Industry executives and experts share their predictions for 2023.  Read them in this 15th annual VMblog.com series exclusive.

Top Procurement and Supply-Chain Trends to Watch for in 2023

By Alex Saric, CMO, Ivalua

Outside of those in the industry, relatively few people cared about supply chain or procurement until early 2020. Within a short time, supply chain issues became frontpage stories. Since then, the pressures placed upon procurement and supply chain professionals to stand and deliver for the good of the enterprise - and the world - has only grown. Procurement and supply chain teams will remain under sustained pressure from numerous challenges, mandates, and risks. Inflation, recession fears, continued disruptions and shortages, and a world pockmarked with war and political instability will continue to accentuate the need for digitally-enabled and agile procurement teams, resilient supply chains, and risk-centric enterprises.

These are some of the top trends we expect to see in the coming year:

1. Companies will double down on supply chain transparency

Recent supply disruptions, from black swan events such as the Covid-19 pandemic and current geopolitical events, have placed supply chain transparency firmly in the spotlight as organizations need a new level of agility to reconfigure their supply chains. Gaining access to valuable supply chain information will prove a vital source of competitive advantage and help procurement teams contribute to achieving a range of business objectives, in particular improving ESG and increasing supply resiliency.

Many organizations still rely on conventional data sources such as contracts, invoices, and audits to support their supply chain transparency initiatives. Such data is broadly available but insufficient to empower procurement teams to make informed decisions regarding their suppliers, nor does it provide them with the agility they need to respond to future supply chain shocks. In the coming year, we expect to see organizations build the right foundations to achieve the visibility they need to navigate today's complex supply chains. A core focus will be gaining visibility into sub-tier suppliers, which is virtually non-existent currently.

2. Flexible supply chains remain top priority for purchasing decision-makers

Economic disruptions, inflation and talent shortages will continue to occupy the international economy in 2023. Businesses are already adjusting supply chains based on recent shocks, diversifying suppliers, building inventory and near or on shoring. But the dynamic market means any strategy may become suboptimal as conditions evolve. To enable purchasing organizations to react more quickly to disruptive events such as a pandemic or international conflict, they must keep their supply chains as flexible as possible - and be able to switch to appropriate replacement suppliers if necessary. We firmly believe that purchasing decision-makers will give high priority to this task in the coming year and adapt their sourcing strategies and enabling better supplier collaboration and monitoring to enable greater agility.

3. Companies will look to digitize to respond to 2023 headwinds

Technology is essential to enable effective, efficient collaboration (e.g., sharing planned orders and forecasts to improve resilience, designing "greener" products with lower environmental impact, etc.) reacting quickly and in an informed manner (e.g., sourcing new suppliers and providing greater visibility into end-to-end supply chains, including sub-tier suppliers) and freeing procurement staff time for more strategic initiatives.

To achieve this, greater digitization and a greater commitment to process automation will become increasingly important. We therefore firmly believe that executive teams will look to invest more in technologies to ensure that CPOs and their teams are fully equipped to respond to the market conditions and challenges that they currently experience, and the unknown challenges they will encounter moving forward.

4. Transition from words to actions on sustainability

ESG has become a high priority corporate objective in recent years. Sustainability, in particular, is growing in focus, with regulations and legislation around the world coming into force. Nevertheless, most organizations have not set formal policies and have made little real progress. Greenwashing has become common, and consumers and governments are increasingly critical of perceived greenwashing. As a result, in 2023 businesses will place growing focus on making tangible gains on sustainability, reducing carbon emissions, and increasing reusability of their products.

To achieve this, organizations will need to put in place processes and systems to better baseline their current carbon emissions and progress against goals. Additionally, they will need to more effectively and efficiently collaborate with suppliers to reduce scope 3 emissions (those produced by the supply chain), which constitute an average of 70% of a business's emissions.

5. Supplier relationships will grow

The common thread in the top 4 predictions is a shift in supplier relationships to being more strategic, with more of a partnership flair. This trend has already been underway but will accelerate and extend to more suppliers. Scope 3 emissions can only be reduced by the entire supply chain working together to improve. Mitigating the effects of inflation requires the same - a collaborative approach to reduce total costs rather than squeeze suppliers on prices (which can only do so much and hinders other objectives). To manage supply risk, businesses must not just select new suppliers, but better share information.

This requires improved visibility into supply chains and better collaboration. Technology investments will accelerate, especially into Supplier Risk and Performance Management solutions but more broadly into platforms that provide the needed transparency and collaboration across the full supplier lifecycle.

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