The Future of Procurement – Our New Paper Available Now

We know that you are all looking for some educational but interesting reading over the forthcoming holidays, so we are delighted to provide you with that, in the form of our new briefing paper, titled very simply "The Future of Procurement".

In a daring innovation for Spend Matters, this is a co-authored paper with Sigi Osagie, guru, adviser and Procurement Mojo author working with me on the project (and pictured here with Garry Mansell of Trade Extensions). Some of you might have caught either our pub debate earlier this year or my presentation at the Trade Extensions conference in the autumn, when we covered this topic, but in the new paper we take the arguments further and deeper. Procurement has blossomed as a profession and a function over the past twenty years; is the outlook set fair for the next twenty, or are the storm clouds gathering?

We think anyone interested in our profession will find this a stimulating read, and perhaps take away a few points in terms of what we all need to do, if we want that future to be a positive one. We will come back to the paper in the New Year, but here is a brief extract for now, looking at some of the reasons why procurement has been so successful in recent years. And you can download the whole paper, free on registration, from the Trade Extensions website here.

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THE FUTURE OF PROCUREMENT

Procurement has been perhaps the most successful business “profession” over the past twenty years in terms of growth in numbers and status. We have seen growth in membership of CIPS and other professional bodies, more universities offering advanced education in the subject, and recognition of the importance of procurement for the effective and efficient delivery of public services, in countries from Afghanistan to Zambia.

At individual organisation level, there has been endorsement of Procurement’s importance as a strategic lever for competitive advantage in many blue-chip companies, from GlaxoSmithKline to IKEA, and the example of these leaders has encouraged others to allow procurement to influence more of the organisation’s third-party spend. That has been supported by more informed use of technology, as well as the increasingly professionalised staff.

But why has procurement seen this leap in status and influence? There are a number of factors that have contributed to this development:

  • As business and technological complexity has grown, it has become more obvious that generally businesses are more successful if they ‘stick to their knitting’ and concentrate on what they’re really good at, whilst leveraging markets and suppliers’ expertise, economies of scale and economies of learning. For example, Apple is good at designing, developing and marketing phones and tablets, but they leave the manufacturing to their outsource supply partners.
  • So vertical integration has become much less common than was the case, and the principle of ‘comparative advantage’ in macroeconomics has been applied at organisational level too as firms specialise. Inevitably that means more reliance on third-party suppliers to meet the organisation’s needs.
  • The world has become more global in its outlook, with firms both selling to and buying from a much wider range of trading partners than they did two or three generations ago. That has brought many benefits, but it has also highlighted issues around supply chain risk as well as opportunities.

These key factors – specialisation, globalisation and risk - have led to more and more of an organisation’s revenue being spent with third-party suppliers rather than on internal staff costs ... (download the paper for more!)

First Voice

  1. David Atkinson:

    A good read.

    And I’m pleased to see ‘ERM’ make its appearance. 😉

    What I particularly liked was the more ‘realistic’ assessment of the impact of technology. Yes, it can and probably will replace the ‘drones’, but not the thinkers. It will surely mean that anyone considering entering the profession better have strong ambition to be a ‘player’, as the traditional roles of the previous generation will no longer exist. One can’t help but think that CIPS member numbers will go south too.

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