Modern technology is built with integration and cross-application capabilities in mind, which will help to aid this evolution of more integrated ecosystems. Open API data architectures with easily integratable REST APIs have become the standard for modern solutions. 

 

Trend #10: Automation Arrives

A whopping majority (83%) of Procurement pros responded to the 2021 CPO Study by ProcureCon, WBR Insights & GEP that less than 50% of their procurement processes are automated (as seen below).

Procurement Automation arrives

As Automation technology continues to mature, and procurement technology budgets grow, it’s possible that we will see a shift towards more automated procurement processes.

Leveraging Procurement Automation

As seen in the 2021 Deloitte CPO Survey (above), Over 50% of High-performing procurement teams, and over 40% of teams labeled as ‘Others’ had already begun testing the waters with Robotic Process Automation or RPA during last year. If the trend continues, 2022 will persist with the application of automated workflows and processes. 

If procurement teams are willing to allow tech to guide and simplify their processes, the opportunities for automation are abundant. Simply put… it’s hard to transform and automate bad procurement processes. 

Change is central to automation. 

Key success factors for digital transformation in procurementThe 3rd Edition of PwC’s 2020-21 Digital Procurement Survey found that “Among the key success factors for digital transformation projects, adapting procurement processes to the chosen solution and investing heavily in change management are identified as major factors, while the choice of technology or integrator is less important”. 

Simply put… A willingness to change will allow you to automate your procurement processes, the technology is just a means to get there!

 

Trend #11 North America follows in Europe’s green footsteps

ESG (Environmental, Social, Governance) and CSR (Corporate Social Responsibility) are areas of massive focus within the European Union and even the broader EMEA markets. 

This is mirrored in the enforcement of the EU Taxonomy. 

EU Taxonomy: Procurement Trends

The EU Taxonomy is one of the many mechanisms that the European Union has put in place to successfully fulfill their promises made in the Grean Deal and meet the energy targets set in both 2030 and 2050.

The Mega Trend, that is Sustainability, is greatly reflected in European legislation, as well as corporate and consumer practices as we spoke about during the first trends during this webinar. 

Historically the EU has passed legislative frameworks that are later mirrored in North America, especially in the United States of America. 

Looking at GDPR as a concrete example. The General Data Protection Regulation, which went into effect in May of 2018, which broadly protects the processing and integrity of an individual's personal data. 

Since, similar Canadian & US state legislation has begun to be drafted, presented and in a few cases passed.

Look for 2022 and beyond to see the same shifts towards a Greener Economy in North America, which will subsequently impact global procurement practices.

How GDPR Inspired Data Protection in North America

Trend #12: Covid Ripple Effect

As stated early in this webinar 66% of CPOs surveyed in Procurement Leaders CPO Compass Survey that they expect supply chain volatility to persist in 2022. 

This will force procurement teams to focus on mechanisms to enhance supply chain resilience.

The COVID Ripple Effect will cause 3 big waves during 2022:

Covid Ripple Effect Procurement

Price Issues  - There’s a good chance that Pricing Issues and market inflation will Continue to persist. We know from a lot of the procurement teams that we speak with on a daily basis that 2021 came with a lot of instability in the market, especially in the sourcing of raw materials. This will likely continue into 2022.

Localization of Supply Chains - The second ripple effect, which Kodiak Hub had listed as a trend for 2021, that will likely continue to be a trend for 2022 is More Localized Supply Chains. As a mechanism to enhance resilience, many procurement teams will look to allocate spend to more local supply networks. Amongst other activities such as increasing risk management, due diligence, and minimizing single sourcing; 36% of CPOs responded to the 2022 CPO Compass Survey that localising the supplier base will be a focus during 2022.

Increased Inventory & Storage - The last ripple effect, Increased Inventory and Storage - or as I like to call it, bunkering down for the winter. After understanding the importance of business continuity and the negative impact of supply shortages, it’s likely that procurement, sourcing and supply chain teams will work in 2022 collectively to increase inventory, warehousing capacities, and reserve supplies.

Crisis breeds change.

The interesting thing about crisis is that it breeds change.

We’ve changed during the last 2 years, and Procurement as a function will change as well.

 This is a Fresh New Beginning. Don’t be afraid to dive into 2022 head on!

 
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