Supply Chain & Procurement Outlook 2022

GEP Outlook 2022: Supply Chain and Procurement Report

The turbulence of supply chain disruptions, labor shortages, and geopolitical barriers has, over the past two years, tested the strength of well-established processes, systems, and networks. Legacy systems and networks often faltered, and at times, failed.

Many businesses were not equipped to handle the crisis as recent history had provided a reasonably stable set of conditions.

Naturally, supply chain and procurement operations were optimized within these boundaries, and enterprises benefited from driving down significant costs: Look no further than just-in-time inventory models, dependencies on low-cost ocean freight, and pricing models that excluded carbon impact.

Now, even though the fog of the COVID-19 pandemic, it is becoming clear that the rules of the game have changed - in foundational and permanent ways.

Companies that focused on resiliency and flexibility have been able to survive the storm. For those that want to thrive, it is time to take action at a more foundational level to not get caught out again.

GEP has over 20 years of experience managing more than $300 billion in spend annually for leading global enterprises as well as guiding these organizations through transformational change in supply chain and procurement operations. With its team of accomplished consultants and technology advisors, GEP offers perspectives to help business leaders thrive in 2022 and beyond.

The GEP Outlook 2022: Supply Chain and Procurement report, provides insights and strategies to help leaders navigate an environment of constraints and opportunities, of inflation and growth, disruptions, and digitalization.

We at GEP believe that the digital revolution that took place during the pandemic would, under normal circumstances, have taken three to four times as long. Such an acceleration demands forward-looking and transformational thinking to not only keep up but also stay ahead.

It is time to rethink the rules of the game.

GEP Outlook 2022: Executive Summary

The conversation once limited to the four walls of supply chain and procurement offices has now entered living rooms across the world. Supplier resiliency and demand forecasting feature prominently in boardroom discussions.

The pandemic and its resultant disruptions impacted every household and business, and the spotlight is now on the criticality of networks, systems, organizations, and people who keep supply chains moving.

This period of global attention and, in some instances, notoriety represents an opportunity for the supply chain and procurement functions to transform and elevate their roles.

The road to normalcy is not straight

Economic recovery has been fragile, chaotic, and largely inequitable. Global supply and labor movements remain highly disrupted even amidst record-setting levels of corporate spending and M&A activity. At a more foundational level, businesses are rethinking pricing strategy, product portfolios, and supplier network design to contend with an environment of sustained volatility and supply scarcity.

Supply chain and procurement leaders must balance analytical reasoning and creativity.

Analytical reasoning: An environment of rising inflation, high competition, and bloated asset prices demand rigorous ROI evaluations to ensure judicious spending.
Creativity: Constrained supply and geopolitical barriers require innovative supplier and network solutions. Regionalization is one of the more powerful forces we anticipate will shape supply chains in 2022 and beyond.

Supply chain and procurement functions will need a combination of strong talent and intelligent digital tools to connect the dots as organizations make critical, long-term business decisions.

Transformations must encompass the entire value chain

We believe strongly that supply chain and procurement enterprise capabilities must evolve significantly in 2022. However, internal changes alone will not be enough. Supply chains encompass an ecosystem of customers, suppliers, third-party manufacturers, logistics providers, and technology partners, among many others. To thrive in 2022 and beyond, enterprises must build and hone their capabilities to manage the overall value chain.

Developing value chain management capabilities will shine a spotlight on planning, a weak point for many companies that remain dependent on legacy systems and manual processes. Rapid modernization - of both talent and technology - will be essential to stay competitive.

Another fundamental element of modern value chain management is enhanced visibility. In 2022, leading enterprises will combine performance monitoring data from their network of partners with advanced predictive capabilities to enable timely, informed business decisions.

Supply chain and procurement leaders must prioritize people, partners, and the environment

Most Fortune 500 and Global 2000 companies have clearly articulated their vision for fostering talent, building diversity, and protecting the environment. However, enormous gaps remain between this vision and on-the-ground realities.

Businesses will start bridging this gap in 2022; for example, through an increased focus on measuring the monetary value of the impact of ESG. Digital tools will enable quantification, but the real challenge will lie in countering conventional thinking to ensure business decisions are made based on the true total cost.

From a human resources perspective, the Great Resignation is an opportunity for companies to rethink their talent acquisition and management approach. The year ahead will see procurement and supply chain functions in leading organizations play an active role in defining strategies that will help hire talent from a global network made more accessible than ever through rapid digitalization.

Conclusion

In 2021, supply chain and procurement leaders learned that recovery can be fragile and systemic challenges will persist as the world adapts to a situation where the pandemic lingers on.

The conditions - geopolitical, environmental, societal - under which we enter 2022 have evolved in very fundamental ways over a few short years. The year ahead will reward those supply chain leaders who meet change head-on, are ready to explore the new opportunities it brings, and prepare to meet it by undertaking bold transformational initiatives, investing in digitalization, and rethinking their talent management strategies.

Dealing with Disruption and Uncertainty

Get actionable insights to effectively deal with disruption and uncertainty. Learn strategies that can help your business thrive in the new normal. Download the report now.

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