John Denslinger future gazes into 2022 and prepares a Bucket List for procurement professionals to help them handle the wave of demand about to reach shore.
From a business perspective, it all starts with a forecast and one key baseline is global GDP. According to its world economic outlook released October 2021, IMF projects global GDP at +4.9 per cent for 2022, down slightly from 2021’s post-pandemic rebound of +5.9 per cent. Lingering supply chain and capacity issues are expected and will likely hamper growth throughout the first half. Not factored are the consequences of Covid variants which could derail recovery efforts. Nevertheless, 2022 should be a banner year for industry.
Demand is the second key baseline and 2022 will see tidal waves of new technology driving global markets. Most significant is the 5G roll-out, digitalization of commerce and the electrification of just about everything else, most notably EV. Beneath that layer is a booming sector expansion: 5G smart phones, smart homes, servers, computers, gaming, Industry 4.0 and a huge government infrastructure stimulant. The demand is very real and at times may overwhelm supply capability.
Drilling down to the component level, semiconductors tend to be the perennial bellwether. WSTS forecasts 10.1 per cent growth in 2022 on the heels of a sensational 25 per cent increase in 2021. Other forecasters seem to agree: IC Insight sees 13 per cent and Semi Intelligence reports 15 per cent growth in 2022. With respect to passives and electromechanical, the technology explosion mentioned above has a content multiplier effect further escalating total demand for these components. It would not surprise me to see passive growth exceeding 15 per cent in 2022.
Goals! We dutifully set them every new year. While 2022 is no different, setting achievable goals in procurement might be a challenge, especially when it comes to sourcing vital components. With so many out-of-the-ordinary influences hindering supply, procurement’s bucket list might be oversized and overwhelming. In fairness, some factors are beyond their control: pandemic variants, trade wars, labor scarcity, regulatory interventions, etc, but the expectation remains: minimize the negative impact. That still leaves purchasing owning plenty of actionable items.
So here it is, procurement’s Top 10 Bucket List for 2022:
- A manageable growth forecast
- No line downs in the factory/end of daily briefings/fewer emergency meetings with senior management
- Plentiful inventory in the channel/scheduling flexibility
- Price stability/price reductions/favorable PPVs
- Normalizing of lead times to pre-pandemic levels
- Confirmation that capacity investments are producing results up-and-down the supply chain
- Inclusion of distributor partnerships in all future supply plans
- Resumption of functioning JITs
- Clear pathways via supplier initiatives to achieve sustainability and green energy goals
- Return of face-to-face advanced technology sessions
If I were to add #11, it would be ‘recognition’. You likely spent hours, day and night, on the phone expediting supply and coordinating delivery schedules with production. You kept lines running and factories open. Goods shipped to customers and demand was satisfied. Given the rosy forecast, let’s hope procurement’s bucket list is the reality for 2022.