What is the next big thing in procurement? The answer to this question is crystal clear: (supplier) ecosystems and the power of networks. Find out why in this article.

As consultants, we get frequently asked what the next big thing in procurement will be. Well, based on the discussions with our customers and our comprehensive network of  technology providers, we immediately see the rising importance of supplier networks. Our latest research shows that at least more than 5 million different suppliers are already registered for sourcing networks (platforms), that have usually been initiated and established by procurement tool providers. The figure sounds high but compared to the vast cosmos of supplier companies across the globe the participation rate is still small.

Figure 1: The Power of Sourcing Networks

Enormous potential

Therefore, we see an enormous potential not only for the growth of these platforms but also to leverage the potentials. While a typical supplier relationship is traditionally characterized by a lot of effort regarding identification and onboarding of the new supplier, already in near future this will become much more native. Already the discovery of new, hidden vendors will be simplified by AI and big data analysis which continuously crawls the network for best matching suppliers.

Furthermore, as blockchains are becoming more and more common, the concept of ID tokens will be established to simplify the registration of new vendors. Imagine you no longer needed  long-lasting screenings and validation processes as this would already happen upfront on a network level. Already today, machine learning technology exists which creates visibility in the supplier base to identify unknown potential for partnering and innovation.

Nevertheless, these topics are primarily improving the process costs – the power is mainly based on real-time information feeds, which transforms an entire organization from being reactive to a much more proactive one. Potential risks can be identified before or at least immediately after they occurred. Impacts on the supply (chain) can be much better foreseen and counter actions be established.

The selling side

However, the most underrated factor is that procurement platforms always have a second side – the selling side. Procurement could move closer to sales and marketing by connecting the buying side with the selling side. In the end, an ecosystem will be generated which connects each and every dot along the supply chain, initiated by procurement. By this we expect that procurement organizations and specially CPO’s will move out of the dark corner as cost center and become a real value contributor for entire organizations.

If you wish to find out more about latest trends and strategies in supplier management, we recommend this white paper, which is available as free download.

We would like to thank Wolf Göhler for his contribution to this article.

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