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5 Key Procurement Trends That are Crucial for Procurement Organizations in 2019

Top Procurement Trends for 2019

With the procurement industry experiencing continual transformations, companies are facing the dire need to look for new ways to assess, increase, and monitor the efficiency of their procurement process. They are now expected to devise an effective procurement plan that can enhance their sourcing and procurement process.

However, doing this is it is not as easy as it appears to be. Companies are driven by different environmental and social risks and require transparency in their supply chains. As a result, more comprehensive methodologies need to be embedded in the procurement process and to ensure sustainability.  At SpendEdge, we understand that procurement is not just limited to minimizing costs or mitigating risks. Therefore, in this blog, our team of experts has highlighted the key procurement trends that are going to impact businesses in 2019.

Have you ever thought why some procurement organizations fail to keep up with the demands? It’s because they fail to predict future procurement trends. Get in touch with our experts and know how major procurement trends can affect your business. 

Top procurement trends for 2019

Surge in digital technologies

Digital technologies such as blockchain, cryptocurrency, cloud, and artificial intelligence (AI) are among the top procurement trends for this year. One of the key reasons behind the emergence of digital technologies is the willingness of companies to make the digital business a top priority. Companies are now finding significant automation potential in transactional activities and strategic tasks and bodes well for most businesses since it will enhance their efficiency.

Cybersecurity threats

Although digitization is taking a leading edge, the growing amount of data is leaving the entire supply chain vulnerable to cyber threats. This is the reason why cybersecurity is considered to be one of the major procurement trends for 2019. Organizations can adopt various strategies such as limiting supplier access to IT systems and ensuring compliance to enhance their procurement process.

Focus on reducing indirect spend

Indirect spending has always been a prime concern for procurement organizations. It involves a large supplier base and a comprehensive governance process to avoid leakages, contract terms, and paperwork.  Over time, these factors become so complex that organizations start losing out on crucial opportunities. Therefore, organizations have started looking for automated financial and tail spend management solutions that can ease out the complete process for them.

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Prominence of big data

Disruptions in the supply chain can lead to increased costs, labor unrest, and customer service challenges. Big data can provide critical insights required for predicting events or disruptions. Businesses just need to collate data points from all sources and align them to their business operations to make the most of big data solutions. These benefits are making big data one of the main procurement trends for 2019.

Enabling sustainable procurement

With procurement functions shifting beyond cost management, procurement organizations have started employing sustainability as a lens to identify environmental and social risks. This is because environmental risks such as resource and raw material scarcities are increasing. Also, risks associated with social factors are becoming more visible and less acceptable as the younger generation of consumers is entering the prime purchasing age. Analyzing procurement trends will help businesses in sustainable procurement and entailing performance-based metrics into each phase of the procurement plan.

Analyzing procurement trends helps organizations to keep themselves prepared for the changing market dynamics. However, it requires thorough market knowledge and expertise. Request a free demo and know how our experts can guide you in analyzing the recent procurement trends.

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The Future of Procurement: What has 2019 Got in Store?

Advancements in technology, business practices, and consumer demands have brought about a wave of changes in procurement. With time, procurement’s role in business is changing. In most organizations, procurement is now considered a strategic contributor to an enterprise’s growth and performance. Furthermore, the rise of new procurement trends has resulted in considerable changes in the procurement functions. There are several revolutionary procurement trends that we see today, but it is also important to recognize, acknowledge, and perhaps even leverage them as we work to improve the entire procurement cycle. According to the industry experts at SpendEdge, here are some of the top procurement trends that all set to take off in 2019:

Procurement trends 2019 

Digitization and blockchain

Blockchain is one of the hottest topics across various industries right now and is soon set to become one of the most sought-after procurement trends. Blockchain technology is believed to play an integral role in shaping the transparency of a supply chain. This technology would make it possible to easily share and transmit information in a safe manner across the supply chain. Furthermore, consequent to blockchain’s increasing influence, there is a predicted rise in digital adoption and use of the cloud.

Talent shortage

One of the procurement trends that companies can expect in 2019 is a shortage of qualified talent. Through 2020, the jobs in procurement and logistics are excepted to shoot up by over 20%. Some of the key factors contributing to this include – changing skill requirement, aging workforce, lack of development, and the common perception that supply chain jobs lack excitement. As the role of procurement is changing in most enterprises, the requirement for additional skills sets such as soft skills, critical thinking, and creativity are also growing.

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Corporate social responsibility (CSR)

Over the last few years, CSR has become a procurement criterion in its own right. The rising popularity of CSR among procurement organizations is expected to make it one of the key procurement trends in 2019. This trend is particularly noticeable in the public sector as public purchasing policies are based on European directives, and in large businesses with more than 5000 employees as their responsibility is scrutinized more closely and their larger workforces allow for it too.request proposal

Cybersecurity

In the past few years, the cyber-attacks have skyrocketed at an alarming rate in the U.S. To make it worse, cyber-attacks are growing in size, sophistication, and cost. So, there is little doubt that such malicious practices will continue to plague organization in 2019. In response to the threat, procurement teams must aggressively identify ways to protect the sensitive personal and financial information belonging both to their own organizations and to their suppliers.


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Top 5 Procurement Challenges Impacting Businesses in 2018

Today, no one can say that procurement professionals and sourcing teams have it easy. They face daunting challenges and struggle to stay abreast of all the regulatory changes happening around the globe. Procurement, for many, is an undervalued operation that impacts every facet of your business.  While there are many procurement challenges, each organization will face its own unique set of challenges. In this article, we’ll talk about some of the common procurement challenges that companies will face while sourcing goods and services this year.

TOP PROCUREMENT CHALLENGES


Effective risk management

risk management2Procurement challenges are an inherent part and parcel of every business process. Each business faces them at some point but managing them effectively is something that every procurement team struggles to do. With the focus shifting towards business expansion, it is no longer good enough to engage with tier 1 suppliers. Implementing an effective risk management strategy at the very start of the procurement process, therefore, becomes a necessity for companies looking to expand their boundaries. But before any company thinks about engaging with tier 2 or tier 3 suppliers, implementing risk mitigation strategies like analyzing the risk of each supplier, comprehensively understanding their supply chain, and putting backup plans in place in case things go wrong become essential.   

Read on to know more about procurement challenges.

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Changing Procurement Trends in the Mining Industry 

Mining companies have spent several years ruthlessly reducing costs. On the bright side, this relentless focus is gradually translating into enterprise-level productivity improvements, with virtually all of the significant players targeting billions of dollars in cost savings. The past few years have put tremendous strain on the industry. Demands for efficiency have skyrocketed, while the means to invest in new programs to support such efficiency have often fallen away with prices. New technology trends in the mining industry, in the form of mining software and innovations in water resilience, are offering exceptional opportunities for efficiency gains and are worth investigating for adaptation across the sector. Apart from this, there are several procurement trends that the mining industry has been witnessing in the recent years. Here is a quick look through some of them:SE_Demo2

Increased process automation

In the constant push for cost efficiencies and higher productivity players in the mining industry are re-examining processes and how they manage every aspect of their operation. They are also focusing on procurement trends, which include striving for greater visibility to gain an in-depth understanding of how they work and their workflow processes, in particular with contractors. The automation of procurement processes, which is considered as a significant cost saver due to its ability to overhaul the traditional way of managing supplier contracts and operations, is a more efficient way to improve governance, visibility, and control over contracts in real time.

Rising cost-cutting measures

Maximizing savings through procurement has always been of great importance in the mining industry, and this is one of the procurement trends still prevailing in the sector. As it continues to come out of a downturn, many companies in the industry are looking for new and more effective ways to shed costs further to improve operational efficiency in an unstable market. Furthermore,  finding new ways to enhance savings through procurement contracts can be challenging in a climate, which leaves many mining companies without the necessary budget to invest in new technologies or resources needed to meet KPIs. Hence, it is advisable for companies in this sector to tap into the expertise within the existing business to improve results. 

Supplier relationship management

The change in the economy and ongoing uncertainty around the future of resource prices has caused many companies in the mining industry to look at existing supplier relationships and contracts and reconsider if they are the best option in the current market environment. Also, the cost is not the primary factor influencing companies to seek new suppliers. Companies in this sector are increasingly considering factors such as quality of the products or service as a critical factor. This indicates that, while many suppliers in the mining industry are trying to differentiate themselves currently only based on cost, it is clearly not the determining factor for most and other qualities are considered more critical to business.


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Trends Influencing Procurement in the Automotive Industry

The automotive industry is one of the most global, interrelated, and complex sectors that exists today. Furthermore, being the most innovative sector, intense competition is at the core of the automotive industry. In fact, it would be right to say that the success of both the manufacturers and the suppliers in this sector is solely dependent on their collaborative behavior against the customer’s need. Automated processes and in-time and in-sequence supply are incredibly crucial for the survival of market. Lately, the automotive industry has been facing the heat from increased transportation costs, rising costs of production, and the hassle of finding a reliable transporting service. These factors have put companies under increasing pressure of procuring quality raw materials and products at the lowest prices to bring their balance sheet on the track. Also, the automotive industry relies heavily on having an efficient supply chain and procurement process. Thousands of parts and components go into making a car, motorcycle, truck, or tractor and no automobile manufacturer has the capabilities to produce all of these components in-house. We have identified three key procurement trends in the automotive industry:SE_Demo2

Active supplier diversification

In the recent years, the automotive industry has been facing severe risks due to factors such as supplier insolvency and financial distress. Though this has clearly been a two-way street, organizations are far more prepared to respond to the issue of supplier diversification and risk management now than ever before. This is one of the critical reasons why automotive companies have begun adopting latest procurement trends such as supplier diversification. This involves analyzing and widening the company’s supply base when sourcing key categories and components, also it is essential to keep a close watch on the existing suppliers from a business and financial viability point of view. 

Rise of fuel-efficient vehicles

Another key factor influencing the procurement trends in the automotive industry is the rising number of fuel-efficient vehicles hitting the market. With oil prices in a continuously volatile state and political concerns about foreign oil dependencies, the emergence of hybrid vehicles using alternative fuel technologies has been gathering pace consistently.  This is expected to ultimately play a critical role in continuing to support product development teams in driving innovation and development – essentially a market facing impact from what has traditionally been a ‘behind-the-scenes’ department. Primarily, the identification, monitoring and procurement of these new technologies, the identification and qualification of suitable suppliers, and the quality monitoring will be a vital role of the progressive procurement professional. Fundamentally, this will require global coverage, constant monitoring, and ongoing technology assessments to ensure procurement has a seat at the innovation table

Corporate social responsibility (CSR)

The ever-increasing demands for CSR, especially among global players, and the responsibility of ensuring these requirements are met and managed across the supply chain will be ensured by the procurement teams. Indeed, buyers have started focusing on understanding the risks involved across the supply chain from monetary susceptibilities, product quality issues through to service performance considerations. Also, we are already seeing buyers across continents work to ensure that their critical supplier’s measure, manage and reduce the carbon footprint levels of their current supply chains. To establish themselves as a progressive member of the corporate executive team. Most companies are likely to adopt activities for ensuring social responsibility ‘compliance.’


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Top Trends in the Industrial Robots Market – Influences in the Future of Automation

The importance of industrial robots is ever-increasing in the manufacturing sector as more and more companies resort to automation. These industrial robots not only reduce the effort required from humans but also operate in conditions and environment that are hostile for humans to work. Additionally, these machines are so technologically advanced that it can produce a large volume of output without any errors. According to a recent report from SpendEdge, the market for industrial robots is expected to grow at a rate of over 12% each year, owing to increasing industrial automation along with high demand from the automotive sector.              Request Free Sample

Trends in the Industrial Robots Market

Increasing Adoption of Collaborative Robots

In an industrial setting, robots are traditionally kept in cages, like a tiger in a zoo, for the safety and protection of the workers. However, in recent times, collaborative robots, also known as cognoscenti, are increasingly being adopted in the industrial robots market. Collaborative robots come with enhanced safety and security features such as embedded force sensors, speed adjustment, and smooth and round arms. It can also be used by SME as no programming is required and costs relatively less than conventional robots, which ranges around US$25,000-US$30,000.

Emergence of Robotics as a Service

Traditional industrial robots are very expensive, costing companies on an average of US$60,000-US$80,000. This hinders the adoption rate among SMEs. To tackle such issues Robotics as a Service has been on the rise, which provides rental service on an hourly or activity basis. Consequently, companies do not have to spend a significant amount of capital on procurement costs associated with industrial robots.

Growth of Mobile Industrial Robots

Conventional industrial robots such as SCARA robots are fixed to a specific location and lack mobility. It also leads to underutilization of workspace and high human mobility, which increases the overall costs associated with the robots. Mobile robots such as UAVs, UGVs, polar robots, and autonomous guided robots are capable of navigating in operational facilities and eliminates additional setup costs. For instance, these robots can be used in painting an aircraft at a much faster rate than stationary robots.

Read more about the trends in this market along with supplier landscape, pricing strategy, articulated robot manufacturers, automation robotics manufacturers, sourcing strategy, and procurement best practices in SpendEdge’s upcoming report on the global industrial robots market.

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Top Challenges in the Bunker Fuel Market

The volume of global trade is increasing at a sharp rate and ships are still the preferred mode of transport for freight and cargo. Bunker fuel takes over precedence in the area of freight shipping as they are the primary source of energy to fuel large vessels. Various grades of bunker fuels are available to fuel ships, where the highest grades such as marine diesel oil are used in navy vessels, boilers, and furnaces and lower Bunker C is used as bunker fuel. Although there seem to be good growth prospects for bunker fuel market, suppliers are facing various procurement and supply chain problems.Request Free Sample

Challenges in Bunker Fuel Market

Regulations Pertaining to Bunker Fuel

Currently, this fuel oil is one of the most polluting fuels available in the market. The fuel obtained from crude oil distillation has the highest amount of impurities and carbon producing over 3,500 times more pollutants than gasoline. To control such pollution, several organization such as IMO and EPA have imposed stringent regulations on the emission of such pollutants.

Volatility in Crude Oil Prices

Bunker fuel prices are highly correlated with crude oil prices. The political instability in the Gulf region and shale gas revolution in the US have resulted in price volatility in bunker fuel market. The suppliers and the buyers in the market are looking for alternative fuel sources such as solar, wind, and LNG to offset this price volatility.

High Toxicity of Bunker Fuel

All grades of bunker fuel are highly hazardous and adversely affects human health. For instance, Bunker C may release or contain chemicals such as hydrogen sulfide, which can prove fatal to humans if inhaled at a certain concentration. It also contains several other chemicals that can irritate eyes, skin, and respiratory system. To combat this problem authorities, certain safety protocols have been implemented, which increases the operational cost and compliance costs for the suppliers.

Constant Occurrence of Spills

Bunker fuel is a dense, viscous fuel often produced by mixing fuels HFO and LFO. HFO is a persistent oil and only 5%–10% evaporates within the first hours of a spill while the rest stays in the water, endangering aquatic life. Constant occurrence of spills forces the buyers to pay hefty penalties and also interrupts their operations.

Read more about the challenges in bunker fuel market along with key suppliers of bunker fuel, procurement best practices, bunker fuel price history, sourcing strategy, and procurement insights in SpendEdge’s upcoming report on the global bunker fuel market.

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Game-Changing Trends in the Computer Aided Design Market

Long before computer aided design (CAD) went mainstream, any design or prototype development work had to be done manually. It was a tedious and time-consuming process which had a high rate of errors thereby increasing the design cost. The advent of computer aided design came as a boon for all designers, engineers, architects, and artists. The CAD software has almost replaced all the paper-based drawing. Since it simplifies the entire design process by digitizing it, even small-scale designers are making use of free computer aided design software to get their task done. Although the CAD market is growing at a steady rate of 7%, the emergence of new technologies is expected to drive the widespread adoption of such computer-aided technologies.

Request Free SampleTop Trends in CAD Market

IoT Capabilities in Industrial Applications

The increasing adoption of IoT in industrial applications is increasing accuracy and efficiency of machines. The rising adoption of IoT in industrial machines enables the designers to get direct insights about the performance of designed components and thereby aiding them in the innovating more compelling designs. For instance, Fusion Connect, a non-coding IoT cloud service by Autodesk, leverages connection of the machines with the CAD software package for enabling better analysis, insights, and management of products.

VR Capabilities in CAD

VR technology can be looked onto as an evolved form of CAD designs. While CAD provides the design blueprint, VR technology can recreate the blueprint in the real life-like virtual projection of the object. Additionally, it enables designers to scale various components of design concerning other virtual objects. The VR technology also significantly reduces the cost of production involved in the prototyping stages.

Emergence of 4D CAD Software Applications

4D CAD or 4D BIM is a big leap in the field of computer-aided technology. Such blueprint drawing software enables integration of scheduling tools in the computer aided design software application itself. Such software application improves the decision process by facilitating rapid prototyping and assisting in the analysis of alternative schedule proposals.

Increasing Industry Consolidation

The global CAD market landscape is witnessing dynamic shifts due to constant innovation in techniques and technology. In a bid to remain competitive, CAD vendors are entering into mergers, acquisitions, and integrations with other organizations. Such agreements help the current CAD vendor to acquire the expertise of other existing vendors and create unique competencies and improve their core CAD platforms. For instance, Autodesk has acquired numerous small players to integrate new technology and knowledge assets in its offerings.

Read more about the top trends in the computer aided design market along with key suppliers, supply market landscape, strategic purchasing, pricing trends, and procurement insights in SpendEdge’s upcoming report on the global computer aided design market.

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Top 5 Trends in Digital Procurement

Procurement activities comprise a significant chunk of an organization’s cost and have a significant impact on the cost of the final product. As a result, organizations are looking for cost-saving measures to remain competitive in the marketplace. Digital procurement offers organizations a streamlined view of all their procurement process by eliminating redundant procurement steps and increasing the procurement process efficiency.

Organizations adopt digital procurement for the benefit it provides such as reducing the purchasing price, optimizing the procurement cost, bringing about internal process optimization, securing supplies, minimizing warehousing costs, and maintaining quality guidelines.

Here are the top 5 trends in digital procurement:

Automation in Procurement:

Automation technologies such as source-to-settle processes, procure-to-pay, e-procurement, and contract management have get in toucheliminated the need for constant human intervention by automating sourcing, procuring, and invoicing processes. With savings in time, even non-procurement professionals can handle the process, and help procurement professionals utilize their time in procurement strategy making. Requisition approvals, automated MRO re-orders, supplier profile maintenance, and purchase-to-pay (P2P) are among the most automated processes in digital procurement

Data Analytics in Procurement

Big data and analytics help the procurement organization to unlock the real value of data by gathering in-depth insights. Big data analytics help save significant time and cost for the procurement organizations by using predictive analytics, trend analysis, risk management, and category management. Applications such as vendor evaluation, spend analytics, and demand forecasting are some of the most popular applications to use data analytics in procurement.

Cloud based Digital Procurement for Small and Medium Sized Businesses

Digital procurement is certain to benefit the procurement organization, but it does come with a hefty price tag? Since digital procurement is moving from being a cost saving tool to a business essential, small and medium sized businesses are also finding ways to reap the benefits of digital procurement. Cloud-based platforms are gaining popularity among these organizations for their budget-friendly attribute.

Dedicated Procurement Systems for Large Organizations

Traditional digital procurement systems were designed with a one-size-fits-all mindset. But with exponential growth in transaction volume and increasing need complexity of each business and suppliers, they demand customized offerings out of these systems. For process efficiency and optimization, large organizations are shifting towards developing their own custom platforms.

Outsourcing it to the Experts

E-procurement isn’t one of the core competencies for many of the organization and may lack expertise in procurement, supply-chain, and logistical challenges. Many organizations now seem more reluctant to leave the complex digital procurement process to the experts and instead prefer outsourcing all their processes to ensure the smooth operation of the business.

Digital procurement is gaining popularity among procurement organizations with an increasing adoption rate. The future for digital procurement would be data driven, and organizations would have to adapt to a high level of automation so that their experts can focus their time on value-added strategic tasks.

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