Imagine it's the year 2020.... Procurement has evolved so much over the past decade, you barely recognize it. Its functions have been decentralized –or outsourced– leaving leadership to focus on very different things. Job descriptions have changed dramatically. What's more, suppliers seem to have infiltrated the organization!
You look around, take it all in, and think, "I wish I'd been better prepared."
Ten years ago, procurement was viewed largely as a backroom function. Today, it is a strategic capability that companies leverage to fuel competitive advantage and growth. What will procurement look like in another decade? To find out, Ariba, Inc. (Nasdaq: ARBA), the leading provider of business commerce solutions, has opened a dialog with the world's top procurement executives and practitioners. The project, called Vision 2020, aims to help shape the future of procurement through an online forum (www.futureofprocurement.com) in which leading thinkers can their insights on an ongoing basis.
"Procurement has undergone a significant transformation over the last ten years, but more change is in store," said Tim Minahan, Chief Marketing Officer, Ariba. "As companies move to gain competitive advantage, procurement executives are increasingly leveraging new business models that allow them to improve productivity and profits and deliver their organizations to new worlds of excellence."
So what do these executives think the future holds?
1. Everything will be Automated. Procure-to-pay (P2P), sourcing, contract management and other automation engines will be integrated up and down supply chains, fully adopted, and operating flawlessly.
2. Information Will Be Synthesized. Ready access to accurate, timely, structured data on spending, risk and performance will create unprecedented abilities to integrate information in support of sourcing decisions and performance management.
3. Virtual Will Replace Physical. Forget jumping on planes and sitting at conference tables. Smart phones, tablets, embedded chips, and not-yet-imagined devices—will create a massively virtual work environment for procurement and suppliers.
4. Data Will Become Predictive. Procurement has spent the last decade looking backward in time—at money spent last year, supplier performance in the past week, month or quarter. The coming decade will bring information and models that look forward.
5. Prices Will Become Transparent. Market pricing for goods and services will become so transparent—due to e-sourcing, cloud sourcing, outsourcing, and procurement's intrepid scrutiny into categories still cloaked in pricing mystery—that negotiation will become a lost art form.
6. Spend Management Will Disappear. Companies will still care about managing their spending, they just won't have large, discrete, enterprise-level organizations dedicated to doing it.
7. Outsourcing Will Explode. Many current procurement and sourcing activities—the ones that do not get redistributed to internal end users of goods and services—will be outsourced.
8. Sourcing Geeks Will Vanish. While valued highly in today's marketplace, people who excel at sourcing processes or at being power users of procurement and sourcing automation technologies will find themselves working for third-party services firms—or not at all.
9. Attention Will Turn Outward. The last 10-15 years have seen intense inward focus by procurement. In the coming ten years, the emerging supply management network will turn its attention outward to end-customers, suppliers, and the innovation that ties them together.
10. Price Will Give Way to Value. There is optimism that procurement is going to crack the code on business-value segmentation and measurement in the coming ten years.
What will your job look like in five or ten years? Ever wonder? We do. So we asked some seasoned and visionary leaders for their predictions about the future of procurement, 10 years down the road. Some 30 interesting ideas emerged. A few of them fall under these headers:
#7 : "Bye, bye procurement"
#16: "Talent competition heats up"
#24: "Suppliers gain power"
#25: "New biz models emerge"
#27: "Firms wake up to supply risk"
Starting in late 2010, Ariba joined forces with leading procurement practitioners and influencers to begin a dialogue with two intermingled sets of procurement executives:
- The first represents a visionary and highly seasoned set of procurement executives—the people who rolled up their sleeves in the early 1990s and conducted the arduous work of leading procurement from tactical paper pushing into things like spend management, strategic sourcing, supplier collaboration, electronic commerce, sourcing and procurement process.
- The second group represents today's vanguard—Chief Procurement Officers in charge of high-performing spend management organizations—who will lead procurement to new and innovative kinds of value contribution over the coming decade and beyond.
For additional predictions, or to join the conversation, visit: www.futureofprocurement.com