The Conspiracy Against Procurement by 2025 – Making the Pub Debate Argument

Yesterday, I introduced the argument that I had to support during a pub debate in London with my colleague Peter Smith. I volunteered to take the side of the argument that procurement is doomed – specifically with the subtext that the digital revolution and other factors will make procurement functions a thing of the past by 2025.

I started my argument by framing the discussion around the notion that there are many elements conspiring against organized procurement that are driving employees and colleagues away from using procurement and even other organized aspects of the business.

This is a key point that procurement, even if you disagree with my argument, needs to factor into account. Here are the sub-bullets of my argument:

  • Suppliers like Amazon Business will forever change the way different spend areas are bought and looked at. And in doing so, they will reach business users and guide them away from procurement process and structure, whether we like it or not – albeit they also will empower those procurement organizations that want to work with new disruptive models. Specifically Amazon and others will give traditional legacy procurement models death by a thousand cuts by making the spend tail wag the dog.
  • Talent marketplaces and workforce intermediation platforms for buying contract labor or even project-based outcomes will enable business users to spend less and get better results for specific projects or simply hourly labor than previous consulting, services or temporary labor alternatives. Smart organizations will, however, invest in freelancer management systems (FMS) tools to work with this new services procurement undercurrent that empowers users.
  • Uber for ground transportation replacing car hire, car rental, taxis and traditional black car services will thwart the active management of ground transportation spend for procurement organizations that fail to look past the threat and partner with Uber and others on the business side by using business specific applications
  • App Store items within the ecosystem and other platforms will let users purchase technology, services, content and other solutions that are pre-integrated with existing technologies, eliminating the need for IT or procurement involvement in selection, sourcing and integration

Overall, when you add up these points, I observe that these alternative disruptive models aren’t typically just cheaper than the alternative for the business. They’re typically better. And procurement must adopt and change or it will be doomed.

Stay tuned as my argument continues.

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First Voice

  1. John Butcher:

    I agree that procurement must adapt or be doomed. Purchasing, evolved from order administration and the journey back in time goes on. Successful procurement leads the evolution by being aware of what is happening, why and what is coming next, both in the supply market and that of its own business industry. Companies are already 70% virtual now, and will be increasingly so, outsourcing more and more of its services and intellectual capital. The core of the company that remains will need to be even better at getting the best from its supply chain and also pulling its own diverse stakeholder groups together. In an increasingly digital world, software as a service and data both becoming increasingly important, so too is procurement’s role in getting marketing and IT to pull together. Too often work tech based marketing without strong and effective procurement is either compliant and useless, or useful but non-compliant. Typically it all depends on whether the work originate from IT or Marketing who classically have not involved each other early enough. Procurement, who knows value is reduced if involved late, can add more value by bringing the groups together, to treat the suppliers as allies not enemies, facilitate more conversations rather than being a blocker. That leads to a better understanding of the problem, a more robust solution and getting the best for the organisation.

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