The European Leaders Network recently ran an interesting article entitled The Key Trends in Sourcing Impacting Procurement Today that summarized the key trends in the Sourcing Industry for 2007/8.
According to the author, the following market trends are currently impacting the way procurement professionals source goods and services.
- Increased multi-sourcing
Mega-deals are on the decline and niche players are on the rise. Value-add is slowly overtaking the ‘monolithic empire’.
- Greater significance to governance
The skills and disciplines associated with good governance are starting to be recognized as the key to sustainable relationships with their associated benefits.
- Continued rise of global sourcing
These days global sourcing is more a question of ‘when’ and ‘how much’ and not ‘if’. Even Europe is embracing the paradigm.
- Consolidation in the IT supplier market
There is significant consolidation occurring in the outsourcing space which should ultimately serve to benefit sourcing professionals.
- Concentration on value
Whereas the last few years have placed emphasis on short-term objectives in transaction execution, pushing sustainability onto the service provider, going forward, the trend is to concentrate on long-term value up-front and ensure that delivery will be metric-driven and focussed on the business needs in an effort to meet the overriding goals.
This is a good start, but it fails to mention the following trends that are also in play, as pointed out in Sourcing Innovation’s recent Sourcing 2007 and Sourcing Innovation cross-blog series. Consider the following:
- On-Demand Software-as-a-Service Providers and (Enterprise) Open Source is changing the landscape
Companies like Iasta and Procuri are driving down cost while driving up value.
- M&A activity is also happening within the software provider space
The latest example is the Cormine and Perfect Commerce announcement.
- Sustainable Supply Strategies are becoming mainstream.
Consider the recent Goldman Sachs report that found that companies implementing environmental, social, and governance (ESG) policies outperformed the general stock market by 25% over the last two years.
- Raw material and commodity prices are skyrocketing across the board.
The days of the constant Walmart rollback are over, especially if you are a minerals buyer.
- The Talent Crunch is worsening by the day.
Supply teams have no choice but to adopt best practices and do more with less.