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Digital procurement: What do Chief Procurement Officers expect in 2023?

For Chief Procurement Officers, the current year was all about continuous crisis management. The war in Ukraine, huge price surges in the energy and commodity markets and galloping inflation have affected supply chains and caused unpredictable cost increases. For decision-makers in procurement, this meant maximum daily performance in order to maintain business operations, eliminate disruptions and keep costs under control. The outlook for the coming year 2023 is not bright either. Chief Procurement Officers are likely to expect ongoing supply chain tensions as well as volatile markets.

The shortage of skilled workers in the sector will also be a major topic in the coming year. You will learn what exactly procurement experts can expect in the coming year and how the challenges can be tackled.

No relief for supply chains foreseen

Raw materials, food, industrial products or semi-finished products: By 2023, global supply chains will continue to suffer from extreme tensions. The main causes here are the war in Ukraine and the sanctions imposed – and the Covid-19 pandemic is anything but over. Currently, China is once again imposing a severe lockdown on parts of Beijing, and it is more than likely that the restrictions imposed by their zero-COVID-Strategy will have a direct impact on supply chains. For Chief Procurement Officers, identifying supply chain disruptions early on and finding alternatives will be a key challenge in 2023.

Unpredictable pricing by suppliers

Price projections provide a rough overview of the markets in the coming months. However, all forecasts for 2023 are accompanied by extreme price volatility – depending on developments in Ukraine and the reactions of global markets. Medium to long-term forecasts in 2023 are more akin to looking into the crystal ball than to providing a basis for a reliable purchasing strategy. The most accurate market insights will become indispensable in the coming year in order to adapt procurement strategies flexibly and quickly to changing market trends. In our view, modern data management and analysis tools provide an effective response to the uncertainties of pricing in global markets and should no longer be missing from any procurement portfolio in 2023.

Skills shortage continues to increase

A worrying trend in purchasing has been emerging for several years. There is an increasing shortage of young, well-trained professionals in the field of procurement. But it is not only the young talents who shun the industry, demographic change is also increasing the shortage of skilled workers. The "Generation Boomer" is gradually retiring – vacant positions often remain vacant afterwards. Another threat to the industry is the rise in food and energy prices. According to recent studies, more than a third of those employed in purchasing are dissatisfied with their wage. The result: 2023 could be a year of job changes. The shortage of skilled workers will therefore almost inevitably cause a "digital boost" in procurement. The need for significantly increased efficiency and more productivity can be achieved through technical solutions in many areas – for example, through faster training of new employees, improved information management and more transparent processes.

Inflation and recession

In his autumn forecast, Minister for Economic Affairs Robert Habeck spoke of "critical times" in October. While economic growth was still modest at 1.4% in 2022, the government expects a decline of 0.4% in 2023. According to Habeck, the "severe energy crisis, which is increasingly becoming an economic and social crisis," is driving energy prices to a high level – and significantly slowing down industrial production. Although multi-billion-euros relief packages are intended to cushion the price shock, Germany in particular is still heading for a recession next year. However, there is also a modicum of hope: the German economy is surprisingly robust. At the end of November, the financial services provider S&P Global published a survey of 800 companies. According to data from the service provider, the purchasing managers' index for the private sector, industry and the service sector rose slightly in November 2022. The decline in economic output could thus be weaker than feared – even if the economy expects a recession in 2023. However, this is likely to be comparatively mild, with a minus of 0.2%. For Chief Procurement Officers, this means preparing as early as possible for the upcoming price increases in the new year and countering risks with alternatives.

Conclusion

The year 2023 is set to be another crisis year for the purchasing and procurement sector. The effects of the Covid-19 pandemic have not yet been fully addressed, the war in Ukraine is putting a strain on supply chains and high inflation in the Eurozone is not helping to ease the situation. Nevertheless, a much more optimistic picture of the future is emerging than economic experts had predicted in the summer. German industry in particular is surprisingly robust in dealing with the exploding energy prices – and experts in the Eurozone are also experiencing a modest turnaround.

The coming year will be a real challenge for Chief Procurement Officers. In addition to difficult-to-estimate supplier prices and disrupted supply chains, decision-makers in purchasing and procurement must also and above all focus on the shortage of skilled workers. Progressive digitisation can be a solution here. The use of tools and platforms can help to achieve the much-needed flexibility and speed that can guide a company through the numerous crises of the new year.

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