The last 30 years have been marked by an era of unparalleled economic growth and prosperity in the West. Key factors like unrestricted trade, low-cost labor, affordable transportation, relative peace in geopolitics, and easy credit have been the pillars supporting this growth. But now, in the early 2020s, these pillars are showing signs of crumbling, and the global economic advances are unwinding.
With rising interest rates making easy credit scarce, and geopolitical instability on the rise, particularly with Europe grappling with war and certain leaders challenging the post-Cold War order, the landscape is shifting dramatically. The West is taking strong economic stances against Russia and implementing policies to curb China's growth.
The implications of these changes are profound, and it's crucial for CPOs (Chief Procurement Officers) to recognize and respond to these shifts. Here, we will explore Ardent Partners' Procurement Predictions for 2023, and what they mean for the procurement landscape.
Less Remote, More Office
The remote working trend is expected to reverse, with more businesses emphasizing office presence. How this affects procurement strategies will be an essential observation for the future.
Political Conflict Will Affect Economies
Multiple economies may suffer due to the increased political conflict and violence, leading to greater uncertainty and volatility in procurement activities.
De-Globalization Accelerates
Cross-border trade, investment, and immigration will slow down, making international procurement more challenging.
The Slow Unwinding of Global Supply Chains
Onshoring will increase, but it won't be a quick process, potentially leading to disruptions and requiring careful planning.
Inflation and Savings Challenges
Inflation is predicted to remain unabated, and savings will continue to be a top priority for CPOs, emphasizing the need for cost-efficiency in procurement.
Sourcing, Spend Visibility, and a Soft Landing for the U.S. Economy
Better sourcing and visibility into spending will be essential for CPOs, while the U.S. economy is expected to have a "soft landing," possibly easing some economic pressures.
The Rising Importance of Capital, Partnerships, and Category Management
With the increasing cost of capital, procurement becomes more vital, partnerships will drive holistic processes, and category management will be a top priority in 2023.
ESG, Digital Intelligence, and AI
Sustainability initiatives will continue to be crucial, and the pursuit of digital intelligence will become a key imperative for CPOs. AI could even be named "Time Magazine's Person of the Year."
As the world faces unprecedented economic challenges, the role of procurement is becoming even more critical. The predictions for 2023 offer insights and guidance for CPOs as they navigate these turbulent times. By recognizing these trends and adapting strategies accordingly, procurement leaders can position themselves for success in the face of uncertainty.
The 2023 agenda must be robust and flexible to meet these challenges, ensuring that the organizations remain resilient and thrive in the new economic landscape.
Read more about 2023 procurement predictions!