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What the 2017 World Economic Forum means for procurement

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For the business community, The World Economic Forum typically serves as a barometer of the trends and issues that will shape the world in the year ahead.

 

At the 2017 Forum climate change, gender equality and globalisation were all on the agenda and will all have an impact on procurement functions and their supply chains. Here’s how.

 

On climate change

 

Marking the first major meeting of business leaders since the landmark Paris Climate Agreement, the environment and sustainability formed a key part of the discussions, which centred on the move away from fossil to more sustainable fuels.

 

Alternative energies that could power manufacturing facilities or fuel logistics networks are coming. Indeed, the Hydrogen Council met at the Forum and pledged to “position hydrogen among the key solutions of the energy transition”.

 

Some companies are already trialling it out. Automaker Toyota committed to sourcing hydrogen fuel for its vehicles as it tries to become completely carbon neutral by 2050.

 

As the supply chain is estimated to represent between 50% and 70% of a business’s carbon footprint, procurement will certainly be looking to such fuels increasingly over the course of 2017.

 

On gender

 

Gender has always been a major talking point at and of the Forum. The proportion of women in attendance has always been well below that of men. In 2017 20% of attendees were women compared with just 18% in 2016. Three of the six co-chairs this year were also women as efforts were made to try and strike a balance.

 

At this year’s Forum both pay and the number of women working in the technology sector were key talking points.

 

"Gender equality is a leadership issue," said Amy Weaver, executive vice president of software firm Salesforce.

 

At Salesforce employees raised concerns about women being paid less than men and this triggered CEO Marc Benioff to conduct a payroll analysis. When this confirmed he took the step of making the issue public and restructured salaries accordingly.

 

In light of Procurement Leaders’ Salary Survey 2017, in which it was found that women in procurement earn on average 75% of their male counterparts, it seems this issue is something that is seen across many functions.

 

If procurement wants to attract the very best into the function and build that diverse team that can open up new lines of thinking then this is certainly something that will have to be considered further.

 

On globalisation

 

In 2016 the business world was shaken by the UK’s vote to leave the European Union and the election of Donald Trump and president of the US. Fears were raised about the implications these would have on free trade and globalisation. In his election campaign, Donald Trump pledged to impose tariffs on goods and build a wall between the US and Mexico.

 

Free trade and open markets have been synonymous with global supply chains.

 

At the Forum, CEOs from across many industries pledged to localise supply chains.

 

"The basic message is to be more national, don’t just be global," Richard Edelman, CEO of communications marketing firm Edelman, told Reuters.

 

China’s President Xi Jinping however warned businesses against a protectionist agenda, arguing that globalisation can’t and shouldn’t be reversed.

 

"Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air," said Xi.

 

Procurement will no doubt be reviewing what these potential changes will mean for them and their supply chains. Local suppliers may help with making a business more agile but that will come at increased costs.

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Rachel Sharp
Posted by Rachel Sharp

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