B2B procurement is an ever-changing process. Much to the dismay of supply chain managers, a well-oiled supply chain will rarely run indefinitely without a bump or two in the road. When these hiccups, big or small, do occur, it is always advisable to have some idea of what you’re dealing with in order to quickly remedy the issue. Here are three trends currently affecting B2B procurement:
Compliance and Sustainable Supply Chain Practices
There has always been public scrutiny of businesses, but never before have such critical opinions had the means to become virally widespread as they do today. In the modern online medium, a harsh tweet or a disparaging review has the potential to gain more views that a well-researched exposé—and thereby significantly and rapidly damage a business’ reputation.
For this reason, companies are treading more carefully than ever before to maintain a favorable perception. This extends to many facets of the business, including those traditionally taking place out of the public view, such as the supply chain. More and more, clients and customers aim to ensure that the products they buy and operations they support with their money are engaged in sourcing fairly and sustainably. This is resulting in companies becoming more transparent about their practices, and oftentimes modifying their supply chains to reflect these new consumer demands.
Risk Management and Reassessing Priorities
In addition to compliance, risk assessment and management provides companies with another reason to re-examine their supply chain operations.
Global sourcing certainly has its advantages, and companies would not be expending the extra effort if this weren’t the case. However, there are also risks involved when sourcing from distant locales. These are often considerations a business would never think of if they were instead sourcing locally. These can vary from social & economic concerns to natural disasters.
In the past decade, a number of severe disasters, including uncharacteristically devastating hurricanes in the United States, have prompted American enterprises to reconsider their supply chains. Many are opting to consolidate their suppliers locally to avoid these concerns going forward. Alternatively, others are continuing their outsourcing operations, but in a country closer to home—a practice known as nearshoring.
Unpredictable Politics and Tariffs
Social and political stability is, perhaps, the most important consideration when assessing risk management. Oftentimes, sourcing done in emerging economies will face the risks (however remote) of social upheaval or political changes. These can disrupt not only a company’s immediate operations, but potentially cause a massive loss of existing investment.
In recent years, this trend has also extended to economies like the United States, China, and even the United Kingdom. Rapidly and constantly changing economic situations caused by the U.S.-China Trade War and the Brexit Campaign, respectively, have seen high amounts of uncertainty in these markets and had measurable effects on the businesses and currencies within these traditionally reliable economies.
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