Procurement of Tomorrow (or the day after that) Part 1

We welcome another guest post on our summer hot topic of the Future of Procurement – this is from Ed Cross, Executive Director at Odesma Ltd

The pace of technological innovation continues, however the level of adoption of enabling solutions built around this innovation moves at a relative snail’s pace, particularly in procurement. This might seem contentious but reflects my 30 or so years in a range of leading-edge procurement operations.

This is no different in a whole range of functions, industries and sectors. For example, we landed on the moon in the sixties, but space exploration has not moved on much; the battery-powered car has been around for a century, but is only now moving out of batch manufacture; the jet engine was created during the second world war, but long-distance travel has not particularly advanced beyond Frank Whittle’s original design. The functional structure and activities of most businesses follow a similar story: HR was called personnel, Finance was Accounting, and the structure of an organisation similarly has not changed a great deal in a century or more.

My point is that the pace at which new things are adopted moves very slowly, particularly in the B2B world, whilst innovation is occurring faster in B2C but is still very narrowly focused for example on cell phone technology & applications, the rise of Amazon and the like. At the same time we continually hear from the new 21st century Futurists (who were also about in the ‘90s) that the world is going to be ‘very’ quickly ‘very’ different.

Excuse me, but my experience tells me that change is much heralded but is much slower than forecast. When I started in procurement in the mid-‘80s with ICL as a silicon chip buyer, we had EDI (ecommerce) with our suppliers for the sending of a PO, and receipt of acknowledgements and invoices. Yet 30 years later many companies are still not or are only partially automated.

Until now, during my entire career in procurement I have avoided postulating on what the function would do and look like in the future given the digitisation and enablement of all facets of human activity. Clearly change is coming in a range of forms:

  1. Process Automation; a long time in adoption at 30 years or so, but procurement processing will become completely automated thanks to a range of readily integrated solutions across the S2P landscape. Robotic Process Automation to Chatbots will ultimately make this a lights-out factory solution with no human involvement – except, of course, choosing the purchase on occasion.
  1. Supply Chain Integration; immediate translation of customer demand into highly configurable products and solutions will result in the total integration of the voice of the customer through the entire supply chain instantly. This will be enabled by open source technologies and limit or eliminate the need for people to translate and interpret real-time requirements. This will likely lead to single unit bespoke solutions unique to each customer at lower cost.
  2. Information Integration; the B2C world has led the exponential growth in knowledge sharing (good and bad / true and false) through social networking solutions. In the commercial World the opportunity to see trends in real time as they occur, or catastrophes as they unfold will see immediate communication seamlessly between consumers and producers resulting in instantaneous responses, whether this is shifting sources of supply, production units or customer fulfilment centres. The information age as such will enable procurement people or systems to respond instantly to change and to opportunity.
  3. The Unit of One (Gig economy); the cultural and financial constraints of starting a business and supplying will disappear completely. Every individual anywhere in the world will become increasingly able to start up their proposition and communicate it to the world at almost no cost, whilst increasingly the cultural ‘norm’ is accepting this approach as a route to commercial advantage.
  4. Global marketplace intermediation; the likes of Amazon, eBay and Alibaba are changing the face of commerce, enabling instant competition globally between the gig economy workers and global conglomerates, thus driving intense and immediate competition in products and in the future services. Coupled with system integration and open source, there will be no stopping them.

So where does this leave procurement in the future? Let’s have a look in Part 2

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.