The Four Faces of Procurement – the environment in 2020

Our new research paper, The Four Faces of Procurement, sponsored by Gatewit, is now available for download, free to procurement practitioners (solution providers require a PRO subscription).  Here’s the first of several extracts we’ll be publishing here, but do read the whole paper!

In this excerpt, we look at the external factors that will influence what is needed from the procurement profession.

“So, if we’re looking into the future, it seems reasonable to consider the wider landscape in which organisations and senior individuals will be working over the next few years.  It is difficult to consider what will be needed from the procurement department (if it still exists) or the individual professional, without trying to understand the likely environment in which they’ll be operating.

Now, if we could predict economic factors with any success we would already be very rich, having made our fortune on the stock or money markets. But here are some macro-level factors that seem likely to be important in 2020.

  • The world economy may be more stable, but we may still be in a phase of post-Euro uncertainty (if it does collapse) or coming to terms with something that resembles more a “United States of Europe” (if it hasn’t).
  • More established economies will be facing competition, not just in manufacturing but in also higher value goods and services, from BRIC (Brazil, Russia, India, China), and indeed from the next generation of developing countries (Indonesia, Vietnam, South Africa etc.)
  • Some resources will become even more scarce, valued or controversial; with access to rare minerals and metals for instance a source of both opportunity and potential conflict at a political and business level.
  • The opportunity for Governments to tax more seems unlikely with the mobility of money, so along with the pressures of ageing populations, there may be tensions between what the citizen expects their government to do for them, and what the State can afford to do.
  • But Governments will look to use their power and raise revenues by controlling more closely how private sector firms operate – through regulation, access rights and force of public opinion.

So it is likely that many organisations will face more economic and political uncertainty, maybe even turmoil. The balance between buyer and supplier – in some industries and markets at least – is likely to move towards favouring the supplier as we see global shortages in some commodity areas. The role of government will be questioned, which will lead to opportunities for the private sector (more outsourcing of services), but also perhaps more pressure to regulate private firms or pressure for them to operate in what is seen as a responsible manner.

In addition, one prediction we can make with some confidence is that the pace of technology development isn’t suddenly going to slow. The increased opportunities to use technology for the benefit of the organisation will become even more vital than today for most functions and professionals".

 

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