Procurement is a dynamic facet of business operations that is influenced by a number of external factors — many of which are beyond a company's control. For procurement teams, being able to quickly react and adapt to these external factors is key, especially when uncertainty lies ahead.
As you prepare for 2024, the team at Asia Quality Focus is here to shed light on the top procurement challenges you can expect to face next year and provide expert strategies for overcoming these complexities.
1. Price Volatility and Inflation
The IMF forecasts that in 2024, global inflation will be around 4.8 percent, higher than optimal. Worse, many countries will not return inflation to acceptable levels until around 2025. With the high inflation, importers will keep grappling with higher product prices. Thus, importers should plan for inflation-related issues like budget overruns and reduced profitability.
Thankfully, there are many ways importers can mitigate the volatile prices. For one, businesses can seek out alternative suppliers with fair prices. Expanding your sourcing strategy to include other major manufacturing hubs outside of China can help protect you from localized inflation and cut costs. Additionally, companies can negotiate with their existing suppliers to lock in current rates or secure a better price for the new year.
2. Digitization of Procurement
Digitization and the use of technology has been a long-standing trend in the procurement space. Digital tools can help with everything from automated ordering to contract management. With the growing prevalence of AI in 2024, teams can even use digital programs to identify anomalies in procurement data and reduce risks.
Keep in mind that while digitization streamlines procurement processes, it has its fair share of issues. For instance, technologies like e-procurement increase the risk of cyber attacks. Moreover, these digital systems aren't cheap. Thus, importers will need a budget to buy and implement the technology. To mitigate these procurement challenges, importers should invest in robust cybersecurity measures. That way, businesses will keep sensitive data safe from attackers. Moreover, importers should offer internal training to support the transition to digital tools.
3. Geopolitics
Global tensions and conflicts are another possible procurement challenge coming in 2024. For example, the China-U.S. trade restrictions will keep prices volatile in the year ahead. However, like other procurement challenges, importers can outmaneuver geopolitics. For instance, the importers can diversify their supply sources. This diversity will cut overreliance on one region.
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4. Growing Awareness of Sustainability
The ever-growing importance of sustainable manufacturing is another possible challenge for procurement professionals in 2024. Importers will face growing pressure from consumers and regulators to align with eco-friendliness and ethical sourcing best practices in the year ahead.
Businesses should be vigilant of counterfeits and other misleading claims in their quest for more sustainable materials and processes. Some fraudsters will resort to branding products as sustainable or ethically sourced when they are not. Running a proper environmental or social audit of your suppliers through a trusted third party can help you verify that your suppliers and materials are as sustainable as they claim to be.
Simplify Your Procurement in 2024 with AQF
In the quest to navigate procurement challenges, it is easy to lower your vigilance when it comes to product quality. As a consequence, you could end up with subpar products that delay production and damage your brand’s reputation. This is where outsourcing quality control to an experienced company like AQF comes in handy.
We help importers maintain consistent quality with our comprehensive quality inspection services. Our expert team is available across China and all other major manufacturing hubs in Asia to help you verify supplier capabilities, reduce product defects, and ensure on-time production.
Don't waste money on subpar products in 2024; contact AQF today to create your tailored quality control program.
