For starters Oil, if you are procuring oil as a commodity you should expect to be a bumpy year. The decline in oil prices has sent many procurement offices to shift strategy. Going from indexed price formulas to fix priced formulas back and forth. 2015 should be no different, and as the past has showed, somewhere there is going to be a bounce back and some experts say a hike in prices sending your office in a very dangerous reactive mode. I´ve seen how some thermal generation companies reacted too fast and too impulsive in a way that they have a big issue now with high priced fuel inventory. Think twice about your strategy and don´t forget that you have company and business objectives to meet and is not about being a guru that beats the market.
As we all know Oil is mainly used nowadays for two main purposes: power generation and Transportation. So the other theme for the New Year is Freight Cost. Yes that means Total Cost of products. Bumpy ride for the contracting of freight too. Although oil prices may decrease, freight is affected by availability which tends to go into a scarce when oil prices are down. Securing good freight will be important. Strategies will have to be around planning ahead and anticipating future needs. You might see cost of freight going down but, is it available when you need it? So the procurement professional should adopt a “prepare ahead” strategy for freight for this year. You might see your service providers going in this same direction for a win-win partnership.
Besides the imminent oil roller-coaster, as the e-sourcing tools are evolving and the IT experts find new ways to support procurement you should see two main themes for the procurement tools: Market Analysis tools and Cloud based services. It is inevitable to see more and more refined big data, computer assisted market trend analysis. It goes based on the need to anticipate things like the oil price drops and the freight market mentioned before and all markets. The new improvements are around processing big data with more artificial and non-artificial intelligence. Big tools are being rolled out that have the latest algorithms with the combination of real life intelligence. The procurement professional should see more of this supporting their market intelligence and decision making.
Cloud Based services if they are not part of your ERP or your e-sourcing tools, they most probably will be by the end of the New Year. Expect to do more from your smart phone or tablet. Approve orders, check market trends, and review data reports. All from a remote device. Also find communities of suppliers and vendors gather together for your convenience.
2015 will definitely will be a challenging year for the procurement professional, also will be a good chance to show how the procurement function can add value to an organization, so good luck and think twice your strategies so you can be sure it´s the right way to go.