Supply chain trends to watch out for in 2022

2021 was all about supply chain shortages. From COVID vaccine shortages at the start of the year to fears that we would struggle to buy turkeys, toys or electronic gizmos to put under the Christmas tree. 

Now, as we look ahead to 2022, we shouldn’t expect a swift end to the supply chain crisis in 2022 as the omicron variant is leading to more staff shortages as people take time off sick and suppliers navigate new restrictions.

Here are some supply chain predictions from executives at SAP. Together they share their perspective on what to watch out for this year, including the need for supply chain resiliency, the importance of prioritising sustainability and the value of supply chain networks.

“Clogged cargo ports, backlogged railyards, microchip and gas shortages…18 months later and we are still feeling the economic aftershocks of the disruption brought on by Covid-19. We had hoped that business would get back to ‘normal’ in 2021. As we enter a new year, we realize that ‘disruption is the new normal’ and resilience is a top priority. In 2022, companies need to formalize resilience, building sustainable supply chain execution that supports business growth. Despite the volatility, organizations must take a step back and look at spend holistically. An integrated spend management approach spanning procurement, external workforce and travel and expense management, will provide customers with the visibility and agility they need to adapt to changes in their markets while continuing to drive their business objectives.” – Etosha Thurman, Chief Marketing and Solutions Officer, Intelligent Spend and Business Network, SAP

“The impact of the pandemic-driven lockdowns underscores how the global economy is a networked economy. Companies know that no business does business alone – success depends not only on one company’s ability to deliver, but the abilities of all companies in its entire supply chain. To adapt to ever-changing business challenges, procurement and supply chain leaders will increasingly look to cloud-based and network-aware solutions to deliver the innovation they need to continually align their spend strategy to their business strategy.  – John Wookey, President, Intelligent Spend and Business Network, SAP

“It has been nearly two years since the pandemic began wreaking havoc on the world’s businesses, exposing the fragility of linear supply chains and the need for a more networked economy. During this time, many businesses have changed their view of procurement from cost watchdog to that of a strategic enabler. As we enter 2022, many procurement leaders are tasked with aligning every spend decision to their overall corporate strategies. To best deliver on this responsibility, these professionals will need an integrated view of total spend across the enterprise and deep into their supply chain. This level of visibility will enable the necessary information sharing and collaboration needed to contribute to stronger business benefits, including better inventory management, more predictable lead times, alternative sources of supply, stronger supplier compliance and, of course, continued cost savings.” Jeff Collier, Chief Revenue Officer, Intelligent Spend and Business Network, SAP

“As global markets continue to face unprecedented labor shortages across industries, businesses will see an increased need to master external workforce management and maximize talent utilization. Tapping into contingent workers and service providers will continue to gain momentum beyond the pandemic as businesses are realizing the benefits – improved productivity, agility and resilience, reduced costs, increased access to quality talent and flexibility. With an estimated 70% of executives anticipating they will hire more temporary workers and freelancers over the next two years, external workforce will remain a top priority across organizations. With this comes the need for leaders to have complete visibility into their usage of external workforce to make more calculated, timely decisions about who is doing the work, at what cost, where and for how long. Digitalizing and automating external workforce management processes and improving visibility will help companies reduce inefficiencies and gain the most value out of its flexible resources.” – Vish Baliga, Chief Technology Officer, SAP Fieldglass Solutions, SAP

“2021 has been the year of supply chain disruption. People who have never heard the term supply chain before are now talking about it as everyone is experiencing stock shortages in stores and lack of availability of the holiday gifts we had planned to buy. Recent events like Covid and Brexit have shown that traditional, linear, fragmented supply chains no longer work, and no business can do business alone. Companies will look to move beyond enterprise-centric systems toward those that are designed for cross-company transparency and collaboration. A digital network approach can transform fragmented supply chains into unified, collaborative, intelligent networks for supply, logistics, asset management, and service. With tighter collaboration between trading partners on a trusted network, companies can better anticipate shifts in supply and demand, deepening their competitive edge in the face of profound disruption.”- Paige Cox, Senior Vice President and Head of Business Network, SAP

“If 2021 has taught us anything, it is that even the best of predictions failed to anticipate some of the challenges the world has seen. What did occur though was that procurement organizations moved away from simply managing and optimizing processes to becoming pivotal in solving critical business problems. In 2022 procurement professionals should be bold in embracing this mandate and propose solutions that help companies navigate troubled, uncertain waters. Creative procurement solutions can address some of the biggest challenges businesses continue to face today: managing supply shortages, rethinking a globalized supply chain, leaning on a vibrant external workforce in the face of the Great Resignation, and focusing on working capital at a time of increasing global inflation. Let’s be bold and re-define traditional paradigms to tackle these challenges.” – Baber Farooq, Head of Market and Solution Strategy, Procurement Solutions, SAP

 “By now, it’s fair to assume that all the big gains to make the internal combustion engine more efficient have already taken place. There will always be a place for it in our world, but to make impactful change at this point a bigger pivot is needed, for example, to electric vehicles. I think about the automated expense reporting in a similar way. Technology providers can spend increasing amounts of resources to make incremental gains, but a big pivot is needed to usher in the next wave of efficiency and innovation. That big pivot is a shift to settlement.

Creating an expense report is never the ultimate goal – the goal is to settle payments for employee-initiated spend. While the expense report isn’t going away any time soon, more innovation will lead to bigger improvements in capturing, processing, and verifying expenses, driven by increasingly sophisticated artificial intelligence. With this pivot we will shrink and evaporate expense reports, with a subset of expenses moving to automated settlement and skipping the traditional expense report process entirely.” – Mike Koetting, Senior Vice President and SAP Concur Solution Area Leader, SAP

 “Sustainability and social responsibility are some of the most pressing issues we’re dealing with today. The recent UN Climate Change Conference of the Parties (COP26) brought representatives from nearly 200 countries together in the fight against climate change. Individuals and businesses alike must heed the urgent call to make drastic changes to help the environment and to stick to ethical principles. I believe that procurement can play an essential role in leading the charge to create a long-term strategy that embeds sustainable and ethical factors in the process from start to finish. While new and emerging solutions are on the horizon to enable these long-term plans, leaders will look to their digital procurement solutions in use today to support environmental, social and governance goals like reducing carbon emissions or banning child labor. Over the next few years, we’ll see further investment in core procurement technology to help businesses achieve more than just operational efficiencies and cost savings, but also to drive risk mitigation and increased visibility into the supply base and supply chain processes to achieve ESG goals.” – Salvatore Lombardo, Senior Vice President and Chief Product Officer, Procurement Solutions, SAP

 “Listening to understand customers’ business operations, goals and expectations is the foundation to building a relationship as a trusted advisor. We have moved well beyond traditional inside-out views of a customer’s situation and transactional sales cycles toward outcome-focused experiences. With the lingering disruption and chaos caused by the pandemic, siloed approaches of solving problems reactively are no longer good enough. Especially as companies are embracing the cloud to increase innovation and propel their digital transformation journeys. Next year we will continue to see many more instances of agile customer-led engagements across channels. These will connect all interactions into an end-to-end solution that addresses customers’ holistic spending needs from procurement to managing an external workforce to capturing travel and expense.” – Steve Seide, Global Procurement Success Partner, SAP

 

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