GEP Outlook 2020: New Business & Economic Realities in a Post-Pandemic World

Procurement and Supply Chain ManagementNEW BUSINESS AND ECONOMIC REALITIES IN A POST-PANDEMIC WORLD 01Introduction02Executive Summary0408Global Business and Macroeconomic TrendsThe 2020 Landscape: Seven Areas of Significant Change and Impact• Introduction • The Macro Indicators -GDP Growth -Energy Costs -Interest Rates -Labor Rates -Geopolitics• Business Resilience in the New Age • Cost Base Reset • Third-Party Risk Management (TPRM) • Source-to-Pay and Budget-to-Pay • Sustainability, Regulatory and Consumer Pressures • Digital Technology and Transformation • Predictive Analytics21Conclusion2223EndnotesAdditional Sources INSIGHTDRIVESINNOVATION1NEW BUSINESS AND ECONOMIC REALITIES IN A POST-PANDEMIC WORLDINTRODUCTIONOnly a few months into the new decade, the world looks very different, and the economic predictions that were confidently put forward at the start of this year have largely been upended. So we have undertaken to publish an updated edition of our eighth annual GEP Outlook Report, in which we present our revised analysis of the trends, priority topics and influencing factors that should capture the awareness of business leaders for the remainder of this year and beyond.The challenges we all have unexpectedly encountered in the first and early second quarters of 2020 should drive home the message that stability should never be taken for granted, and that unplanned events can invalidate the expectations of even the most trusted authorities. But with 20 years of experience managing over $200 billion in spend for leading Fortune 500 and similar businesses, our firm and its team of respected consultants and technology advisors can offer guidance to help business leaders adapt and chart their course through the new environment in which we find ourselves.Emerging from nowhere, the COVID-19 pandemic has redefined the concept of business resilience. Organizations across the world are focusing on employee health and safety, liquidity and cash flow, overcoming supply chain disruption, and managing risks to business continuity. The crisis has demonstrated the need to rethink long-established supply chain and forecasting strategies. And the pandemic isn’t all that has rattled the world in 2020. Trade wars, fires in Australia, locusts in East Africa, political turmoil, and other conflicts continue to dominate headlines. Business leaders have the unenviable task of navigating a global pandemic amid an economic downturn, a complex political landscape, consumer pressures to act on environmental concerns, and ever-evolving digital technology innovation and disruption.Amid these challenges, supply chain and procurement will assume greater strategic importance than ever before. As objective business partners focused on both value and cost, they are strongly positioned to champion the recovery through the crisis and set the stage for winning the future. While most Fortune 500 companies have recognized the need for robust and effective supply chain and procurement functions during the past 20 years, leaders will use 2020 to strategically reposition the impact of these functions. INSIGHTDRIVESINNOVATION2NEW BUSINESS AND ECONOMIC REALITIES IN A POST-PANDEMIC WORLDEXECUTIVE SUMMARY The COVID-19 outbreak and the unpredictable first few months of the year put to rest any late-2019 predictions of what 2020 would look like. Global GDP is expected to shrink, tipping major economies into a recession, the severity of which will depend on the duration of economic restrictions and efficacy of fiscal measures. Energy prices dropped significantly in early 2020, with substantial volatility attributed to a sharp decline in global demand and the OPEC+ price war through the first half of the year. Interest rates are being slashed across the globe as an emergency response to the health crisis. The liquidity and solvency problems that organizations face are producing unprecedented unemployment rates. The trade dispute between China and the United States remains a distraction for business leaders and is prompting many to slow down investment decisions. Similarly, the protracted separation of the United Kingdom from mainland Europe drags on, complicating the long-term business outlook.New TechnologiesEven in this time of uncertainty, the outlook for disruptive technology is crystal clear. With the COVID-19 pandemic resulting in shutdowns of offices, manufacturing plants, supply chains and more, companies will expedite their investment plans for digital capabilities such as automation. The supply chain of the future will be more digital and more automated; this crisis will convert many long-term skeptics. Through a combination of secure, cloud-based technology solutions and the introduction of artificial intelligence (AI), manual and time-consuming activities will be streamlined and improved both within and outside supply chain and procurement. Leaders who implement these new technologies will position their companies f