This post addresses the four predictions that came close to the mark in Ariba’s Vision 2020 – The Future of Procurement report. For the most part, they were just a little too hopeful.
02. Intelligence moves into context
Intelligence will move into context, and be front and center in leading supply management organizations, but will not be a substitute for Supply Management Professionals with expertise in risk and economics and target markets. Just like a dashboard can only alert a user to a known issue, automated monitoring solutions can only alert a user to known risk indicators. Political uprisings, natural disasters, and financial failures (due to a loss of one or more major contracts when a supplier is operating on razor thin margins) can still come without any obvious warnings and only a sourcing professional who is carefully monitoring the country, the news, and the supplier will be able to detect a significant event before, or, in the worst case, as soon as it begins.
06. Prices go transparent
Price transparency will continue to increase to the point where most prices for most products and services will be known to within a few points most of the time, but there will be limitations in accuracy, just like there will be limitations in systems’ ability to predict risk and market changes. Unexpected natural disasters, political uprisings, enthusiastic traders, and government intervention will still create unexpected (artificial) supply shortages that materialize over night and wreak havoc on prices. In addition, shifts in consumer preference, organizational boycots, and new regulations will contribute to rapid demand decreases that will do the same.
11. SBUs absorb procurement
Strategic Business Lines will absorb most day to day Procurement and Supply Management functions, leaving the Supply Management organization to focus on strategic initiatives, long-term value generation, innovation, and business line consulting when and where it is needed. And tactical procurement functions might entirely disappear from procurement, being handled by service centers that support the various business lines. But Supply Management will still be needed to not only deal with strategic initiatives, but to handle special projects and unexpected situations when they arise. Since the strategic business lines will never by Supply Management experts, they will never truly absorb all of the Supply Management functions.
25. Early is the new black
Suppliers will be more heavily involved in NPD and will be involed earlier in the process, but it won’t always be on the ground floor. Suppliers have limited resources too and dragging them in to every project before the supply management professional has identified the value they can bring and the value they stand to receive will only result in strained relations. They’ll be brought in when the supply management organization feels the time is right, but it won’t always be early as that will be too speculative, and, in some cases, risky.
The next post will discuss the four predictions that were totally off base.