This week, Shaz discusses where procurement is headed and what that means for the future of business, too. Conversations about the future of procurement tend to revolve around technology, but there is more to the evolution of procurement than just technology. People and their work experience in procurement will change, too.
“When you look at the future of procurement, there are two distinct areas that will be most affected. The first is technology solutions, and the second is people.
Automation & Digitization
“Number one- when you look at technology solutions, you are seeing a lot more technology focused on automating processes that were traditionally manual. Number two is the digitization of documentation. What that really means is that traditional, paper-based processes have moved to an online, electronic format.
“I think you are going to see a continued reliance and dependency on automation and digitization that will be pervasive in software applications – not only procurement, but software in general.
The Move to Mobile
“Typically, when you would go on a business trip, you would think, “Ok, I’m going to bring my laptop so that I can work and make stuff happen.” Now people are thinking, ‘I’m just going to bring my phone.’ The phone can accomplish everything.
The People of Procurement
The New Strategic Role of Procurement
“Then, when you look at people, that is where the biggest shift will happen. Organizations will experience a vast behavioral shift. The very nature of a corporate buyer and an individual that will actually process invoices on behalf of the company, those roles are going to shift.
“They are going to shift to become more strategic. The folks that are doing manual data entry or manual cutting of purchase orders – their roles are going to be more focused on, for example, how do I improve collaboration with my suppliers? How do I identify risk quicker with my supply base? How do I areas with better profitability mechanisms for the company, outside of my core job function? How do I institute policies which allow me to impact the company positively, both financially and from a morale standpoint?
Entrepreneurship Within Procurement
“I think what we are starting to see and will continue to see is a more entrepreneurial spirit being tolerated and endorsed by corporate executive management. It will allow people flexibility to do things that people in procurement may not typically be used to, like going in front of a Board and presenting ideas on your analysis and how to make the company better.
“All of these things are impacting businesses positively, but when you look at the role of corporate procurement, corporate procurement was typically looked on as a transactional processing engine. People were saying, “Ok, go give it over to procurement, let them deal with it. I need new suppliers onboarded immediately.” Or whatever the case may be. Now, you are looking at corporate procurement as an essential area of innovation, where you are not only looking at corporate procurement systems and technology, but you are looking to corporate procurement practitioners to seek out co-innovation opportunities with suppliers that make our product line better.
“You see this in the automotive industry. You see this in the telecommunications industry where you have a lot of co-innovation cycles happening – major Fortune 100 behemoths and their supply base working together. We saw this with a major beverage maker that actually has co-innovation labs sponsored in different parts of the world where they invite specific suppliers to help them solve specific business problems. Anywhere from digital payments for rural farmers to optimizing the agricultural supply chain to looking at blockchain initiatives for supplier onboarding.
Chief Procurement Innovation Officers
“All these things are coming together but companies are realizing you can’t solve these problems yourselves. You have to engage in your suppliers, beyond just the relationship of, “Hey, I’m going to buy this from you.” And this is the most exciting element of where I believe the procurement future will lie is this increased collaboration with suppliers beyond just the transactional function, which, in turn, has a direct impact on the people that actually work in the traditional procurement functions.
“It’s no longer going to be your traditional “I’ve been negotiating contracts for 30 years, now I’ll be a Chief Procurement Officer.” It could be a CIO transitioning to a Chief Procurement Officer. It could be someone with legal experience transitioning into a Chief Procurement Innovation Officer. It could be somebody on the factory floor who has worked their way up, who can say, “I’m ready to take over this whole supply chain.”
Stay tuned next week for more from Shaz Khan on procurement innovation.