What will procurement look like in 10 years? - Supply Management

What will procurement look like in 10 years?

19 March 2013
The world economy may be more stable, but most established economies will be facing competition from the BRIC nations – and it’s hard to predict what state Europe will be in politically in 10 years’ time. Some resources will become more scarce, valued or controversial, with access to rare minerals and metals, for example, becoming a source of both opportunity and conflict, politically and at a business level. We may see governments flexing their power and raising revenues by exercising closer control over how private sector companies operate, so it’s likely, therefore, that many organisations will face more economic and political uncertainty. Global shortages in some commodity areas may see the balance between buyer and supplier move toward favouring the supplier and, as the role of government is questioned, there will be greater opportunities in the private sector, perhaps leading to more outsourcing of services. Conversely, there may also be more pressure to regulate private firms, or pressure for them to behave more responsibly. One thing we can confidently predict is that there’ll be no slowdown in technology development or in the opportunities for procurement professionals to use that technology for the benefit of their company. It’s possible that – in a few limited areas - procurement might virtually disappear, with transactional procurement activities becoming largely automated and budget holders taking on some of the more strategic market or supplier management activities. But, even with technology becoming more powerful, there’s no reason to believe that there’ll be a reduction in the need for human judgement or inter-personal contact. For example, although we’ll see a further increase in the automation of supply chain activities, there’ll still be critical commercial and judgemental issues regarding outsourcing and reputation management that can’t be left to machines alone. And in other sectors, such as services or public sector procurement, management of internal stakeholder dynamics and how they relate to the external market will continue to be central for procurement. So, we won’t see procurement disappear in 10 years, but we will see a need for it to change and for purchasing professionals to develop new skills to manage this change. The industry will need to move away from its current dominant focus on reducing unit cost to playing a wider, more fundamental role in business. Procurement’s primary role in the future will be to manage the value an organisation gains from dealing with the external world of existing and potential suppliers. The future will be a world of rapid change, bringing with it fresh challenges and global issues, but the procurement profession will face it with improved technology and by its personnel developing new and necessary skills, knowledge and behaviour. ☛ Pedro Paulo is CEO of Gatewit
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