Over the past few decades, the procurement industry has shifted its focus from physical supply to broader questions around the value it can deliver. It has developed links between procurement within and outside of an organisation, as both areas become integral to a business’s success, and, of course, technology has had an undeniable impact on the industry.
But if we look ahead, what might the procurement industry look line in ten years’ time?
Let’s consider the environment in which the procurement professionals of 2023 might be working.
Although the world economy may have stabilised, we can’t be sure what political state Europe will be in.
Most established economies will be facing competition from manufacturers in the BRIC nations, and certain resources will have become increasingly scarce, valued or controversial. Access to rare minerals, for example, may become a source of both opportunity and possible conflict – commercially and politically. As some commodity areas face global shortages, the relationship between buyer and supplier is likely to move toward favouring the supplier.
Governments may control how private sector companies operate more closely in order to raise revenues, and these private firms may come under increasing pressure to operate in what is regarded as a more responsible manner.
But, greater scrutiny of the role of government could lead to increased opportunities in the private sector, such as more outsourcing of services.
However, one thing we can say with confidence is that there’ll be no slowdown in the rate at which technology develops, or in the opportunities for procurement personnel to use that technology for the benefit of the company.
Transactional procurement activities are likely to become largely automated, with budget holders taking on some of the more strategic market or supplier management activities, so it is possible that, in a few limited areas at least, procurement might virtually disappear.
But we don’t predict any significant reduction in the need for human judgement or inter-personal contact, no matter how powerful technology becomes.
There’ll still be critical commercial and judgemental issues that can’t be handled solely by computers, despite the number of supply chain activities becoming increasingly automated.
And it will remain central to the industry for procurement professionals to manage the dynamics of the internal stakeholders’ relationship to suppliers and the external market.
We see a need for the industry to change, rather than for it to disappear altogether.
By managing the value gained from dealings with existing and potential suppliers, procurement needs to move away from its prevailing focus on reducing unit cost, to fulfilling a wider, more fundamental role in the business.
And for procurement personnel to do this successfully, they’ll need to develop a new skillset.
So that they can deal with external markets and suppliers, as well as internal stakeholders, colleagues and budget holders, they’ll need the ability to communicate both internally and externally.
They’ll also require a balance of analytical and relationship skills, enabling them to work in an analytical manner when appropriate, at the same time demonstrating a high level of sensitivity.
It’s fair to say that this balance won’t be required across all procurement roles, as top procurement execs will be less concerned about analytical details, and junior operators won’t need so much of a relationship focus.
The world as we know it is changing, the future uncertain. We know that it will bring fresh challenges, issues and opportunities on a global scale, but we also know that the procurement industry is changing too, and will face these challenges, issues and opportunities with improved technology, greater knowledge and a wider range of personal skills.
Stay in the chain gang