Editor’s Note: Back in March in my post Buyers Need Not Apply, I had made mention of the fact that I would be teaming with an industry notable to write a book The Future of Procurement. Well today I am happy to say that I can now tell you who that notable is . . . Kelly Barner from Buyers Meeting Point.
As part of our launch of this new project – in which we will likely release the book before the end of the year – we are reaching out to the procurement community as a whole asking you to provide your take on where you see procurement going in the years ahead. By the way when you do respond please use the #FutureBuy hashtag.
Of course given that we are authoring a book with our own take on procurement’s tomorrow, it only seems fitting that we provide an advanced look at how we see things starting with Kelly’s vision below.
When Jon asked me to start collecting my thoughts on the future of procurement, I actually started by looking back. I have had some fascinating conversations with industry veterans, many of whom have decades of experience in procurement as practitioners, thought leaders, or providers. I am amazed by how little has changed since their careers started. Three examples that jump out at me are Al Jacobs (VP, COO at Puridiom – 26 years), Don Jean (CEO FocusedBuyer – 40 years), and Harry Hough (President, American Purchasing Society – 45+ years). Sure, some things have changed – but not as much as you would expect.
For instance, it is true that technology has come a long way. It was developed, for one thing, then took procurement to the Cloud, and now we are starting to look at mobile platforms for a growing portion of purchasing and procurement activity. But putting something online does not make it strategic. If the corresponding practices don’t advance, we’re just moving less than optimal work into an electronic format.
When ISM-New York celebrated their Centennial in 2013, we got a look at some of the documents from the association’s rich history. One that particularly caught my attention was the ‘Principles and Standards of Purchasing Practice’. The straightforward one page document contains ten standards that were to serve as a guide for all members of the association. My guess is that the document dates from the 1960s or 70s. Although some parts of the document and standards reflect the time in which they were drafted, such as the pervasive use of the pronoun ‘He’ and some terminology that has passed out of common use, they are still remarkably applicable to our profession today. The standards including being good, ethical stewards of the company’s resources, to maximize the value created, and to build as much knowledge of the products and services being purchased as possible.
In order to look to the future, I think we need to start by understanding why we haven’t changed more to this point. I think it is because we didn’t really have to. But now the time has come. Now we have to change: corporate money is tight, automation is plentiful, outsourcing is an option, and over-management of the low-hanging fruit has diminished the need for large, dedicated, multi-tier procurement organizations.
In the future, procurement will be more of a distributed discipline than it is today. Tactical procurement will be handed by a combination of outsourcing and increased use of automation. These two efforts, in addition to contract management, will be managed by a single person in Finance who reports directly to the CFO. Large organizations will also have an executive level governance and compliance officer that deals with many of the regulatory concerns that procurement handles today.
Purchasing will be managed through a thorough technology-enabled governance structure. Strategic procurement (outsourcing, strategic supply relationships, complex categories, corporate acquisitions) will be handled by a small but skilled ‘strike force’ style team. Each member of the team will have a critical but unique strength: team lead, negotiation, analytics, market intelligence, risk assessment, and innovation. This team will work across all categories of spend and with all departments. The entire team will work together on each effort and will travel globally as needed. They will report to the highest-ranking operational executive in the organization. This strike force will continue to be separate from supply chain (logistics). The team’s performance will be assessed based on their ability to meet the objectives of each project rather than to hit annualized savings numbers.
So I’m not predicting that robots will do our jobs, and I certainly don’t think our cars will fly, but now that business requirements and enabling solutions have changed, conditions are finally right for procurement to enter a new era.