March 01, 2018

Challenges that Will Disrupt Global Sourcing

Traditionally, senior-level procurement officers have focused on reducing costs for purchased goods and services and ensuring their timely delivery. However, today’s landscape is increasingly complex, with legal issues, sustainability considerations, and regulatory and ethical concerns. These could impact not only revenue but also brand and reputation.

Over the next decade, industry experts expect that procurement officers will be stepping into more expansive roles in their organizations. And companies that embrace a broader scope for their procurement functions will find themselves in a better position to manage and anticipate risk. 

The challenges listed below have the potential to transform global sourcing over the next decade, and procurement executives who proactively address these will be taking a huge step towards helping their organizations prepare for the future.

  • Risk: Experts believe that procurement risk management will undergo a major shift in the next 10 years, moving away from emphasizing compliance towards adopting a more holistic strategy including total risk exposure, risk transfer pricing, and risk mitigation investments.
  • Sustainability: Procurement will move beyond managing cost towards developing supply chains that create and sustain economic and social value. This shift is expected to accelerate as millennials and younger generations gain further economic status and influence in the workforce.
  • Globalization: Traditional demand and supply models that have shaped global commerce will change as emerging markets assume a greater role in the global economy.
  • Integration: The procurement function will play a greater role in sharing information about internal and external costs throughout the organization, becoming a go-to source for tracking information beyond costs.
  • Innovation: Leading procurement organizations will be a primary channel for finding new ways to create value from a global supply base, including streamlining product development and outsourcing non-core functions.