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Inflation is the number one issue on all procurement professionals’ minds right now as companies take action to thwart inflationary pressures, lower costs and find new suppliers to work with. The current annual U.S. inflation rate is 8.5%, an increase over 7% in 2021 and 1.4% in 2020. The rate has subsided slightly after reaching 9.1% in June—an over 40-year high.
“Procurement and sourcing teams continually respond to the impact of global events and market volatility—crises now exacerbated by inflation,” TealBook says in its recent 2022 Supplier Information Study, The Agility Edge: Bringing Sourcing and Procurement into the Future.
In fact, the company says inflation has forced 100% of procurement and sourcing leaders to take action, including finding new suppliers to lower costs (48%) and increasing the price of goods and services (44%). And, as an indication of how business deals are changing behind the scenes, it says executives are renegotiating contracts with existing suppliers (44%) to address inflation concerns and entering into predefined agreements for products expected to have a high rate of volatility (40%).
More Supplier Visibility and Diversity Wanted
TealBook’s survey also delved into some of the key challenges that procurement is facing when it comes to supplier diversity, supplier selection and the best way to leverage the data. Some of the other key report findings include:
- 100% of respondents have faced negative consequences from taking too long to identify a supplier, including delays in project timelines (56%) and exceeding project budgets (50%).
- 94% of procurement and sourcing execs are making visibility into Tier 2 suppliers a high or moderate priority in order to find new and potentially lower cost suppliers.
- 77% of sourcing and procurement leaders are “extremely concerned” about their ability to handle supply chain disruptions.
- 64% of procurement professionals see accurate, up-to-date supplier data as a way to quickly and cost effectively source materials in a crisis.
- ·99% of professionals want to increase supplier diversity to deal with future problems—as well as seize innovation opportunities.
Also, nearly half (46%) of procurement professionals surveyed have enhanced their supplier diversity program in response to inflation challenges and 51% cite the top benefit of a data foundation is greater supplier diversity. The commonly cited barriers in partnering with diverse suppliers include a lack of information (52%), no single source of reliable data (46%), and not enough resources or investment (45%).
Getting the Right Pieces into Place
Ensuring that the right goods arrive at the right place and on time is paramount for sourcing and procurement leaders. And, agility is often the key to making this happen, especially when procurement is paired up with the right suppliers and able to complete the job. In many cases, data is the connective tissue that ties all of the people, processes and platforms together.
“With the onslaught and continuation of threats to the supply chain, even the most agile companies are not immune to supply chain disruptions and the negative impact of sky-high inflation,” said TealBook CEO Stephany Lapierre, in a press release. “Access to the data needed to work with suppliers that can help mitigate inflationary and supply chain challenges gives companies the ability and agility to ensure the goods they need to run their business arrive on time and on – or under – budget.”
According to TealBook’s survey, 64% of respondents say accurate and up-to-date supplier data allows them to quickly source materials. And, leaders recognize that the benefits extend beyond crises, including improving real-time analytics (52%) and identifying market trends and forecasts (51%).
“As the world looks toward a post-COVID future, sourcing and procurement leaders continue to face challenges the likes of which they’ve never encountered before,” Lapierre said. “There are a number of issues that inadequate supplier data has only exacerbated – and ensuring organizations have the data foundation they need to survive future disruptions is paramount.”
