It is just the start of 2019, yet again the year will fly away faster than we all expect. It is worthwhile to invest a couple of minutes to think about what will come next in procurement.
In recent years we all, whether from industry, services or consultancy, have dedicated most of our attention to the question of how to tackle the digital future. We have been testing and developing or attempting to understand what is coming next, be it Robotic Process Automation (RPA), Blockchain / Smart Contracts or Artificial Intelligence (AI). We have learned that some of these applications (will) have a significant impact on our business and that others first need to prove their value before scaling.
The RIP of procurement?
However, what if for a moment we keep these developments and technologies aside (just after the festive season is the right time to do so) and focus on what the impact and role of technology as a whole is. Are the scenarios of lights-outs, pure robotic manufacturing and services the ultimate aim or only a vehicle to the work environment of the future? Moreover, is the prediction that 2025 will be the RIP of procurement right (a popular hypothesis in the debate about the future of procurement)?
To respond to this question, tough decisions have to be made. All of them will have an impact on organizations, their structure and personnel regardless of the fact that similar pursuits involving the strong utilization of robotics and lean manufacturing have been pursued for decades.
Digital transformation with purpose
I am an advocate of digital transformation with purpose and I believe that processes (not only for MNCs but also for SMEs) have to run digitally to be efficient. However, my perspective is a more differentiated one:
Digital transformation of procurement should not only drive process improvements. Procurement should rather aim to find ways to improve product and service levels for a company’s clients. Being directly connected to suppliers and partners and at the heart of supply/demand and pricing, procurement can have a more proactive influence on the supply chain. For instance, supplier management needs to break out of its traditional boundaries and act more like a partner management function, which leads to an integration with (Key) Account Management (can someone explain why suppliers and clients are still managed in separated systems?). Silo thinking still exists, which becomes even more apparent once you check the existing platforms in procurement and supply chain and their limited collaboration interfaces which date back to an outdated former SCOR model.
My concern is that we halt our initiatives right after digitalization has taken its first steps. There is a reasonable motivation behind this behavior: Digital transformation has taken more resources and effort from operational teams than predicted at first. Despite the promises, it usually feels like the standard roll-out of an ERP software, and weak points that have become obvious are the natural consequence of a missing strategic design of the transformation roadmap. Predictions for procurement are doomy, and while some of them are imaginable, it is for procurement to redefine its value proposition and to rise from the alleged dead.
The questions is: are we strategic enough in procurement or have we given up on accepting the thisrole as predicted? I am happy to hear your thoughts!
We would like to thank Ferhat Eryurt for contributing this article.