BearingPoint and Malbek: New Year wishes for the procurement solutions and services marketplace 2022

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As we near the end of our series of New Year wishes (rather than 'predictions') for the procurement, supply and services market for the year ahead (read more about it here), today we hear fromChetan Rangaswamy,US Practice Lead and Partner at multinational management and tech consultancyBearingPoint.

My wishes/expectations 2022:

As we all experienced, 2021 felt like a reset (yet exciting) year after a challenging economic climate in 2020. We believe that 2022 will continue to be an exciting year, full of interesting challenges and opportunities for supply chain and procurement practitioners. For BearingPoint, and our Production Industry clients, we see two significant predictions:

1. Finding each organization’s CO2e baseline and the path to net-zero

Coming out of COP26 and 2021, “the reset year,” firms will take entire accountability to find their path to Net-Zero. Of course, to be accountable, these firms will need to know what they are accounting for in the area of CO2e. The demand to account for this is coming, may it be from the investment community, consumer demands and/or CFO accountability. Many of my contemporaries believe it will come slowly in the coming decade; however, I believe it will smack firms in the face. The demand for an accounting of CO2e will be much like how Sarbanes-Oxley compliance took over the talk track for US Corporates in 2002. The simple fact is, timelines are being set to reduce CO2e with major gates set for 2030 and 2050. Keeping that in mind, you cannot act without knowing what to act on – you cannot manage what you do not measure. For the Production Industry world, energy-intensive sectors, like steel and cement, Scope 1 and 2 will be top of mind. For the rest in the Production Industry world Scope 3 will be front and center. CPOs and CSCOs will be immediately challenged with accounting for their firms’ CO2e contribution — Scope 3 – Value Chain Emissions. We will see discrete manufacturers, process manufacturers, consumer good, food and apparel firms all needing to create a host of transparency reporting – may it be emission labels on products, or various disclosures. This will be an exciting topic in 2022, and a unique opportunity for CPOs and CSCOs to continue to shine in their organizations.

2. Continued shift of attention to Mexico(a North American perspective)

Over the past decade, Mexico has been a top 3 exporter of goods to the US market. After 2021, the reset year, in 2022 we will see Mexico’s exports drastically increase to the US. We have already begun to see changes within Discrete Manufacturing Segment with efforts to decrease dependency on China. This effort has come in the form of sanctions on China and tariffs on goods. We also see pandemic-induced closures and increased freight costs with China. And finally, we are seeing a significant push for shorter supply chains. Mexico has many advantages for manufacturing in comparison to China – particularly with a shared border that spans 2000 miles to the US. Other benefits include manufacturing wages being lower than China and proven industrial competencies in cities like Tijuana, Monterrey, Juarez and Saltillo, to name a few. What does this mean for CPOs and CSCOs? First, will be a renewed focus on identifying, qualifying and developing suppliers/sources south of the border. Another topic, with proximity and access, will be the reconfiguration of supply chains, which will remove costs with speed to market and fewer days in transit. Finally, focus on logistics cost vs. manufacturing cost, particularly with logistics capacity being a challenge for the foreseeable future.

If you are looking for tech to help with your procurement goals for 2022, try out Spend Matters TechMatch℠ to benchmark and shortlist providers

Today we also hear fromHemanth Puttaswamy, CEO and co-founder at AI contract lifecycle management specialistMalbek,a Spend MattersFuture 5.

My 3 wishes 2022:

1. Moving from just-in-time to just-in-case supply chain strategy

For the past three decades, the supply chain has followed a “just-in-time” model for managing inventory. But the new era that was ushered in by the Covid-19 pandemic has made it very clear that “just-in-time” is inefficient and unsustainable. Now we are seeing a movement towards a new trend – “just-in-case” inventory management. My wish for 2022 is to see this trend grow even more with technology helping to solve some of the more difficult questions, like how much inventory is too much? Software solutions can help the supply chain remain resilient enough to withstand the pandemic or other unforeseen disruptions, while at the same time staying cost-effective for buyers. I believe that in 2022 we will see more solutions optimizing for unknown “what-if scenarios” to make sure there is enough of an inventory buffer without sacrificing cost.

2. Smart contracts/blockchain

I believe in 2022 we will continue to see smart contracting and blockchain become more and more of a reality for Procurement. Whether it’s placing the order, tracking the obligations over multi-year deals, or ensuring that each vendor is equipped to handle the obligations in question and can flag issues ahead of time, blockchain will likely be a significant driver of efficiency in sourcing.

3. Universally accepted contract terms

One of my biggest wishes for the year ahead is to see increased movement towards establishing universally accepted contract terms. Many have called for sourcing professionals and vendors to come up with standard terms that are a win/win for the whole industry as well as buyers and suppliers. For every part of the contract equation there needs to be a balance. Standard terms that can be re-used in a plug-and-play fashion could help promote fairness that produces winners on both sides and reduces overall negotiation time.

Thanks to BearingPoint and Malbek, and look out for our final solution and services provider wishes/predictions tomorrow with an overall take on the series from our analyst to come.See more vendor predictions and wishes here.

And if you are looking for procurement services providers to help you with your 2022 decisions, look no further than our Procurement Services Market LandscapeDirectory.