Prediction one: Developments in procurement
General – 2014 will be the year which will see organisations move away from short-term cost reduction approaches and become more mid- to long-term in regard to supply security and SRM, to control prices in a more collaborative approach with their suppliers. This is because it will be the year when suppliers start to become more aggressive and look to exploit rising inflation to justify recovery of the diminishing profit margins over the past four years. Year after year of repeated cost challenges and exploitation of the weakening economy will come back to haunt clients who will now be on the receiving end of suppliers looking to reclaim their ‘pound of flesh’.
Business- Private Equity companies, having ridden out the recession and having used the low supplier pricing to enhance the EBITDA of their investments will now look to divest and move on to new investments. This will see an increase in the number of organisations being sold or going through mergers compared to 2013.
Sport – In a World Cup year there are many contenders for the main prize. Brazil are on their home patch, Spain are going for a record of four back-to-back major championship wins (currently two European Championships and the 2010 World Cup) and it is difficult to discount Argentina or Germany too. That said, there are many countries who stand an outside chance – including Italy, Holland, Uruguay, France, England and every neutral’s favourite, Belgium. In my opinion Spain are aging and past their peak, Germany, like other European teams, will struggle with the humidity and Argentina rarely play as a team. So, if Brazil can cope with home team pressure, then my money will be on them.
Prediction two: 3D Printers will redefine supply chains
From printing spare parts to model toys, and now even to baking cakes, 3-D printers have come a long way to redefine the way we expect supply chains to be. It’s not a far off dream that aircraft maintenance units will not have to worry about storing costly spares as they will soon be able to print nuts, bolts and valves in their printing cells. Recently, 3-D printers entered the kitchen arena when a California based business, “The Sugar Lab”, started printing their cakes and confectionary items. So it won’t be a big surprise if we soon start witnessing globally dispersed supplier parks where the suppliers get paid not by the volume of inventory shipped, but by the number of times their designs are printed on a 3D printer. Moreover, the accuracy of these printers can ensure a quality consistency to the minutest of the levels. Though the 3D printing market is still in a nascent stage, Gartner predicts worldwide shipments of sub-$100,000 3D printers to grow 49% this year, to reach a total of 56,507 units; while other independent research shows a 23% growth for 3D printing technologies over the next seven years, making it a $8.5b worth market by 2020.
With a growing emphasis on fuel conservation and challenges from emerging megacities, the mass utilisation of 3-D printers in households may soon not be just another scene from a sci-fi movie. The technology that helped create replicas for James Bond’s Aston Martin DB5 in the movie Skyfall, might start becoming just another household appliance. An early Christmas present for 2014 anyone?
Prediction three: IT still key
IT systems will continue to play a key part in procurement related activities in 2014. This will result in system providers becoming more competitive and potentially lead to price increases.
Prediction four: The Bitcoin bubble will burst (mostly)
A combination of hype and regulatory benchmarks has driven this virtual currency to spectacular highs in 2013. Yet the currency continues to be used only at the fringes of the world economy, and most purchases remain purely speculative. As such, the slide that began with China’s and Greenspan’s near-simultaneous negative rulings on the currency will continue. However, its underlying utility for online transfers should allow the Bitcoin to retain its more stable level of early 2013 in the $150-$250 range.
Prediction five: The UK Government will focus on cutting red tape
The Welsh Government is looking to save £25 million annually of its £4.2 billion public sector spend in 2014. To achieve that, the Welsh Government’s National Procurement Service (NPS) will focus on helping small to medium business to win public sector contracts by reducing bureaucracy and administrations. As part of these initiatives, NPS will work on a “resource efficiency framework” focused on SMEs and micro-business that implies not going to do a pre-qualification questionnaire, but doing due diligence to reduce the burden on suppliers and minimise the bureaucracy.
Prediction six: Sport – A win for team spirit
What a pleasure it is to watch great sportsmen. Iconic tennis or golf players come to mind. It is an even greater joy to see a team of 11 players playing in harmony and being more than just the sum of its components. Not just in harmony but supporting one another, never giving up, dreaming the impossible. 2013 showed that teams like Bayern Munich could outplay Barca in style, and that Miami Heat could turn around an impossible game against San Antonio in the NBA finals – which shows that it is not just about the star, the signature signing or player, or about money. I predict that great teams will decide the major sport events around the world, not just individuals. Brazil will prove, as in the Confed Cup that once honour is in play in front of a home crowd they are extremely difficult to beat. And the Champions League will be won by Bayern Munich, the most balanced and consistent team.
Prediction seven: Sport – Belgium will reach the semi-final of the 2014 FIFA World Cup
The resurgent “Red Devils” cruised through their qualifying round and have been handed a favourable draw in Brazil. Blessed with a young core of rising superstars up front and complemented by a maturing defence in the back, the Belgians are poised to make a deep run in their first major tournament in 12 years. While a lack of experience in big competitions is a concern, this golden generation of footballers should win their group fairly easily, before beating USA/Portugal and Argentina/France en route to the final four.
Prediction eight: Growth in online retailing
The proportion of online sales will continue increasing faster than UK’s retail sales rates. In 2014 online shoppers are going to spend more time browsing and comparing retailers’ online offerings, but after having made the buying decision, the buyers are likely to spend more money on the goods than in 2013. Retailers are also investing in new technologies and online technology solutions to facilitate user-friendly buying experiences. Sector-wise, DIY home repairing retailers and department stores will continue recording the highest proportions of the UK’s online sales, increasing the value of online retailing sales even further. Food, clothing and reduced priced luxury goods will keep their place as the most purchased online goods.
Prediction nine: New steps in technology
Big Data: Spend data at its most basic level identifies what is being purchased and from which organisation. Taking spend analytics a step further is to see which individual in the organisation is buying, how they are buying and why. The next step is benchmarking what an organisation is spending against the industry overall which will help organisations uncover previously untapped savings opportunities by looking at spending behaviours and identifying new and better ways to proactively influence demand and inefficiencies.
Battery life: Apple or Samsung will launch a smartphone with a half-decent battery life. Despite many advances in smartphones (I am not even sure what half the functions on my smartphone do!) battery life rarely exceeds 24 hours. In 2014, a smartphone will come on the market with a battery life of a week or more. Whichever manufacturer achieves this will steal vast market share and, more importantly, win my custom!
Prediction ten: New approaches in marketing
Did you love it or hate it? No, not Marmite but the Sainsbury’s Christmas advert.
Now that we are pulling out of recession and Marketing investment is becoming more secure we are seeing more brand advertisements presenting their brand in an alternative creative way. We already have alternative comedy and now we have alternative brand advertising where the impact is designed to come from association with some ‘found’ happy vibes which already exist.
How does the massive TV advertising fit with measurement being so much more accountable in online advertising? At the end of the day it is all down to ‘Return on Investment’ isn’t it? While it is easier to track the advertising impact on the Christmas sales, in general sales from brand advertising take a long time to build up, so attributing the sales build up over time is harder and is difficult to fit in with a quick results culture.
So whenever there is a need to measure the effectiveness of brand advertising remember that the impact should be expected to build over time – so you need to allow for a suitable time period in your targets.