6 Procurement Challenges You Can Face In 2022
COVID-19, for supply chains, was nothing short of a Black Swan catastrophe, with ripple effects that continue to affect the global markets. While some of these battles will go away over time, others will persist indefinitely. This signifies a shift in how we think about future supply chains.
Well, procurement professionals will have a tough time managing raw materials. Both pricing and availability for raw materials will be highly volatile. As a result, procurement leaders will need to plan their raw material procurement more carefully than ever before.
Let’s take a look at the sourcing challenges that procurement professionals are most likely to face in 2022.
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The Price Will Be Volatile as Demand Rises Around the World
As the global population rises, raw material availability will become more challenging for businesses. As a result, the prices for raw materials will be affected across the supply chain. In addition, suppliers may seek to differentiate themselves from competitors as well.
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The Logistics and Supply Chain Will Become More Complex
The complex geopolitics of raw material supply will make raw materials more difficult to procure. In 2022, new technology may allow companies to manufacture smartphones using raw materials from South Africa or China. As a result, sourcing will move beyond factors like availability and costs.
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Differentiation in Product Quality Will Strengthen Across the Board
Differentiation of raw materials across industries is already underway. For example, bauxite used for aluminium has unique qualities. Same way, coal used for steel production has unique qualities. Therefore, the raw materials industry will see increased emphasis on product quality.
Companies in a business that provide raw materials will go beyond delivering raw materials that meet specifications. For example, a company that provides raw materials might deal with the customers who need finished goods.
As a result, in 2022, procurement professionals will need to consider business continuity. They will also have to think about raw materials that are scalable for the customer’s product.
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Raw Material Procurement Will Become More Complex Due to Shrinking Suppliers
The raw material market is becoming more and more concentrated in supplies. This mainly affects countries with limited raw materials like oil and coal. Countries that have stored and preserved raw materials in large quantities will be able to make money in 2022.
As suppliers compete around the world, the quality of raw materials may suffer. This will make raw material procurement in 2022 even more challenging. This will be hard for professionals who work with raw materials to get it at cheap prices and ensure its availability.
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Sourcing Raw Materials Will Become Even More Multinational
The sourcing of raw materials is already heavily global, mainly iron ore, bauxite (for aluminium), and copper. The raw material supply chain is global because the people who buy raw materials have a worldwide presence. However, in 2022 procurement of raw materials will become more challenging due to the rise in raw material consumption and scarcity worldwide.
Raw materials are expensive, and we need more. Because of the increased consumption of raw materials, suppliers may have to find new places to get them. As raw material demand rises worldwide, raw material sourcing will become even more complex.
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Raw Materials Will Become Scarce as Innovation Drives Demand Higher
In 2022, innovation will drive the usage of raw materials. This will be particularly true for electronics, energy, and healthcare. People will buy more raw materials to meet the demand that comes from advances in these areas. However, these advances come at the cost of hurting the environment. As a result, people must consider factors beyond raw material availability while doing their jobs.
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