Future of Procurement – A Round Up of This Summer’s Series

It’s that back to school, start of a new academic year feeling this week, and suddenly the daily email load will jump 50% as everyone picks up those projects that got put on hold over the summer.

If you’ve been away from Spend Matters, you missed our series of articles on the Future of Procurement. To be honest, we hoped we might get a few more submissions, but what we had was excellent – genuinely thought-provoking content from our contributors.

The debate started really here with our own critique of the CIPS (Chartered Institute of Procurement and Supply) “Future of Procurement and Supply Management” research project.  We found it a mixed bag really, criticising some of the way the work was presented, and the way it focused on two “visions” of the future, but we agree with many of the messages. Here is some of what we said.

We need to move ahead rapidly with automation, is the message (in the CIPS report), then prepare ourselves for this new role, based more around managing relationships and setting the environment (as we think of it) for organisational procurement success.  There’s a key theme in that, around the need for PSM to be proactive, to see ourselves market-makers and influencers, not just the passive accepters of what goes on in the supply-side world. But do PSM professionals see that as their role?

The authors also highlight the need for the profession to be aware of strategic blind spots – for example, they report that discussion with research participants around data and systems tended to get stuck around doing current work more efficiently, rather than the “potential game-changing exponential gains and risks of transformative data and systems”.

Our first external contributor was David Feavearyear from Pearson, with an insightful senior practitioner’s viewpoint. He sees much more automation, but has hope for the survival of procurement-type skills.

“… the procurement of complex services and strategic relationships (both internal and external) is likely to prove more difficult to replace. In the case of the former, it seems highly likely that there will continue to be a role for people that are able to strategise, build consortia, translate business requirements into outcomes and build effective, trust-based relationships both internally and externally”.

But he points out that everyone in the business will consider that they have the skills that will still be “human”, because they are mainly behavioural or general business related rather than “technical” procurement skills.  So that calls into question whether there will still be a defined “procurement function” in the business – that will depend on whether leaders get ahead of the curve and attract the right talent. He finished with a great rallying call.

“Procurement needs to be relevant to its stakeholders, to think about outcomes and influence rather than process and mandate. It’s a different skill set, less process and more judgement based. I heard a great quote at a conference recently: ‘if you don’t like change, you will like irrelevance even less’. It is very true ... as a function we need to think about whether we get out ahead of the curve and help shape it, or whether we resign ourselves to becoming increasingly obsolete. It is up to all of us to shape the future and to determine what we want to be famous for!”

Ed Cross, a founder of procurement consulting firm Odesma, contributed an excellent two-parter, here and here. He focused heavily on technology, suggesting it is not just the transactional areas that will be affected by automation.

“… this leaves sourcing and decision-making, areas that I have always thought would permanently remain with people and not systems. However, now I am not so sure. Analytics and Decision Support is still in its infancy from an application perspective, though the enabling components are readily available in the form of off-the-shelf AI programmes supported with easy-to-use integration languages (it’s aptly called R) mean that almost every decision could be made by an intelligent computer. This means that the Procurement AI could tell the procurement leader or another intelligent computer exactly what to do and when – I envisage an Alexa-type bot on every person’s desk.

He was not too hopeful for the future of the “profession” - I believe that procurement technological enablement will ultimately eliminate virtually every task and result in the procurement function as we know it not being needed any longer. I postulate that procurement thinking and creativity will move into a commercial or strategic function with one or two roles considering direction and how to create competitive advantage. The rest will be automated and AI-enabled.

However, because organisations are slow to take advantage of technology, he thinks this will take 10 to 15 years – some hope for us there !

Alan Haynes, an experienced practitioner, took us through some of the history of the profession before moving onto the future. He foresees technology taking away the idea that “procurement” possesses a unique skill-set, suggests we and predicts that change will come faster than we imagine. So different approaches will be necessary – “Innovation (an overused term I know) needs to come to the fore more than ever, we need to work more closely with our suppliers to extract the additional value not available through the standard contract management relationship approach, we need to let the businesses in which we ply our trade to ‘have their head’ occasionally in pursuit of new and different ways”.

That will include changes in what are currently seen as core procurement processes; “…the traditional RFx approach stifles creativity and in so many ways competition, as the cost and tedium associated with them deliver less than optimal outcomes”.

Then just yesterday, we heard from Apex Analytix on the subject of Accurate Vendor Master Data and its importance as the backbone of procurement going forward. "Smart, AI-leveraging supplier portals that cover 100% of the supplier base ... are a genuinely effective way of enhancing the quality of supplier master data. Especially so, when augmented by robotic process automation capabilities and the ability to interrogate data sources known to be authoritative. In other words, use portals to onboard suppliers, and to solicit full and complete data at the point of that onboarding, and accuracy levels rocket."

So if you didn’t pick up on these first time round, do take a look now – it will set you up nicely to do some serious strategic thinking for the “new term!”

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