KPMG on Procurement in 2025: Early Warning Systems, Market Intelligence, and What Not to Outsource
Categories: Innovation, Learning / Research, Procurement Commentary | Tags: L2, Process and Best Practice
Continuing on with this analysis of KPMG’s star-gazing look at the future of procurement, FUTUREBUY: The Future of Procurement – 25 in 25, we come to the notion of a mission control center or role for the function, or as the authors put it, the “idea of procurement acting as a supply side early warning system, as an enabler of decision-support, and as a market-facing forecaster” and the challenge that this “is a new role for many companies.”
We concur that “the capability to gain, translate, and codify this type of intelligence into meaningful implications and actions does not inherently reside in many procurement groups.” Yet in the future it must. And this is where we differ, in part, with KPMG’s thinking. Here, the authors argue that the future may see “a network of external partners that create analytical insights, triggers, and event notices that are easily digestible, accessible, and communicated in a timely manner to the right decision-maker in the organization. In this environment, speed of analytics is critical to effective decision-making.”
Yet the concept of a network of partners coming together is one we would not want to see in practice. Rather, what we think is likely to occur is that information specialists (think Bloomberg, LexisNexis, Thomson Reuters, etc.) will create new and enhanced offerings for the procurement community, just as they have financial, legal, and other professionals. And we’ll see a new set of skills cluster in procurement groups to make sense of this data.
Ask yourself: do investment banks outsource their trading functions? Heck no. It’s core to their business (and it’s why Goldman Sachs is still the king of banking as judged by their 2013 performance, compared to Morgan Stanley and others). Yet of course they use their formal and informal networks, intelligence and operational terminals, exchanges and other systems to manage, link and execute operations based on intelligence signals. Procurement must develop the right skill sets to act on market intelligence. However, the secret sauce of successful teams will be managing the interpretation and execution of decisions on their own.
You can download the full KPMG paper if you’re interested in more on the topic. Even if you don’t agree with everything in it (like us in this one area), we promise it will get you thinking!