Spend Matters Procurement Predictions: Five Scenarios For the Next Decade (Part 1)

A few weeks back, I found myself with less than 24 hours to the Spend Matters UK/Europe first anniversary celebration without having prepared the "predictions" speech that Peter Smith had asked me to present. The idea was that attendees would gain something of substance that they could take back with them -- besides ringing eardrums from all the rock music -- from our little party. Fighting a combination of jetlag, late-night curry and the combined effects of good Bordeaux, Vintage Port and warm beer we had quaffed the previous day, I set out to put pen to paper to come up with five scenarios for procurement in 2020 on a short train ride into London. I wanted to describe five different worlds that were not necessarily mutually exclusive, bad or good -- just different from today, and logical extensions of where we might be headed as a function based on different happenings in the world and in our companies and organizations.

But before finalizing the details of each decade-out sketch, I thought it important to frame the current state of the market in a single slide -- or at least the issues contributing to my thinking, looking forward from today. Here, I suggested a number of key elements that were shaping my perspective starting with a European/EU economic meltdown, ironically at the time that the US is trying most to look more like Europe with healthcare, taxes, restrictive business practices (California cap/trade, OSHA, EPA enforcement, etc.) that unfortunately make us look more socialist than the socialists. Yet at the same time I pondered other things on my mind, such as the then PM of Italy and not just how he led his country into junk yielding 7%+ bond territory, but how such a physically unattractive individual could get such attractive young ladies to make house calls. Seriously, even Bill Clinton looked like a male model in comparison to Silvio's Jabba the Hut appearance (and no, Kiton or Brioni suits can't begin to cover that up). Lessons for procurement, you bet. But we need to keep these virtual pages at a PG-13 rating at worst, so I'll leave it to your imagination.

Obviously, there were more serious topics shaping my thinking as well. Like the fact we discovered the world was not flat thanks to globalization hiccups such as significant wage inflation and total cost increases on a global sourcing basis not to mention CSR, labor and different definitions of acceptable behaviors between China and other developing countries and the rest of the world. Moreover, I would have been negligent had I not shared the criticality of examining supply chain risk today -- of all types -- as well as the raw material and commodity volatility we face thanks to demand uncertainty, government trade policy, speculators and other factors.

I also shared a few other factors guiding my current thinking, including the increasing desire among procurement to ask "why," which ties into the fact that we see an increased level of procurement-led forecasting and planning on the rise, especially around commodities. Moreover, I offered up the newfound emphasis on the more effective management of all spend types -- complex services included -- we're seeing in the market. I closed with our view that today, technology enables procurement transformation in the best of cases vs. transformations that simply leverage it as a means to an end.

Where will all these observations leave us in ten year's time? Here are the five procurement scenarios I offered up at the event and in a series of coming posts, I'll describe and flesh these out in significant detail. So without further ado...

Scenario One: Extreme localization and decentralization require new approaches
Scenario Two: Beyond process: politics, regulation, philosophy and economics define procurement's focus
Scenario Three: Technology proves more then transformative -- emerging enterprise applications, mobile computing, social "intelligence" and technology democratization change the possibilities (and priorities) of procurement
Scenario Four: Global supply chain intelligence dictates winners and losers
Scenario Five: Core procurement is absorbed (e.g., by shared services such as corporate Six Sigma, finance, operations, HR)

As we examine these scenarios in detail in the coming posts, let's remember that they're not mutually exclusive. Nor do they exist on a fixed timeline. As an example, we might see Scenario One and Scenario Two dominate the thinking and discussion in the next three years, with Scenario Four really coming into place as we approach the turn of the next decade, with a combination of Three and Five ultimately resulting in 2022.

Jason Busch

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