The fast technological evolution means that nearly every aspect of your business is experiencing change in some way, and vendor management is no different. When it comes to procurement and vendor management in the digital age, look out—and be ready—for these emerging technologies and trends.
Trend #1: Implementing a Digital Strategy for Procurement
As businesses start using digital technologies to help make purchasing and business decisions, it is imperative that you have a strategy that keeps up with the emerging technologies. A recent Hackett report surveyed 180 large companies…and the results were surprising. While nearly 85% of executives said they believed that the digital transformation would fundamentally change how services are delivered in the near future (3-5 years), only 1/3 of them have begun to prepare for this shift. It is going to take a paradigm shift from manual to digital technologies to realize maximum value from these technologies. This means evaluating your organization’s objectives and business goals then investing in the infrastructure and processes to make this shift possible.
Trend #2 – Developing a Strategy for Risk Management
Economic and political events have caused the major world economies to be somewhat volatile in the recent past. Trade wars and fluctuating oil prices have left many evaluating how they handle risks so that they can see continued growth. And, of course, the ever-present threat of cyberattacks that put your data at risk is only growing as more and more businesses switch to the cloud. Perhaps no function within your organization is more susceptible to outside risks than managing 3rd party vendors. In fact, according to a cloud survey 69% of responders from 1,200 business and IT decision makers across the globe wrongly assume data protection, privacy, and compliance are the responsibility of the cloud provider. Mitigating these risks requires a solid strategy that is rooted in an understanding of the entire procurement cycle. Make sure you are as protected as you can be at the agreement stage. Conduct War Games to play out your worst-case scenarios with your key vendors. Include all stakeholders, including the vendor, to ensure you have a strategy for if—dare I say when—things go wrong. Also, keep in mind, there will be huge growth in the development of risk management strategies based on the incorporation of artificial intelligence and machine learning technologies.
Trend #3 – Developing an Effective Strategy for Change Management
Within any organization, procurement and vendor management is a huge endeavor, and many of the leaders within the sector say that change management is a major hurdle. Most people think that change management is as simple as informing everyone up and down the supply line of an upcoming change. However, this simplistic view can leave a lot of people feeling anxious about the change and you miss the opportunity to get everyone on board with the company’s vision. Digital technologies can improve processes and bring efficiencies, allowing additional resources to be redirected to your organization’s objective. The challenge is communicating these changes well with both employees and vendors so that there isn’t instant resistance to seeking new business initiatives.
One last note, these trends aren’t the only things changing in the procurement and vendor management world, but these are trends that we will see continue as new technologies emerge and reshape how business is done. Be prepared. Be ready. And, most importantly, be open to new ideas and technologies.