For several years, chief procurement officers have been focusing on reducing and cutting costs of purchased materials and services and ensuring the timely delivery of goods. Today, they face much complex landscape of procurement, which is often dominated by legal issues, sustainability concerns, and regulatory and ethical concerns that could leave an impact on not only their company’s bottom line, but also its brand and public image.
Over the next few decades, procurement officers will need to hold account on more expansive roles within their organizations. They will need to become guardians for corporate brand, advocates for sustainable business practices and innovators for helping new products and services. Undoubtedly, companies that embrace this broader perspective for procurement will find themselves in a better position, to tackle the 10 change dimensions- from mitigating the anticipated risks to embracing the need for greater transparency across the supply chain- that will transform the procurement by 2025.
Let’s read on more and get to know the challenges which have the potential to disrupt the dynamics of current supply chains. Procurement officers, who proactively address these issues, are likely to help their organization prepare for the future.
Risk: By 2025, procurement management risk will experience a major shift, moving away from emphasizing compliance to adapting to more holistic strategy that includes total risk exposure, risk investigation services, risk mitigation investments and risk transfer pricing. To give a way to this transition, procurement leaders need to develop category managers based on the various approaches that can develop next generation methods to tackle supplier risk management and factor to decide new metrics into major sourcing and supplier management decisions.
Sustainability: Procurement functions will go beyond the terminology of managing costs and will seek to develop a supply chain that create and sustain the economic and social value. This change will escalate as post-2000 generation gain more economic status and stability in the workforce.
Younger professionals are more likely to accept and embrace the economic growth that is not dependent of exploiting the resources and will eventually encourage the companies to reject the “linear economy” of consumption and disposition in favor of circular economy.
Globalization: The traditional demand and supply poles that have shaped global commerce over the last 50 years will change dramatically as the emerging markets assume a greater role in the global economy. By 2025, most of the global companies will have a procurement manager to source materials and services not only for their welfare and operations in the country but also for the entire organization. In America, Brazil will become a major source and lead of both demand and supply for global companies.
“To handle this task capably, current procurement teams need to start developing expertise in local emerging market sourcing in China, Brazil, Russia and India, as well as other rapidly increasing economy”
Integration: By virtue of its position within the organization, procurement teams are aware or should be aware of all the clients and the information and progress flowing into the enterprise and demand and the product data flowing out to the collaboration party. Additionally, savvy procurement teams will begin start playing an important role in sharing information about internal and external costs throughout the organization. They will also become a reliable source for tracking information beyond costs, and also on how the organization is meeting its sustainability and social responsibility commitments.
Finance: In future, procurement officers will need to broaden their skill set and make themselves flexible in terms of procurement and strategic sourcing to help their organization adapt to the complex challenges of managing the global supply chain base. Many procurement officers will need to develop acumen that rivals their counterparts.
“Leading companies should start taking big steps and come forward to tighten the relationships between finance and procurement and to enhance the financial skill set of their procurement teams.”
Innovation: By 2025, many leading procurement organization will serve as a primary channel for discovering new ways to create values from the global supply base value; whether by stream-lining new product development or outsourcing noncore functions. In order to move this progress forward, procurement companies need to gain a better understanding of the role outside entities play in bringing innovations to their industries. To support this, many procurement teams and officers will need to expand their expertise in engineering, design and new product development.
Collaboration: In near future, leading procurement organizations will deploy external traditional models far removed from traditional “buy and audit” models. Procurement professionals will need to mount and manage the complex outsourcing and service management arrangements with multiple vendors.
Starting now, procurement organizations should understand the need to begin moving towards establishing collaborative outsourcing and service acquisition models to replace adversarial constructs that encourage zero-sum or win/lose scenarios.
Transparency: Social media and the increasing acceptance of information transparency will amplify the degree of scrutiny on procurement organizations. This disruptive change coupled with the adoption of real-time social technologies, will make procurement the most visible and clear corporate functions to the outside world. For that sake, procurement leaders have to encourage their teams to adopt a social mind-set and operating model that will sustain the corporate brand in this more transparent era.
“By 2025, procurement officers will be as comfortable speaking to customers as they are with suppliers”
Information: With the revolutionary changes and involvement of big data into corporate decision making processes, best-in-class procurement organizations will need to be more comfortable with advanced data mining and analysis techniques. These skills will be an integral part of all the high-performance procurement organizations, especially in the consumer and high-tech sectors. Leading companies, now, need to start asking and analysing their capabilities that how those skills and technologies need to evolve in the upcoming decade.
People: The above listed 9 dimensions make the case for an extremely different procurement functions within next 10 years. Even if only half of these predictions turn out to be true, the procurement leaders of tomorrow will have to adopt a different worldview other than their counterparts in the past. And to adapt to this change, savvy chief procurement leads are already thinking about ways to find and nurture the next generation of their procurement leaders, which needs their intellectual and geographical diversity to reassessed:
New Blood: Procurement team will expand and attracts more number of people with backgrounds in education and professional services, making it one of the more intellectually diverse organizations within the enterprise.
New Culture: Geographical shifts into emerging markets will require procurement teams to recruit more diverse workforce that can design buying strategies relevant to social and cultural dictates.
New Mind-sets: Doing business in a more transparent society will require procurement organizations to shift from “corporate social responsibility” to “corporate social relationship”.
New Profiles: The profile of the traditional buyer who got success through hard-won negotiations that didn’t leave any money on the table will be replaced by procurement teams that adopt a multidimensional approach to manage the supply chain.
“While reducing the costs will continue to be important, it will not be overarching factors in all negotiations”
The shift in finding tomorrow’s procurement leaders will mirror the overall transformation for all procurement teams, in which they moved beyond the role of buyers that specialized in finding, acquiring and ensure the timely delivery of goods and services. Companies that begin adapting to the new procurement landscape today will be poised to seize a competitive edge in the decade hand.