‘Titans’ could dominate procurement landscape

posted by Francis Churchill
16 April 2018

The business landscape could become increasingly dominated by a few business titans that control AI, connectivity and resources, a CIPS study has found.

This is one of two possible outcomes for the future of the global business landscape that buyers need to prepare for, CIPS said. In this scenario the ownership of infrastructure, data and systems, resources and market power would be concentrated within a few major businesses.

As a result new procurement and supply management systems would drive down transaction cost and make supply markets more dynamic but also unstable.

These titans are likely to be big tech companies, with Amazon being named as one of the likely dominant forces.

In a second potential scenario outlined in the report, The Future of Procurement and Supply Chain, market power could be more distributed and “networked”, caused by growth in the sharing economy and non-profit sector and by a shift towards less hierarchical and more collaborative business structures.

In a networked scenario, procurement systems would be more transparent, opening up more influence to external stakeholders, but decision making and innovation would become slower.

The report said either one of these systems is likely to become the norm in the next 15 years, but stressed that it would be one or the other as the two landscapes could not co-exist.

Buyers should consider how they need to prepare their businesses for both these potential outcomes, CIPS said.

Helen Alder, group head of knowledge and product development at CIPS, said: “These potential scenarios can be just a few short years away, so it’s important for everyone involved in sourcing decisions to look at our titans and networked scenarios and see how they resonate with the aims of your organisation and how you can move into this future with ease and taking advantage of the opportunities they bring.”

The paper was written in partnership with Aston University and the University of Liverpool, and involved in-depth discussions with procurement and supply management experts, discussions with senior executives and consultants outside the function.

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