A Brave New Supply Chain World
To understand long-term transformations in supply chain and procurement technology, supply chain professionals must be able to understand present trends so they can help shape future realities. Experts believe the following supply chain predictions are viable hypotheses that we should consider for 2030.
Predicting the Supply Chain Landscape in 2030
1. Increase in Population
In 2030, there will be more people seeking cultural and political self-determination, financial stability and personal self-actualization. Population growth means more economic activity and expanded production capacity. This also creates a greater need for food, water, healthcare, housing and education.
2. Extreme Weather
In 2030, the upper atmosphere will have warmed significantly. This so-called “Greenhouse Effect” will create more extreme weather. Because of hotter summers, colder winters and lethal storms, agricultural zones will be forced to shift. Fresh water will become more expensive.
3. Rising Populism and Nationalism
In 2030, more people will gravitate to populist and nationalistic movements and build political coalitions. For culture, this means that membership in clubs, societies, unions and professional networks will become more important. It also means that these organizations will more explicitly identify with economic and geopolitical agendas. For policy, it means that we can expect more tariffs, more walls and more trade disputes.
4. More Refugees
In 2030, the number of people displaced by extreme weather and rising sea levels will have massively increased, while the number of countries willing to host refugees will decrease. Stateless and displaced people will continue to become economic migrants in wealthier countries and will struggle to claim recognition and political power.
5. More Real-Time Data, More Real-Time Accountability
In 2030, the largest driving force for change will be the consumers, businesses and shareholders in wealthy countries who have access to data. These groups of people will be skeptical of business claims and will hold companies accountable by voting with their dollars. Consumer and shareholder activism will increase, in some cases driven by viral online outrage events that reverberate through vast global social networks.
This is a world where the stakes of business success cannot be overestimated, particularly when it comes to the supply chain. Based on these predictions, being bullish on complexity, chaos, ubiquitous data, ubiquitous computing from a management perspective and ubiquitous feedback loops (real or simulated) will be essential for supply chain success.
Consumer opinion and preference will move from analysis of abstracted trends to analysis of large numbers of real people using connected devices in real-time. Companies will be expected to know the physical location of all inventory and shipment arrival time.
Wireless sensor networks (WSN) in logistics will automatically optimize lanes, allowing real-time response to weather events, changes in tariffs and current events. Business operations will live at the speed of the 24-hour news cycle and will be expected to take advantage of changing circumstances.
Procurement teams will be consultant strategists, analyzing and acting on large datasets concerning real-time demand and changes in the market. They will work with outsourced customer service teams to process buying requests in compliance with approval processes.
Predicting Strategic Sourcing Technology in 2030
1. Category-Focused B2B Marketplaces Using Hyperdynamic Pricing
Hyperdynamic pricing, driven by AI, is used today by travel websites like Expedia and Hopper. The price is updated in real-time relative to breaking news and responsive to buying patterns. For example, if a music festival announces a new location, plane tickets to that location may quickly become more expensive. In 2030, Hyperdynamic pricing engines, based on large-volume B2B marketplaces, will become the norm for most categories of spend.
2. Cradle to Grave ESG Supply Chain Accountability
Corporate leaders, in solving the supply disruptions caused by bullwhips, can leverage demand to make price changes; however, with great power comes great responsibility. In 2030, as corporate boards respond to consumer concerns about deforestation, human slavery, and limiting exposure to infectious diseases or neurotoxic contaminations, the supply chain will come under greater scrutiny. It will also be a driving force that moves the ESG numbers shareholders care about.
3. The Customer as Procurement Stakeholder
Think about how data moves through most enterprises today: customers buy things through a website. That data goes to business analysts, to sales, to operations, then to suppliers. As more businesses move to customized, made-to-order inventory, because of process mapping and mining, pressure is put on stakeholders to represent the voice of the customer.
In 2030, new data pipelines will enable customers to generate the specifications, evaluate the criteria, and establish the requirements for selecting and managing suppliers. As consumers become more data-driven in their buying habits and more particular about customization, brands will scramble for tools that can incorporate consumer participation directly into their supply chains through interactive web portals.
4. Strategic Suppliers as Fully Integrated Partners
In 2030, as data from connected devices becomes more readily available and deliverable to ubiquitous interfaces, supplier partners will be brought further along into real-time visibility of sensitive operational data. As videoconferencing, distributed and remote workforces, and work-from-home cultures become normalized, more firms will use both a contingent workforce and integrated suppliers. They will operate more like part of the company’s internal team than as an external party.
5. Sourcing Events
There is supported business evidence that sourcing events add value to a company. In 2030, they will become far more common. Sourcing events will have an arms race effect on CPOs buying the latest and greatest in digital sourcing technology. CPO’s will want to arm their category teams so that they are buying the latest and greatest CRM, targeted prospect research, and lead nurturing tools. CFOs will insist on a minimum number of sourcing events per year. Still, CMO’s, alongside corporate boards, must demand that procurement delight consumers with suppliers that can deliver on the company’s ESG goals. Sourcing event networking is the key.
Betting on Innovation
Predictions are, by their very nature, uncertain. A lot can change in 10 years. Startups like ours (Arkestro) are notoriously fast paced. Our team tends to think in 30-, 60- and 90-day cycles using annual technology roadmaps. Sometimes, however, we find it advantageous to take the time to make long-term predictions using the following inputs to correct our own inherent biases:
- What do forecasters tend to underestimate and overestimate?
- What are the current supply chain trends? How might they affect the future?
- What are the status quo pain points that can be solved by technology?
A Hopeful Future
There is no doubt that supply chains will look very different in 2030. It is the responsibility of procurement professionals in 2020 to know present trends and understand their impact on the future. We need to embrace technology, but not at the expense of humanity. We need to continue to care about diversity, sustainability and societal impact. Education is now more than ever of the utmost importance.
Hear more about how Arkestro has helped clients during the Optimal ’22 predictive procurement in action case studies.
How Using Human Behavior Science and Game Theory Benefits Procurement
Arkestro users have the advantage of a predictive negotiation process based on behavioral modeling and game theory.
A vast range of variables is considered, including supplier reputation, historical raw material prices, competition, and product budget. In a short time, Arkestro’s embedded platform performs a comprehensive analysis for quick award decisions and can then recommend a price.
Not only does this cut costs, but the speed of Arkestro’s embedded platform also offers a significant competitive advantage by beating others to the market.
In addition to the advanced abilities of predictive procurement, Arkestro delivers a wide range of critical features:
- Real-time collaboration
- Advanced supplier management and evaluation tools
- Evident transparency throughout the procurement process
- Easy integration with other commonly used software
Arkestro: Elevating Chemical Manufacturing Procurement
Procurement technology is changing the decision-making landscape of chemical producers.
Predictive Procurement Orchestration represents the leading edge of the new wave of digital procurement. It influences all addressable spend and leverages a unique approach to predictive pricing.
Arkestro pulls in your company’s internal data, including purchase orders, supplier master, category data, and contract data. It also pulls external data, including supplier information, ESG, and diversity datasets, and then cleanses and validates the data.
Arkestro does this using three broad motions: Simulate, Send, Select.
- Simulate: Arkestro simulates a sourcing or purchasing event to predict prices and terms.
- Send: Akrestro emails a recommended offer to the supplier(s) for review, revision, and acceptance.
- Select: Arkestro recommends holistic awards and approvals using many possible scenarios. Awards reflect an organization’s intent and are based on KPIs and the unique purchasing and pricing history of the line items involved. Arkestro’s award recommendations can be tweaked or manually overridden, so the procurement team is always in the driver’s seat.
Procurement teams end up with tangible business results:
- Quicker and more impactful supplier engagement
- Greater amount of spend actively influenced using predictive models
- Increased cost savings and/or cost avoidance across more spend
- Better and faster quality decision-making across the organization
- Incorporation of supplier ESG, diversity, and risk metrics into spend decisions
To learn more about how Arkestro can elevate chemical manufacturing procurement to a new level, see Arkestro’s predictive purchasing in action.