Two days ago, Tim “Mr. Perfect”* Minahan of Supply Excellence kicked-off the series with an impressive post entitled Sourcing Innovation: Predictions for the Future of Strategic Sourcing where he portended how decision support tools, such as advanced optimization-based analytics and role-based dashboards, would enable supply managers to examine and manage value-based sourcing decisions that were previously impossible due to insufficient data and limited analytical tools and discussed how sourcing networks would emerge to provide supply market intelligence, cost models, and category sourcing templates to provide invaluable content in context of the strategic sourcing process. (* Thanks Dave!)
Yesterday, Tim Minahan followed up with Part II of his Predictions for the Future of Strategic Sourcing where he discussed supply chain sourcing and frontline sourcing which extend strategic sourcing (and e-sourcing) methods to supply partners and internal stakeholders, respectively. In the context of supply chain sourcing, Tim defined multi-tier sourcing, co-sourcing aggregates, and buy-sell arrangements. Even though these are not novel concepts, I agree that you will probably start seeing a lot more of these in the future as inflation and ever-increasing raw-material costs start forcing organizations into larger and more creative buys to maintain savings and affordable price points. However, I think the real vision in Tim’s post is in the frontline sourcing prediction. Change is inevitable. Enterprises will have to test market dynamics with regular purchases, particularly in categories like lodging, travel, and print and employ category-specific templates that guide users through the process of specifying requirements that will become more common as a methodology of not only institutionalizing but capitalizing on market knowledge.
However, in an effort not to be outdone, or at least an effort not to be left behind, Dave Stephens of Procurement Central jumped in with his views on The Future of Sourcing. Whereas Tim focused on processes that were going to revolutionize sourcing, Dave took a different track and tried to understand the economic and marketplace drivers that were likely to change the very nature of sourcing over the next few years.
Dave noted that he believed that natural resources will face steady upward pricing pressure for the foreseeable future – which then, whether pure economists like to view it as such or not – will likely translate into inflation (or decreased buying power if you like that better), that perhaps it’s time to hit the pause button on over-zealous “let’s beat up the suppliers continually” approaches, and that he believes we’ll see a recession of Sourcing functionality back into transactional systems, further speculating that he believes that 5 years from now customers will have a really tough time distinguishing Sourcing as separate from Procurement.
And now for the fun part – I unequivocally agree and vehemently disagree at the same time! Price pressures will continue to increase, and only the buyers that focus on innovation-based relationships will succeed at curtailing cost increases. Today’s best-of-breed sourcing functionality that differentiates the innovative non-transactional players from traditional transactional ERP players will eventually be bundled with the big platforms and there will be no difference in the fundamental capabilities. But sourcing five years from now will not be the same as sourcing today, just as sourcing today is not the same as it was five years ago. This means that while most of today’s niche players probably won’t be around in five years, those who understand the continually changing nature of sourcing and continue to adapt to it will be stronger than ever. Tim has already given us some hints on where sourcing is likely to go and what tomorrow’s solutions will look like and I’m sure David Bush and Jason Busch will offer up more in the days ahead (and I expect Doug Hudgeon will have some very interesting takes on the future of successful buyer-supplier relationships). And I’ll be sure to add a few breadcrumbs of my own as well. So stay tuned!