So just what is the Next Big Thing in procurement? That’s our QOTW

Since the beginning of 2011 there have been articles in magazines and on blogs all around the topic of the 'next big thing'.  Recently David Rae in Procurement Leaders asked 'what's next'?  What indeed. What is it that we should be getting excited about in procurement? What is going to make the strategy consultants their next million?  What will earn bright young procurement managers their first CPO role when they impress the headhunter, then the CEO or CFO, by their insight and strategic vision?

Over the years, we've had category management and strategic sourcing; eProcurement (transactional) and eSourcing (including reverse auctions). We've had whole life cost, and sustainable procurement. Outsourcing procurement was a big thing; but maybe hasn't quite taken off.

What's next? At the Empower event last week, Carlos Alvarenga of Accenture talked about 'Procurement 3.0', (and more to follow on that presentation), but quite a few people felt they were already at the point he was describing.

So let's put it out to you.  What should our bright young (or cynical old for that matter) procurement managers be looking at over the next couple of years? Any thoughts?


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Voices (4)

  1. Final Furlong:

    Bitter and Twisted, as usual, has the hit the nail on the head.

    The integration of commercial awareness and procurement skills within an organisation could be regarded as a signifcant 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. The associated ERP system, often integral to the success of these companies, is also owned by the Supply Chain function. Tesco deliberately selected Leahy’s successor due to his previous ownership of the ‘global supply chain’. It makes a massive profit but, as a percentage of its actual turnover (and cost base), it’s pitiful when compared to, say, Financial Services.

    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.

    Sustainability could be another ‘next big thing’. And I don’t mean being ‘green’. It may 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. Very small example: let’s take mobile phones. On the 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). Why do manufacturers need to differentiate the way their devices should be charged? Extraordinary waste. (It takes oil to make all of that plastic.) Ditto batteries.

  2. 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.

  3. Devron:

    The next big thing in procurement could be ‘procurement goes global’. Many UK businesses will be looking to survive the economic tightening of purse strings over the coming years but it does not mean it is the same for others around the globe. International trade may be on the cards and the procuring of goods and services exported out of the UK may not be a bad thing for the british economy.

  4. bitter and twisted:

    The importance of “Purchasing” is now settled. The fight will be whether organisations 1) teach procurement skills to everyone or 2) have an all-powerful purchasing dept. Obviously its horses for courses which approach is right for any particular company, but this wont stop a legion of consultants getting big dinners and comfy chairs swapping the 2 approaches round every couple of years.

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