Embracing digital changes

David Noble, Group CEO, Chartered Institute of Procurement & Supply
8 June 2015

Over 50 Years ago, a young research and development director called Gordon Moore made an observation about technological advancement that would come to bear his name decades later and become a metaphor for our present time in this second digital age.

Moore predicted that the performance of computing technology such as the microchip would double its levels of capacity and speed every 18 months or so. This became known as Moore’s Law and can equally be applied to other technologies such as robotics, nanotechnology and 3D printers (which incidentally, have been around since 1983). Though the development of microchips has now slowed (the improvement rate is ‘only’ 50 per cent) this rate is still impressive and reflects the similar velocity of change in business over the last half century.

One example of this meteoric revolution is ‘Uberisation’ (Uberfication/Uberification), terms which are fast becoming part of the modern business lexicon. They reflect a radically new business model as well as societal change in a ‘shared economy’. It also means serious competition for traditional businesses with customers having more power than ever before and individuals taking greater control of local economies and setting up their own companies. In this new landscape, first, there were Uber taxis, where licensed cabs were superseded by the convenience of local individuals offering you a lift within a few minutes of your location and at half the cost. Many more businesses have followed suit, including medical services for non-emergency cases and legal support.

The Chinese government is encouraging this sharing or individual transaction economy in a big way. A user-generated market where thousands of entrepreneurs can collaborate and develop their business with a level of autonomy that has no historical comparison is exciting. In China, the most successful example so far, due to its scale and impact is Yiwu City in the Zhejiang province, the first ‘Taobao’ village. Named after a popular e-commerce site, its 800 residents have registered 2,800 online shops.

Uber’s methods has its critics. There are questions about passenger safety and its evasion of laws and regulations, and the ride-sharing service has been banned in many countries. However at its best it restructures supply and demand and creates something like a second spring for entrepreneurs in this post-recession world. Uberisation involves collaboration, fast-paced working, less adherence to traditional working methods, less hierarchy, trust in employees, quick decisions and using data. All of which we should encourage in the profession as we challenge old ways of thinking. Moore went on to co-found the Intel Corporation and in 2013 he agreed with other commentators that there was likely to be a saturation point in Moore’s Law. He predicted only one more decade of extreme advances, but to my mind, the future is always difficult to predict.

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Risk permeates every aspect of procurement and the level and type of risk can change in a day, for instance if there is a natural disaster. Although some risks can’t be managed immediately, professionals need access to topical, quality data to help them plan contingencies. I can’t stress enough how important data is in the fight to reduce the vulnerability of the supply chains that we
all rely on.

David Noble, group CEO, CIPS

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