Gartner announces its top three procurement technology predictions for 2018 and beyond
Spend-analysis software, procurement-to-pay solutions, and the "tail spend" are set to face major changes in the next five years, a report from the analyst group says.
New technologies, such as artificial intelligence (AI), B2B marketplaces, and chatbots, are
poised to radically change procurement and sourcing processes over the next five years, according
to a recent report published by the analyst firm Gartner.
Fifty percent of all legacy spend-analysis software will be retired, replaced by AI-powered, cloud-based solutions
Seventy-five percent of all B2B "tail spend" (or one-off, nonstrategic spend items) will be purchased in an online
marketplace such as Amazon Business
or Alibaba's 1688.com
All major procure-to-pay software suites will have embedded virtual assistants and chatbots
to help guide buying and self-service requests.
These three predictions are further detailed below.
Future of spend analysis. According to Gartner, "legacy spend-analysis software
has failed to deliver on its promise." Instead, the analysts contend, the current spend-analysis
process is time-consuming and error-prone. As a result, procurement managers are not able to make
quick decisions in the face of changing market conditions.
Gartner foresees a new breed of spend-analysis tools that will leapfrog traditional software
and incorporate more advanced AI, better business intelligence tools, and the ability to process
natural (human-generated) language. While some traditional providers will reinvent their solutions
using AI to analyze unstructured data, Gartner believes that greater than 50 percent of them will
fail to adapt and instead will become obsolete.
Future of tail-spend management. In the past, tail spend has been largely ignored by
procurement departments because it was not worth the time and investment. Over the past two years, however,
e-marketplaces such as Amazon Business and Alibaba's 1688.com have been growing rapidly because they offer
businesses an easy, effective way to handle this type of purchase. These marketplaces currently focus on
what would be considered indirect spend, such as maintenance, repair, and operations (MRO); information
technology (IT); and office supplies. Gartner expects usage to increase even more as these sites develop
vertical-specific marketplaces and improve interoperability with procure-to-pay (P2P) software solutions.
Gartner's analysts suggest that companies find out how much money individual employees are already spending
with Amazon Business, Alibaba, or other online marketplaces. If the amount is more than 5 percent of total spend,
they recommend that the company consider consolidating that spend under an enterprise account. The analyst group
also recommends setting basic guidelines for employees on when they can use Amazon Business and Alibaba and
consider adopting P2P software that has a high level of interoperability with these marketplaces.
Future of P2P software. The biggest change that Gartner expects to see in P2P software in
the next five years is the introduction of virtual employee assistants (VEAs) and chatbots. According to Gartner,
both VEAs and chatbots are computer programs that simulate a conversation with a human being. VEAs work on behalf
of enterprises to support employee engagement with, for example, the procurement process. Chatbots have a narrower
functionality and are often highly specialized.
These artificial intelligence features will help guide end users through the buying process. A VEA will use
a series of simple questions to help determine the best buying channel and payment method for the employee.
Initially these interactions will be via text-based communications, but Gartner predicts that voice responses
will be enabled in the near future. Chatbots will be used to handle common supplier requests, such as answering
questions about the status of a payment or helping to resolve invoice discrepancies.
Gartner recommends that companies identify pain points where chatbots can be added to create
immediate value, and then work with their current P2P software vendor to identify potential pilot opportunities.
Organizations are working to make their supply chains more resilient to disruptions and responsive to abrupt market changes, the firm said in its “2024 ISG Provider Lens Supply Chain Services” report for the U.S. In the wake of major geopolitical events that have affected supply chains, including international conflicts and the COVID-19 pandemic, companies are seeking to prevent or quickly bounce back from supply or demand shocks.
U.S. companies in particular have been especially fast to adopt digital supply chains, due to lighter regulation in the country and a higher willingness to take technology risks, ISG says. Many U.S. firms are also undertaking digital transformation as they shift from global to regional or local supply chains to reduce the risk of future disruptions.
A top goal for U.S. enterprises is aiming for more real-time insights and data-driven decision-making, prompting them to clean up and integrate data from throughout their supply chains, including from both internal systems and external suppliers, ISG says. End-to-end visibility and process orchestration could improve supply and demand forecasts, order fulfilment and profitability. Providers are helping clients carry out this major transition, usually in one part of the supply chain at a time.
“Cost is still a concern for supply chains, but capability is gaining importance,” Bob Krohn, partner, manufacturing, for ISG, said in a release. “Service providers are stepping up to help enterprises implement systems that meet their unique requirements.”
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Gulf Coast businesses in Louisiana and Texas are keeping a watchful eye on the latest storm to emerge from the Gulf Of Mexico this week, as Hurricane Rafael nears Cuba.
The category 2 storm’s edges could also brush Florida as it heads northwest, causing tropical storm force winds in the lower and middle Florida keys. However, the weather agency said it is too soon to forecast Rafael’s impact on the U.S. western Gulf Coast.
In the face of campaign pledges by Donald Trump to boost tariffs on imports, many U.S. business interests are pushing back on that policy plan following Trump’s election yesterday as president-elect.
U.S. firms are already rushing to import goods before the promised tariff increases take effect, to avoid potential cost increases. That’s because tariffs are paid by the domestic companies that order the goods, not by the foreign nation that makes them.
That dynamic would likely increase prices for U.S. consumers as importers pass along the extra cost in the form of price hikes, according to an analysis by the National Retail Federation (NRF). Specifically, Trump’s tariff plan would boost prices in six consumer product categories: apparel, toys, furniture, household appliances, footwear, and travel goods. “Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices,” NRF Vice President of Supply Chain and Customs Policy Jonathan Gold said in a release. “A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”
The rush to avoid those swollen costs can already be measured in the form of rising rates for transporting ocean freight, as companies start buffering their inventories before the new administration officially announces tariff hikes. Transpacific rates are still $1,000/FEU or more above their April lows, showing increased ocean volumes and climbing rates generated by shippers’ concerns about supply chain disruptions including port strikes and the Trump tariff increases, supply chain visibility provider Freightos said in an analysis. "The Trump win may start shaking up supply chains even before he takes office. Just the anticipation of higher tariffs may lead importers to pull forward shipments, creating a preemptive freight frenzy," Judah Levine, Head of Research at Freightos, said in a release. “Frontloading will cause freight rates to feel the heat as importers race to dodge the extra costs, similar to what took place with Trump’s tariffs on Chinese goods in 2018 and 2019."
Another group sounding a note of caution about international trade developments was the Global Cold Chain Alliance (GCCA), a trade group which represents some 1,500 member companies in more than 90 countries that provide temperature-controlled warehousing, logistics, and transportation. “We congratulate President Trump on his election. We also congratulate all those who have been elected to the U.S. Senate and House of Representatives,” GCCA President and CEO Sara Stickler said in a statement. “We are also committed to promoting the growth of exports from U.S.-based food production and broader manufacturing sectors. We will engage constructively in the policy discussion about future trade policy and continue to make the case for the importance of maintaining balanced and resilient trade routes for food and other temperature-controlled products across the world.”
Businesses in the European Union (EU) were likewise wary of tariff plans, judging by a statement from the VDMA, a trade group representing 3,600 German and European machinery and equipment manufacturing companies. "Donald Trump's second term will be a greater challenge for German and European industry than his first presidency. We must take his tariff announcements seriously, in particular. This will once again put a noticeable strain on transatlantic trade and investment relations," VDMA Executive Director Thilo Brodtmann said in a statement. “The USA is and will remain the most important export market outside the EU for mechanical and plant engineering from Germany. Our companies offer the products required to implement the re-industrialization of the USA that Donald Trump is striving for. The VDMA's overall outlook for the American market therefore remains positive."
In addition to its flagship Clorox bleach product, Oakland, California-based Clorox manages a diverse catalog of brands including Hidden Valley Ranch, Glad, Pine-Sol, Burt’s Bees, Kingsford, Scoop Away, Fresh Step, 409, Brita, Liquid Plumr, and Tilex.
British carbon emissions reduction platform provider M2030 is designed to help suppliers measure, manage and reduce carbon emissions. The new partnership aims to advance decarbonization throughout Clorox's value chain through the collection of emissions data, jointly identified and defined actions for reduction and continuous upskilling.
The program, which will record key figures on energy, will be gradually rolled out to several suppliers of the company's strategic raw materials and packaging, which collectively represents more than half of Clorox's scope 3 emissions.
M2030 enables suppliers to regularly track and share their progress with other customers using the M2030 platform. Suppliers will also be able to export relevant compatible data for submission to the Carbon Disclosure Project (CDP), a global disclosure system to manage environmental data.
"As part of Clorox's efforts to foster a cleaner world, we have a responsibility to ensure our suppliers are equipped with the capabilities necessary for forging their own sustainability journeys," said Niki King, Chief Sustainability Officer at The Clorox Company. "Climate action is a complex endeavor that requires companies to engage all parts of their supply chain in order to meaningfully reduce their environmental impact."