by Malcolm Harrison, Group CEO, CIPS
Ethical sourcing, technology and Brexit are just some of the challenges facing the supply chain and procurement profession.
As human beings, we have a strong drive to be inquisitive and wonder what the future holds for us. Good procurement professionals are inherently curious, and whether on a business, economic, political or personal career level, we want to know how new scenarios will affect these aspects of work and life. As a rule, no one welcomes uncertainty. Ambiguity in business can cause panic, but procurement and supply professionals who face these challenges all the time have increasingly learned to adapt, plan and find solutions for their business. Good procurement and supply professionals thrive on dealing with uncertainty and overcoming obstacles.
The procurement profession as it is now is not what it once was. The skills our professionals acquire have moved beyond traditional procurement competences and are becoming more relevant and sought-after in broader business environments. The context in which professionals are working continues to change and new responsibilities make them much more focused on mitigating risks in supply chains, though the core activities of supply continuity and delivering value for money remain.
So what are these new pressures on procurement? News travels fast and bad news even faster, so understanding the impact sourcing decisions have on reputation is high on the list. Food scandals and product recalls in recent years have shone a spotlight on the importance of effective and proficient sourcing. Implementing good procurement and supply chain practices will protect reputation, human health and safety, so should never be underestimated. Consumers and investors are increasingly looking to buy from and invest in ethical businesses, and this movement with continue to gain momentum.
Ethical sourcing has many definitions. It is generally recognised to mean the prevention or identification of any criminal activity relating to modern slavery, corruption, bribery, increasing transparency and sustainability in supply chains, and is intended to minimise any negative impact on the environment and society as a whole. Of course, business must still make a profit, but ethics and commerciality make good bedfellows. Ignoring the ethical agenda will result in a detrimental impact not just on organisations but society more widely.
Another challenge we could well be facing in the not so distant future is an increase in trade tariffs. Protectionism may have some advantages for some countries in the short term, but the global economy, which is already facing challenges, will be weakened further in the long run. Protectionism can drive up costs for everything, and as digitalisation paves the way for more interconnected supply chains, the world of business is getting smaller and distance is not the barrier it once was. A supplier from across the world is only a Skype call away, and the vital imperative of the right goods, right ethical standards and value across the supply chain should be uppermost. Politically-instigated tariff barriers will not help.
As sociopolitical movements continue to impact us, procurement must stay abreast of these developments. No one could have failed to notice the effects that the UK leaving the EU is having and will have on supply chains across Europe. This is probably the most challenging time the profession has faced for several decades, as the rulebook on trading with Europe is ripped up. CIPS research has found that the preference for just-in-time supply chains in some sectors has been cast aside, and sourcing managers are stockpiling again. Our recent Brexit survey found 43 per cent of UK supply chains managers are stockpiling in the event of not just no deal, but mitigating against any potential disruption post-Brexit. A lack of warehousing space intensifies the pressure on sourcing strategies.
The procurement sector is increasingly aware of the need to invest heavily in technological solutions to remain at the forefront of the industries it serves, to remain efficient, productive and joined up. A digitalisation programme means redefining models, functions, operations, process and activities by leveraging the benefit of technology to build an efficient business environment where gains are maximised and costs and risks are minimised. If artificial intelligence and automation take on many tasks of the profession, this will result in a greater need for strategists and future thinkers, analysts and creatives as the sourcing landscape because more technical, more challenging, and more exciting.
Professional procurement and supply knowledge and guidance available on the CIPS website.