17 Muharram 1446 - 23 July 2024
    
Sign up for newsletter
Eye of Dubai
Business & Money | Saturday 10 February, 2024 1:20 am |
Share:

The growing importance of procurement and supply chain in today’s economy

As we reflect on another tumultuous year beset by political, economic and social challenges, including ongoing conflicts and an escalating climate emergency, the strategic value of procurement and supply chain in 2024 is self-evident now more than ever.

 

Today, things continue to be just as difficult, and it is the procurement and supply chain profession that is at the forefront of finding solutions, helping organizations navigate each new pressure.

 

Procurement professionals, perhaps more than most, have to be ready to deal with unexpected events and challenges. Day to day, they are on the frontline minimizing risk, reducing volatility, and increasing value and supplier visibility. They have turned the adversities of the “permacrisis” into strengths and opportunities and, having played a crucial role in ensuring business continuity through the unprecedented period of business disruption, they have had to find new and innovative ways of keeping the wheels turning.

 

Supply chain management

According to Statista, as a commercial system of organizations, resources, information and people, the supply chain network forms a complex and dynamic supply and demand network between a multitude of economic agents. The expansion of international trade triggered the importance of supply chain management further. For instance, the global supply chain management market was worth roughly $16 billion in 2020. Over the last decade, the supply chain management software and procurement market expanded more than twice.

 

 

 

There’s never been a more crucial time for companies to utilize procurement professionals, with such an importance being placed on managing costs, risk management and keeping businesses compliant. And as highlighted at the recent COP28 event, there is a growing concern for and need to address sustainable initiatives within supply chain management. This involves ensuring that suppliers operate sustainably and ethically, reducing waste and incorporating environmentally friendly practices into the production and distribution of goods and services.

 

Cost management is under much scrutiny, with high inflation and the huge fluctuations in energy prices over the past year. Analyzing spend data allows procurement professionals to obtain valuable information regarding procurement spend, such as unidentified payments, double invoices and specific suppliers that may be open to re-negotiation. Through effective supplier consolidation, procurement teams can also avoid risks like overspending. By assigning more products to fewer suppliers, companies will usually negotiate better rates, and the cost of freight, handling and other relevant shipping expenses will also be reduced.

 

Software solutions

Software solutions are another great way of managing the procurement process, with the aim of generating savings and saving time. The supply chain landscape will witness a profound transformation with the advancement of technology and it doesn’t stop at software solutions. According to a recent KPMG report, companies need to learn about emerging technologies from AI to distributed ledger technologies, low-code and no-code platforms, and fleet electrification. This will need to be followed by managing the migration to a new digital architecture. The report states that in 2024, 50 percent of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics capabilities.

 

An efficient procurement process provides consistent and dependable connections with suppliers, staff and consumers. Each transaction involves many considerations, including product quality, vendor dependability, customer satisfaction, and corporate reputation, all of which must be monitored and managed to mitigate risk. In a recent survey, we found that 44 percent of those in procurement across the MENA region found that managing risk is their main challenge. In order to minimize risk, companies must focus on compliance. This ensures that suppliers meet standards and company policies, and involves monitoring and evaluating suppliers to ensure they comply with industry standards and regulatory bodies. This reduces risk, but also improves quality, increases transparency and promotes ethical and sustainable sourcing.

 

Read: The global economy in 2024: Déjà vu or breakthrough?

 

Sustainable initiatives

Procurement professionals hold many of the keys that will help organizations unlock a more sustainable and ethical world, and that holds many individual opportunities for those in the profession. And with global supply chain management expected to more than double in size over the next decade, there has never been a more exciting time to be a part of the profession.

 

With a continued focus on managing costs and mitigating risk, and a new focus on sustainable initiatives and streamlining processes with new technologies, I am excited to see the profession’s transformation unfold over the coming years and I am confident that this new era will only strengthen the profession and highlight its importance in the global economy.

 

supply chain

Sam Achampong, regional managing director, CIPS MENA

 

About Sam Achampong

Sam Achampong is the regional managing director of the Chartered Institute of Procurement & Supply (CIPS) for the Middle East & North Africa Region. Sam is a seasoned procurement specialist with over two decades of experience. He possesses a strong grasp over diverse areas; procurement, supplier performance, negotiation, spend management and stakeholder management.

 

Sam has offered his excellent visionary guidance to several leading organizations in the UK and GCC. The organizations include Majid Al Futtaim, Nakheel, Municipality of Abu Dhabi and MTN.

 

Share:
Print
Post Your Comment
ADD TO EYE OF Dubai
RELATED NEWS
MOST POPULAR