The next big thing in Procurement; comments from our QOTW

We asked last week – what is the next big thing in procurement? We had some good replies, with three strong themes emerging.
Final Furlong galloped away with a new take on ‘sustainability:

Sustainability could be another ‘next big thing’. And I don’t mean being ‘green’. It may drive the creation of alliances (and standards) across many industries. The planet and its consumers can no longer afford to have such massive choice and differentiation across products where there is no significant benefit in doing so. … Let’s take mobile phones. On one end of a charger there is a standard three-pin plug – on the other end, for each mobile phone manufacturer, a totally different terminal for inserting into the phone. I have approx 20 chargers around the house yet I only ever use two (downstairs/upstairs). Extraordinary waste…

Theme number 2 was around globalisation - or whatever we call the reverse...with some differing views. This was from Pete from Purchasing Insight:

Business process repatriation - The list of factors why we’ll see more and more repatriation of business processes, whether that’s purchasing, AP or P2P, includes: Geopolitical risks; global supply chain disruption caused by unpredictable natural events; maturation of automated purchase to pay processes (AP automation in particular); staff attrition rates in traditional low cost countries and the decay of the labor arbitrage model.

Devron on the other hand looked at it from a different angle; procurement will take on greater significance in countries whose economies are rapidly growing. “The next big thing in procurement could be ‘procurement goes global’”. And that would include “procuring of goods and services exported out of the UK, which may not be a bad thing for the British economy”.

The future shape of the procurement ‘function’ was the final theme (and one we’ll certainly come back to). Bitter and Twisted said:

The fight will be whether organisations 1) teach procurement skills to everyone or 2) have an all-powerful purchasing department. Obviously it’s horses for courses which approach is right for any particular company, but this won’t stop a legion of consultants getting big dinners and comfy chairs swapping the 2 approaches round every couple of years.

Final Furlong agreed.

The integration of commercial awareness and procurement skills within an organisation could be regarded as a significant step for many. It would lead to a point where ‘demand management’ (largely in non-manufacturing/retail firms) would be an ‘unconscious competence’.
I also believe that one of the biggest battles procurement has had to face in many non-manufacturing/retail organisations is that, functionally, it doesn’t ‘own’ much. IT owns the IT infrastructure (and budget), Finance owns all of the numbers, HR owns the people, businesses own their budgets (and their clients), and so on. Which is why each of these areas often have a seat on the Board. One could argue that, in manufacturing/retail, the Supply Chain function owns the supply chain and the suppliers within it. So how can procurement create a sense of ownership? Of what? When it does, it can instill commercial and procurement skills across the organisation and be the all-powerful purchasing entity.
Cost reduction will always be one of the big hooks for procurement but a CEO with strong leadership can significantly reduce the costs across his organisation by issuing a simple announcement to his staff, thereby wiping out the ‘perceived value-add’ in a split-second with little more than the cost of an email.

Thanks as always to all our contributors!

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