Artificial Intelligence to Improve Decision-Making in Procurement
Kelly Barner - Owner and Editor of Buyers Meeting Point

Looking for the Pivot: Predicting Procurement’s Next 25 Years

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Reasonable predictions combine present conditions and future vision. They are a best guess about which trends will maintain their status quo, which will gain in popularity, and which will exit the stage. Unfortunately, most predictions (and predictors) do a terrible job of addressing the unknowable unknowns – think pandemic! – and all of their downstream implications.

As I recently wrote, over the last 25 years procurement has seized the advantages of cloud hosting and the SaaS delivery model. Teams have become smaller, sharper, and more visible in the enterprise. The Chief Procurement Officer role is no longer a rarity, and the trailblazers that have held the title thus far have opened doors for the rest of the field to push through and widen.

A simple prediction would assume that many of these dynamics will remain in play or be altered incrementally. Technology will continue to evolve, procurement teams will continue to get more focused, and companies will increasingly value the contributions of everyone in a spend management role… but if 2020 taught us anything, it is to watch for the pivots. We have to assume that there will be at least one truly disruptive change in the next 25 years that radically alters the business landscape and procurement’s place in it.

The following are my best guesses for a procurement pivot that is in the realm of possibility between now and 2046. I’m not saying these are the most likely changes, and I can’t (reliably) guess what will bring them about, but I believe we can already see the seeds of some of these pivots today.

Pivot Possibility #1: Procurement Will Stop Sourcing Altogether

Five to ten years ago, procurement was talking about the fact that ‘strategic sourcing’ was more of a static checklist than an agile business process, and now we’re actively discussing self-guided buying and self-sourcing.

With improvements in supplier pre-qualification and advancements in strategic sourcing technology, the value of procurement professionals in this process is slowly but steadily waning.

Sure, sourcing takes time and has to meet certain requirements, but how often are we actually surprised about an award decision?

For truly complex or onerous spend categories, it seems within the realm of possibility that Robotic Process Automation (RPA) could step in and walk an informed buyer through their objectives, options, and relative ROI.

There will be no need for hands-on spend analysis, market assessment, or supplier discovery. If the information is digital, RPA can retrieve it and factor it in.

The buyer will be on the hook for making the choice that is in the best quantitative and subjective interests of the business, and the technology will do the rest, freeing up procurement to consider the next possible pivot.

Pivot Possibility #2: Procurement Will Co-locate with Suppliers

If procurement’s path forward is driven by where they can add the most value, then placing dedicated resources on site with a few strategic suppliers seems quite likely.

This would provide the buying company with access to the latest information, allow procurement to advocate for the business’ needs on a daily basis, and deliver innovative collaboration as a natural by-product of association.

In fact, with the world already shaken up by the ‘working from home’ movement, new hire decisions can already start to be based on proximity to critical supplier production locations rather than corporate headquarters.

Regular re-immersion sessions would be necessary to keep these co-located procurement professionals aligned with the company’s goals, but some amount of that is going to be required for all employees as companies remain somewhat virtual in the coming years.

Pivot Possibility #3: Procurement Will Be as Subject to Oversight as Finance

Standards such as Generally Acceptable Accounting Principles (GAAP) and Sarbanes-Oxley are hardly new. They govern financial reporting, fund/asset management, and hold companies and executives legally accountable for non-compliance.

These requirements have become more stringent in recent years to protect the interests of individual and institutional investors. Procurement has not been subject to this level of scrutiny so far because our work is largely internal, theoretically rolling down to be represented in P&L and cash flow statements.

But procurement’s work is already becoming more apparent to the outside world. Environmental, Social, and Corporate Governance programs (ESG) are being reported publicly and factored into shareholder, brand, and consumer valuation decisions. As this information becomes more motivating, and the temptation for companies to overplay their hand grows, government oversight will naturally follow.

While these standards will increase the complexity of procurement’s work, they will also increase our value and visibility in the C-suite and out in industry.

Each of these potential pivots represents a change for procurement that brings both good and bad, opportunity and risk. Our profession is likely to become smaller in numbers, but larger in influence, and we will no doubt be aided by technology in ways that I cannot imagine from my seat here at the beginning of 2021.

The most important take away is the perspective that each one of today’s ‘ripples’ has the potential to grow into a future tsunami.

The thinkers and leaders that are watching the horizon carefully and manage to interpret the water correctly will have the opportunity to position deliberately for the pivots that are to come.

About The Author

Kelly is the Owner and Editor of Buyers Meeting Point. She has a unique perspective on procurement from her experience on both sides of the negotiation desk. She has led projects involving members of procurement, supplier and purchasing teams. Kelly has practical skills in strategic sourcing program design and management, opportunity assessment, knowledge management, and custom taxonomy design and implementation.

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