Supplier Management in a Turbulent Global Economy

Direct procurement is in the midst of similar technology driven changes as indirect procurement, centered around the implementation of automation and the repercussions of the resultant environment created. However, direct procurement has a tendency to be exposed to complicating factors that may or may not be reflected in the indirect sourcing side of the house. One such factor is the current volatility of the global trade climate in regards to geopolitical instability. Factors such as international economic sanctions, the looming question of Brexit and the economic implications on the Eurozone, the impact of developing economies and growing powerhouses in Asia all impact the supply chain and pricing of direct materials. This bleeds in to the importance of identifying, qualifying, and onboarding new suppliers, which is the most significant source of anxiety for procurement by a fair margin. Interestingly, 8% of respondents cited climate risks as potential disruptors of their established supply chains. While this a much smaller share than the proportion of respondents who prioritize security concerns related to onboarding, it is nonetheless reflective of an adapting reality for global trade.

The establishment of protocols for risk avoidance in sourcing, as well as building adaptability in the supply chain are both solid ways to showcase a value proposition that resonates with key-stakeholders. This will be critical going forward for the >48% of respondents who struggle with the development of their value demonstration to key stakeholders. Partially, this is about identifying the right metrics to put in place. It is also about creating a rapport and dialog with the business that focuses on process optimization.

In the near term, direct procurement will need to keep an active watch over ways that technology will continue to impact the development of their organizations, especially in the sense that it can assist them in their risk mitigation efforts. We will be exploring these factors and others in the full length study ProcureCon Direct will release in June 2019. In the interim, be sure to check out the content currently available in the content center!

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