Ep. 6 - The Procurement Pathfinder: Five Megatrends Shaping the Future - with Laurin Zemmrich

Explore the future of procurement! Discover how five key megatrends are defining the industry's next chapter and how you can future-proof your procurement strategy.

In this episode, host Richard McIntosh is joined by Laurin Zemmrich, from the University of St.Gallen's Institute of Supply Chain Management, to discuss the whitepaper, "Procurement Pathfinder 2024: A Trend Outlook." Laurin shares his extensive research on the megatrends that are set to shape the future of procurement. The discussion delves into how these interconnected trends impact procurement, from immediate priorities like cost management and geopolitical risks to long-term strategies involving sustainability and technological integration.


You'll learn:

1. The five megatrends redefining procurement and their interconnected nature
2. How CPOs can balance short-term cost pressures with long-term sustainability goals
3. The critical role of AI and technology in future procurement processes
4. Strategies for enhancing supply chain resilience and managing geopolitical risks
5. The evolving regulatory landscape and its implications for sustainability in procurement

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Get in touch with Laurin Zemmrich on LinkedIn: https://www.linkedin.com/in/laurinzemmrich/

Download the "Procurement Pathfinder 2024: A Trend Outlook": https://procurementinitiative.org/insights/procurement-pathfinder-2024-your-guide-to-navigating-future-trends-1

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Details about University of St.Gallen's Institute of Supply Chain Management:
Website: https://iscm.unisg.ch
Industry: Higher Education
Size: 1,001-5,000 employees

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About the host Richard McIntosh:
Richard McIntosh, Partner at H&Z Management Consulting, has spent over 23 years helping procurement leaders succeed. Richard is an avid rugby fan, and a children's rugby coach, with a passion for helping children to become their best selves through sports. He spends his time outside of work with his wife and children.

Get in touch with Richard McIntosh on LinkedIn: https://www.linkedin.com/in/mcintosh-richard/

Transcript

SPEAKER_02 0:02

Just to mention maybe the the trends themselves, huh? So basically what we found out is that within these five categories, so we have technology, where we have a lot of discussion on AI and machine learning, you know that as well. We have digital twins, blockchain, and so on. Talent management, of course, related to talent shortages, new work trends, how this is impacting procurement, and how actually procurement can be more attractive for talent. Risk and resilience, localization, diversification, anti-supplier visibility, inflation management, and so on. Political influence was mostly on regulation, right? National regulation, such as the German Supply Chain Act that we are seeing, or geopolitics. And then we also have the environmental bucket with resource efficiency, circularity, and so on, CO2 management.

SPEAKER_01 0:50

Welcome to the Procurement Initiative Leaders Podcast, the ultimate resource for top-level procurement professionals looking to stay ahead of the curve and drive meaningful change within their organizations. I'm your host, Richard McIntosh, partner at HZ, Europe's leading procurement consultancy. Join me as I sit down with Global Leaders in Procurement to uncover the latest trends, strategies, and insights that are shaping the future of procurement. We tackle crucial topics like leadership, technology, value creation, cost management, supply chain resilience, and many more. Ready to up your game as a leader in procurement? Let's jump into this episode of the Procurement Initiative Leaders Podcast with me, Richard McIntosh. Today I'd like to welcome as a guest to the show Lauren Zemric from the University of St. Gallen and in particular the Institute of Supply Chain Management. So we have a fantastic podcast subject today. We're going to talk about the trends that are going to impact procurement in the next 15 years. And it's based on an excellent piece of research which has just been published by the Procurement Initiative. And that's called the Procurement Pathfinder. So Laurin, great to have you on the show. And can you tell us a bit about your role and your research at the University of St. Gallen?

SPEAKER_02 2:08

Of course, Richard. First of all, thank you very much for having me on the show. Good to be here. I'm a researcher, so with the Institute of Supply Chain Management at the University of St. Gallen. So, as you said, basically, I'm a researcher, and in my role, I try to investigate how procurement organizations develop the necessary capabilities to somehow address all the challenges that you have already discussed in these podcast shows so far. So we're talking about inflation, resilience, sustainability, and so on. And essentially, I think the claim of our university is to provide research that bridges a bit the gap from insight to impact. And this is what we are very much focused on. So on the need of practitioners. And this is what we are doing in this collaboration with you in Essential and Agent Set Management Consulting, right? So we established this procurement initiative to have a think tank on procurement, to better understand procurement, shape the future of procurement. And this is based on our science-based research and the interactions that we have with procurement executives in the procurement landscape. Great, great.

SPEAKER_01 3:21

Yeah, brilliant. And just um, I mean, what was the this piece of work? Um what was the background to that? And then probably just talk us through how it was actually conducted. Um, because it's based on based on research, but also from the views of CPOs.

SPEAKER_02 3:37

Yeah, I mean, just to give a bit of background here, I think our our collaboration, first of all, has this uh yeah slogan to have this new purpose of procurement, right? So we frame this as the new purpose of procurement so that we're having this value contribution somehow beyond purchasing goods and services at the lowest price, because yeah, we're doing a lot more than cutting costs, right? We have quality issues, we have to ensure innovation and so on, right? So we have risk, sustainability, and so on. So, from my point of view, a couple of sources of competitive advantage that we can provide. And um I think this is also where we were coming from with this trend radar because we see so many uh reasons, so many priorities that procurement has to focus on. And this is where we said we have to work on some kind of procurement trend radar, which we frame as this procurement pathfinder. And maybe to make it more specific now, why we did this, I think two reasons from a research perspective, we see that there are not many trend raters in the market, basically. So when you look at trend raters, you will realize that there are a lot in the realm of logistics, for example, by DHL, Schenker, and so on. But when it comes to procurement, there's a scarcity of research. So this is a bit what motivated me to do this, right? And on the other hand, of course, we have the practitioner's perspective, which is more the procurement executives that we are working with in this collaboration. And what we see uh also when doing our pulse check surveys, so this is what we are doing, right, on this quarterly basis to somehow get a sentiment of the CPOs every now and then, is then when looking at these sources of competitive advantage, so cost, quality, innovation, sustainability, and risk, we see that these are a lot, yeah, they are very fluent, liquid, let's say they are moving very fast, right? Yeah, so 2020 until 2022, we had the resilience debate, high focus on that, high priority uh in sourcing, which was the black swans. We had all these black swans, right? Yeah, and then we had then we had this topic of the gray rhinos. So the gray rhino was the the recession, which we are potentially still in. It's you can see it, but it's becomes very difficult to manage. So we have a high resurgence and focus back on cost currently. So, and this is a bit where we are coming from the practitioner's perspective, this setting of priorities and seeing what is actually what should we actually manage. Because, as you know, you're you're also working in this industry for so long. What typically happens in such a situation with a researching uh cost is that the urgent somehow gets in the way of the important, right? And the short-term firefighting trumps a bit the long-term thinking.

SPEAKER_00 6:32

So yeah, right?

SPEAKER_02 6:34

This is a bit the the landscape that we are in, and we want to acknowledge this with the trend trader to say what are the things that have an immediate impact as of today, what are maybe long-term challenges or opportunities that we are going to face in the next five and next 10 years. Yeah, great. Yeah.

SPEAKER_01 6:52

And that and that's that's such a key point because that you know that is what we're seeing right now, that this this short-term focus back to cost. Um, but of course, this this piece of work is great because what it does is it then raises the view and the long-term perspective to say, okay, what is coming, what is coming at us as a uh as a as a profession. Um, so it's great. Uh, I mean, it I've I've got it in in front of me here. Um, it's a fantastic piece of work. Um, but actually what you you've you've mapped those trends uh and and actually created that so it to a trend radar. Um so probably worth describing that for the for the listeners to the show.

SPEAKER_02 7:33

It's a technology, talent management, risk and resilience, uh politics, and also ESG factors, so sustainability. So these were like the five overarching clusters that we look at in this uh research piece. And then we said, okay, we need to put a bit more meat to the bone. We need to make this more granular to really have specific trends that have an impact. And we did this by doing two surveys. So we asked in the first survey the procurement professionals, what are like very specific trends that you see within each of these five megatrend categories? And this way we identified, let's say, the more granular trends. And we specified this in three stages, then. So we had in total like 41 specific micro trends that we clustered into 20 um uh macro trends, and then we have the five overarching mega trends that these then are associated to. So this is a bit the the structure of this this uh the trend piece to have really a very good overview of how are five, let's say, mega trends that everyone is discussing about five buzzwords, how are they eventually manifesting themselves in specific trends? And uh then we evaluated each of these trends in a second survey, again with roughly 80 procurement professionals, to then have an uh have this trend radar sheet that you are talking about, where we actually see the trends and they're positioned and mapped on this chart based on their timely relevance. So when are they reaching their peak in relevance and what impact do they actually then have? So that this way we have a very good picture of what is relevant for today, maybe already, where do we have to respond, and what is maybe more manifesting itself in the future.

SPEAKER_01 9:20

Yeah, great, great. I think I think it's great. I mean, it's those, as you say, there's lots of there's lots of talk in the world of procurement. There's lots of kind of there's lots of buzzwords right now, but what this does, it it it crystallizes it. You know, the trend radar is really good because you can see see this you know, see these mega trends and you can see where they are and and and it's it's it's just very nice from uh to to bring that all together. Exactly.

SPEAKER_02 9:47

And what we see, um I mean, you have been part of these uh discussions already with the uh CPOs, is it sparks a lot of discussion, right? Absolutely because I mean this is the perception and a perceptual representation of practitioners, but everyone agrees to some extent to some of them, and you will also disagree to maybe the positioning of some trends.

SPEAKER_01 10:10

Yeah, yeah, that's it. And and of course, it does, you know, it it does depend on on the the sector view of the CPO um and and the and also the maturity of their organization as well, where they see that that coming. Um uh but it was really interesting because we had the if we if we if we go a little bit deeper into those into those mega trends, um so we had the the recent CPO round table, that was that was great because we used this as the discussion point, of course. Um and as we as we spoke about, you know, there's there's this short-term um refocus on savings, you know, there's the the worry of of China-US relationships and and and sanctions, um, and the sort of the you know the the need for sustainability regulation focus. Um so I mean that that's an interesting one. What what do you see from the Pathfinder in that short-term focus?

SPEAKER_02 11:03

Yeah, I I I think just just overall, maybe just to sketch this a bit out before we jump into this uh this aspect of the of the of this very specific, maybe short-term focus. Uh, just to mention maybe the the trends themselves. So basically what we found out is that within these five categories, so we have technology, where we have a lot of discussion on AI and machine learning, you know that as well. We have digital twins, blockchain, and so on. Talent management, of course, related to talent shortages, new work trends, how this is impacting procurement, and how actually procurement can be more attractive for talent. Risk and resilience, localization, diversification, enter supplier visibility, inflation management, and so on. Political influence was mostly on regulation, right? National regulation, such as the German Supply Chain Act that we are seeing, or geopolitics. Yeah, and then we also have the environmental bucket with resource efficiency, circularity, and so on, CO2 management, right? So this was a bit just to have this overview uh of the pathfinder uh sketched out for the for the listeners. Great, great. And I think we had this discussion uh earlier um to have this like a toolbox, right? So this is the metaphor that I like to use because this is just this very good overview of what the different trends are and the trends that you as a CPO should have on your individual radar, right? I think this is this is like the first insight of this Pathfinder on a more holistic or general level. And now coming back to your question, what is maybe more immediate impact? What we see basically mapping these 20 macro trends in our trend radar is that we have a lot of trends that are already assigned to have their peak in relevance in the next, let's say, five years. Yeah, so we see a multitude of trends that are transforming the procurement landscape as of today. It's not that they are far-fetched and we see them somewhere in the future. Absolutely, the the front and center right now. Exactly. And this is um this is essentially the picture. And when you look more into the color coding of the mega trends, you see that the different mega trends occupy different regions. So um the risk and resilience trends are essentially taking center stage at the moment. So they are materializing as of today. We talked about it inflation management, crisis management, and so on. And what we see in the outer boundaries of this um procurement pathfinder is that we have automation technology trends. Also, AI is not in the middle of it, even though we have a lot of discussion on it, but it's more towards the outer boundaries. And I think maybe this is the last comment on a general level is that we need to be a bit careful also with that, and see this also as a warning signal. What is the perception of the professionals? Because we in academia we have this term called recency bias. So we always tend to see and to tend to favor uh events a greater importance when they are occurring today and not when they are materializing in the future. So most of the trends that are materializing as of today, which are the mostly the risk and resilience trends, they have a very high impact. Yes. But when you go to the outer boundaries, like the technology trends, like also AI, but also blockchain, for example, digital twins, the practitioners tend to attribute a lower importance to that. And I think this is a bit also a warning uh uh signal because we should not lose out of sight of these uh technology trends that are on the horizon, just because they're maybe materializing a bit more in the future.

SPEAKER_01 14:48

Yeah, yeah, absolutely. Uh and and of course, that is what you know the the nature of the work for of the CPO. They're dealing with you know what's on their desk right now. Um and you know that they've also got to to keep those longer-term impacts in sight because they've got to orientate their organization towards those longer-term, longer-term trends. Yeah, yeah.

SPEAKER_02 15:09

And and maybe just to go come back to your question again, this this topic, of course, of China-US relations, and then you have the focus on savings. I mean, with this discussion, you feel also a bit that this is all interconnected somehow, right? So um, as you mentioned, the current economic and I would say geopolitical climate has overall led to this situation where we have overall rise. Of course, inflation rate is going down, but uh maybe it's two or three percent in the uh European Union now, and it was eight or nine percent. But you always measure this based on a year-to-year comparison, right? So you still compare it to the very high uh uh levels that we that we had. Um, and and and so stemming from this observation, the number one priority that we see also in the trend radar is the working capital management. So optimizing cash flow, uh uh uh reducing, let's say, the stock, um, and and also, of course, negotiating, for example, payment terms and generating the savings. This is uh, I think a very high priority, as you already said it as well. Yeah, and the second priority that we also see, which is interesting, is the regional sourcing strategies.

SPEAKER_01 16:24

So geographic, yeah, and risk diversification through through sourcing. I thought that was really interesting, those those those short-term trends, almost the the reaction to what CPOs have been through in the past few years.

SPEAKER_02 16:42

Exactly, exactly. And this is, I think, uh uh very interesting because it comes again from different directions, right? You have, of course, the geopolitical aspect in it, uh, which creates risks, um, where we definitely need to delve deeper into as well. But then you also have the sustainability-related issues, which are, at least to my perception, not so much included uh in this in this discussion. Because if you look at it as of today, those reshoring, near shoring, or ally shoring as you call it, so to move more to politically, let's say closer countries is more driven from the risk perspective. And I think what we see is basically that uh this offshoring tendency that we have seen throughout the last uh decades uh has been primarily driven by cost. So now we have the risk perspective in it as well as of today. And I think going forward, you will also see that um you need to put the ESG concerns into the debate, because as you might know, for most of the manufacturing companies, the supply chain basically defines the ESG performance, right? And what you can see is there is a lot of analysis on that, that the lower labor cost economies, countries, they underperform on the ESG bucket overall, be it human uh uh labor conditions and so on. So, in other words, offshoring production has somehow offshore the pollution. So here you can see how the the mega trends, so to say, sustainability, geopolitics, risk, and resilience somehow also come together and become interconnected, maybe leading to a tipping point even here, so that we say even in the future, this regional sourcing strategies might become even more important.

SPEAKER_01 18:31

Yeah, really, really interesting, those two, those two combining to bring that to the to the forefront. Because we've certainly seen that um that near shoring for the risk purposes. Um and a really interesting term there, that that ally shoring, because that that combines the the geopolitics factor as well that we're seeing playing out. Um so where where where do you see that if we focus on that sustainability um trend? I mean, right now we're seeing CPOs, you know, really having to focus on the the regulatory aspect of that. But of course, that's that's only that's only part of it, you know, that's very short term. Um so what do you see as sort of relevant in the in the mid to long term as well?

SPEAKER_02 19:17

Yeah, I think of course this is um pressured by legislation on and and regulation, but this also makes it um mandatory, right? So I think the perception in our procurement trend radar was now that the sustainability topics and we have mostly resource efficiency, circular economy, and CO2 management in that, uh more positioned in the midterm, so to say. Yeah, so uh not short term, but also not long term, which is a good sign, I would say, compared to maybe a few years ago. But still, as you said, it's driven by regulation. So it's not a you can do, but it's a must. So it doesn't really matter if the peak in relevance is perceived in the midterm, but it's a must. This is the this is, I think, the first one. And then when it comes to it, um, yeah, I think there are CO2 management, is probably the hottest topic for us in procurement, but we should not forget also about these other ones. So, for example, resource efficiency. We we see a lot in the discussions about, for example, bio-based materials, right? To make materials more sustainable, more renewable in manufacturing, uh, compared to those synthetic manufacturing inputs that have been used in the past. So, for example, in the in the polymer industry, so plastics industry, uh, we have this European regulation that mandates uh as of 2025 that in PET bottles you have to uh contain at least an average of 25% recycled polyester. So, this is also where you have regulation. So, it's not only the big ones like the in the EU, uh, CSRD, CS triple D. You also have when it comes to resource efficiency, essentially a big regulation. And I think the the basic discussion that you have here is you always have to consider, let's say, the price premium from the recycled material to the conventional synthetic material. You have to consider the feasibility of maybe changing uh uh the products, and of course, then then the timeline for such a thing. Um, and I think there you can also see a lot of changes happening. Um maybe the the second one is circularity, right? So, circularity, of course, you want to decrease carbon emissions and waste. It is a means to do so. Um again, but um it is again also a thing to consider because we're in a market where the supply plays a bigger role. We have a tightening supply market with scarce raw materials and so on. So, this is of course, these are trend drivers, so to say, for circularity, uh, even though there are there is no regulation, so to say, behind. And um I think companies, most companies that that we see where we're doing case studies with, they are already recycling, let's say, a high percentage of their production waste, or they are implementing circularity measures when it comes to circular packaging. But really, but real, so to say, circularity in terms of the business model and in terms of interorganizational collaboration with other companies is still a bit far-fetched. So we see first indications, I would say, in this market. Um, for example, in the automotive sector, you have this uh collaboration in Catena X, which is this automotive network where they are trying to have more open exchange in terms of data and information to also foster circularity. But I would say real circularity is still a bit far-fetched in that direction.

SPEAKER_01 22:50

Yeah, yeah. But but actually what what you're seeing is that it's not too far away, and and the leading organizations are already working on it.

SPEAKER_02 22:59

Exactly. And exactly the leading organizations are already moving on it. And uh I think this is of course very relevant because um you need to move today, because you have very uh ambitious targets uh at times, especially then also when it comes to CO2. And as I said, for me, circularity is also a lever or lever and a measure to go there. Uh uh you start today. And I think I mean now we can talk also about CO2. Of course, CO2 is the hot topic for most organizations and procurement uh organizations, and what you see there uh is that a lot of companies are actually redesigning their products or even the whole product portfolio, right, for lower carbon intensive products. And I think my favorite example uh here is uh I don't know if you're aware of that in the UK, but we have in Germany uh the this company Rügenwalder Mühle in the food industry, right? Is one of the big meat producers in Germany, and they have pivoted very strongly to uh, let's say, more vegetarian uh alternatives in their product portfolio. So as of today, they're already making more than half of their revenues with these uh with these new product portfolios, so to say, and not with the classic sausages. Yes. So, and and of course, this is from the end customer perspective, but as we say in research, we think procurement and supply chains from the perspective of the end customer. So this has again a big impact on suppliers that you need to identify, that you need to develop, where you need to communicate, for example, the CO2 emissions reduction efforts and so on. Yeah. So we see, as you say, the the impact as of today already and not not in the in the midterm.

SPEAKER_01 24:46

Yeah, and that and that that's that's such a great example because the you know, of course, the challenge here is that that it's a it's a value chain challenge. It it's not you know uh a simple lever is not going to do it. We we need to be much more strategic in in terms of thinking through the the entire value chain to make that impact. Yeah, yeah. That's that that's that's perfect, perfect example.

SPEAKER_02 25:11

Yeah, I I think uh it's also an easier one, of course, because if you again, of course, then think of very big multinational companies in the automotive and so on with very complex supply chains, I think yeah, it becomes a bit more difficult to handle these topics, right? Because again, you have this interconnection with resilience because uh you're not really aware where your product is coming from. Yeah. So, how will you eventually manage CO2 emissions and have the CO2 accounting behind that? So, again, also here, this kind of topic identifying your hotspots in the supply chain now when it comes to CO2 is very important. Mapping out the supply chain becomes very important to eventually then stay within those science-based targets that you as a company set yourself to. And again, you have kind of the intersection to risk and resilience with sustainability.

SPEAKER_01 26:04

Yes, yeah. And look, hey, that that also then comes back to that short-term view, which is that the you know, you have to put the those enablers in place. You know, the the the focus on CO2 emissions now uh enables you to then think about, okay, so how do we change to uh sustainable and circular value chains in the future? So great, great, great example. Um Larry, can I come back to one of the things you you mentioned at the at the beginning? So um uh we, you know, that the you know, no, no discussion on trends go goes without talking about AI and and machine learning. It it is the the buzzword right now in procurement. Um, but actually in in the trend radar, we don't see it as totally immediate. Um so really interesting to get your view on on the technology trends that that CPO should be thinking about.

SPEAKER_02 26:58

Yeah. So I think um, as you said, I mean, uh the technology trends are rather on the outer boundaries of our trend radar, but still uh if you look at AI as one trend, it's let I would say more one of the more relevant ones, essentially, that most of them are discussing as of today, but the peak in relevance is rather perceived in the mid to long term, especially with come when it comes to the generative AI applications. So, what we did here also, then maybe focusing on AI here, is uh within our Pulse check survey in the Q1 edition of this year, we essentially looked like where are procurement professionals and CPOs looking to apply AI. So we had uh different categories where you can have that. So from essentially building a category strategy, right? There are solution providers in the market that provide that within with the help of AI, up to, let's say, contract uh risk management solutions. I mean, we're all aware of those uh solution providers in that area that provide the mapping uh aspect, uh, up to let's say the spend analytics, where especially the big suite providers are now looking, how do we actually manage this whole chunk of data that we have of these big companies to provide better uh spend classifications? And what we essentially see here uh when doing the survey is that the three there are three areas that excel somehow as with the use of AI is the procure-to-pay automation, it's the spend analytics, so classifying uh suppliers with a portfolio approach, and then also the contract and risk management. And I think these are, of course, also areas where you see a high need because you can uh uh reduce the demand of manual efforts. And on the other hand, the risk and risk management aspect, I think we have a lot of solution providers that are very advanced now. So this topic of N-tier uh suppliers uh becomes a bit less maybe of a problem as of today. You have better risk alerts because they're using all this information from newspapers and so on with uh with web scrapers. So there are a lot of I think use cases in there. And as we discussed also then in our uh latest CPO roundtable, Richard, uh of course, it always then depends on the the end perspective, right? So, what what do you actually want to achieve with that? And I think this is something beyond all the hype that we're seeing and all the discussion that we're seeing, is to really ask yourself what do I want and how can maybe AI as a solution within a solution can help me to achieve this goal. This is maybe more related to this overall type of AI. And we also did in this survey a more specific one. So to ask the procurement professionals, are they actually using all this new generative AI? And it was quite interesting to see that uh like three three out of four are using uh actually or have at least once used uh a chatbot like uh uh ChatGPT, Copilot, Gemini, and so on. Um, but uh most of them are not using it uh, let's say on a daily basis. So this is only one third. Uh and this is quite interesting to see um that there is, I think, after such a short term, a very high share of people that are already using uh chatbots in procurement, and they describe use cases like, of course, from general workflows like creating presentations, uh, let's say formulating emails, uh, using translation and so on, yeah. But also more supply management related tasks. So, for example, to name uh competitors for suppliers, they are using chatbots for, or they are using it to write a tender or improve a tender letter, negotiation, prepare a negotiation, and so on. So it's quite interesting to see also uh new, let's say, ways of working around this uh topic of generative AI.

SPEAKER_01 31:05

Yeah, yeah, really interesting that one. You see, the yeah, it's it's already in the day-to-day operational work. Um but you know, but what what what I found interesting from what you've said there is that we're seeing those really definitive use cases for procurement. As you say, that that contract management use case, the spend analytics use case, where the provide, you know, where there's providers out there that are already um building that into their to their service um technology. Um, we're seeing it, we've just been to the the World Procurement Congress and seen the uh the you know what what's on the market already. Um and it's yeah, it's fantastic.

SPEAKER_02 31:46

Yeah, and and again, of course, as you said it in the in the beginning, or as we discussed it, important to have this always on the radar, on your individual radar, because what we see is the risk and resilience taking center stage. Uh we had the this geopolitical uh uh trend that we also have within the trend radar. So we have a lot of regionalization ongoing, we have a lot of public incentives ongoing, we have a lot of tariffs and sanctions ongoing. So a lot of companies are still dealing with the consequences of the geopolitics and the risk and resilience. And of course, and very important to have this technological view uh uh in place and on your own radar.

SPEAKER_01 32:30

Yeah, absolutely. Yeah. Um, and and you know, we're when we when we take that big view, you know, there we've got the we've got the mega trends, we've then go down to the to the micro trends. That there's a lot to consider there. It's a it's a very dynamic moving environment. The truth the trends are linked. Um so um given all of that, um, I mean, so what's your advice to to CPOs, procurement leaders? How how do they how do they synthesize all of that and and prioritize what what's important?

SPEAKER_02 33:04

Yeah, I think uh always good to to have an easy answer for a complex question, right? Yeah, so but this is what I think management is about. And uh yeah, what we said in our white paper uh with this procurement pathfinder is that there are essentially three, let's say, strategies that you need to look at. So you need to respond, of course, to some of those trends because they have an immediate impact. You need to prepare for some, and you the ones that are really long-term, you need to monitor. So to have those use cases in mind. And I think first, of course, CPO must address those immediate trends. So respond to those immediate trends that have a significant impact. We talked about it, inflation management, we have the geopolitical tensions and so on. The second one, the prepare is more for the midterm trends, like invest in the capabilities in your people and in the technologies that will become critical in the future. Like, for example, of course, AI, or we said also CO2 reduction, also linked uh, so to say, to digitalization. And this is enforced through regulation, anyways. So this is midterm, but you need to prepare for it now. Yeah. And the third one is, of course, then the monitoring aspect, and this is for trends that are emerging on the horizon that have not an immediate impact today, but they may maybe shape the procurement landscape in the future or in the long term. And we talked about these ones as well. I would say circular economy practices are a very good example for that.

SPEAKER_00 34:32

Yes.

SPEAKER_02 34:33

And I think last but not least, these are like the three strategies. So respond, prepare, and monitor. But as we said in this discussion as well, is the procurement trends, so to say, are developing or evolving at varying pace and impact, right? So maybe um trends under talent management have an accelerated impact today. We have a talent shortage, procurement needs to attract and retain talent. Conversely, trends like technology, environmental, they will unfold over a longer time horizon, but we will need this proactive engagement to mitigate the risks and build the capabilities that are needed in the future. So we must somehow develop this capability to discern the trends that have an immediate impact that we need respondents today, but we also need to discern those that are more in the mid-to-long term and say these are musts and these are ones that we need to monitor.

SPEAKER_01 35:32

Yeah, great, great. And of course, that's in the context of each CPO's business, you know, corporate objectives, their particular sector. You know, it's that's that's that leadership role of matching the trends to the business.

SPEAKER_02 35:46

Exactly. So in in our white paper, we also covered the different industries, uh, key industries like automotive, for example, like uh the medec industry, uh, and and also more for banking insurance companies, and also give some initial idea where we see differences in terms of the trends and their impact for these different industries.

SPEAKER_01 36:08

Yeah, great, great, brilliant. Um, Lauren, thank thank you very much for your um for your for your insight there. It's it, it's a it's a great piece of work. Um and uh just for for the podcast listeners, um, I'll put the link. You can download the the procurement pathfinder from the procurement initiative website. So that's procurementinitiative.org. Um I'll put a link into the uh in into the the notes from the from the podcast. Um so yeah, please, please download that. It's it's a it's a great piece of work. Um and of course, there's there's there's a lot to discuss there. It's it's a great um catalyst for for thinking, great catalyst for for discussion. Um so Lauren, thank you very much for taking us through that. Um just to finish up, I mean, how how can people contact you if they want to talk more, if they want to go deeper into the to the subjects?

SPEAKER_02 37:00

Yeah, of course. I welcome any uh inquiries or discussions on procurement in general, or of course on this uh procurement pathfinder research. So uh I think if anyone is interested, the easiest way is always to connect via LinkedIn. Uh so just send me a message and uh happy to connect. Great, great.

SPEAKER_01 37:17

Lauren, thank you. And we'll we'll we'll put that that connection in the um in the notes. Great. Very good. Um thank you so much. Um appreciated. Um and uh yeah, thank you for being a guest on the show. Thanks for having me, Richard. Thank you for joining us on the Procurement Initiative Leaders podcast. I really hope you enjoyed it. Looking for more procurement insights, tips, and developments from leading procurement professionals? Join our procurement initiative community on LinkedIn. Just open LinkedIn and search for the Procurement Initiative. And be sure to hit that subscribe button to never miss another episode. Thank you for listening.