2018 was a volatile year across the globe, marked by falling stock markets, foreign trade skirmishes, natural disasters and tech privacy dust-ups involving some of the industry’s biggest players.
What’s in store for 2019? Chances are, more upheavals in certain sectors. But I see opportunities for positive and even inspirational developments in other areas – like positive impact from technology, an increasing focus on sustainability, climate change and plastic-free oceans, and even the labor market, including the role for procurement. Here are some things to look out for in the coming year.
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To date, procurement has been relatively slow in adopting digitalization. Even robotic process automation (RPA), which can help speed basic tasks like invoice matching, is still mostly unknown in procurement. In 2019 I expect to see significant growth in the application of artificial intelligence and machine learning for monitoring data, which will help generate insights to drive and define decisions and strategy.
Prepare for more risk
The year ahead has a great many unknowns, ranging from Brexit, which could have a moderate or very large impact depending how it is finally executed (or even stopped), to the volatility of economies and the world stock markets. Many tech companies have lost billions in value, and we are dealing with continued trade tensions. While there are some positive developments, there is still bound to be considerable change in 2019, and that can lead to risk. Despite this, there is an incredible opportunity to leverage emerging technologies and intelligent spend management. This presents a compelling case for companies to implement a more agile supply chain environment, execute their day-to-day operations carefully and develop strategic long-term plans.
Role of the CPO will expand
The role of the chief procurement officer (CPO) will continue to change as automation tames more operational and administrative tasks. Procurement leadership will focus more on helping to drive value with lines of business through closer cooperation with their stakeholders, from lines of business to suppliers to the internal workforce. In this increasingly collaborative world, CPOs will continue to raise their visibility at the same time that they play an increased role in delivering value.
Don’t expect a blockchain revolution
For procurement, 2019 will be the year commentators stop predicting a blockchain revolution. Bitcoin and cryptocurrencies are not the future of transactions. With Bitcoin you can perform only seven transactions per second versus thousands using conventional financial tools. Consider how many people come to your site or your store and ask yourself whether blockchain could handle that traffic! The key point of interest for procurement is not cryptocurrency; it is blockchain as a technology, which is really best described as a “distributed ledger.”
That is basically a technology for enforcing trustworthiness. However, even distributed ledger technology has been oversold. Some of the early commercial attempts to build a service or system on this technology have not been that promising. The fact is that for almost all purposes, ERP systems and existing methods of business are perfectly fine and very cost effective. The use of distributed ledger adds complexity and time to transactions that can only be justified in a few cases, for example in ensuring that diamonds or raw materials are not sourced from conflict regions.
Climate change report will be call to action
Recent reports underscore evidence linking human activity to rising temperatures. The evidence presented to us in the real world of dryer summers in Europe, flooding and hurricanes around the globe validate this. These facts will spur more action from governments and the public will grow more supportive. Procurement organizations must be ready to work with risks that climate science may mandate in daily operations while also working to be more resilient in the face of unpredictable weather changes for their global supply chains.
Organizations will take a leadership position on digitalization
For a few years, the headlines surrounding digitalization have too often been negative; forecasting job losses and perhaps even social unrest as a result of ever-more sophisticated automation. However, as with economic shifts in earlier times, all evidence points to digitalization and automation as a positive. Companies are going to recognize the truth in the World Economic Forum prediction that 58 million new jobs will be generated by this new application of technology. That will be good for companies, employees and society.