Long Before Ariba published their 20/30 Vision of the Future of Supply Management and Aberdeen took us back to 1999 with their vision of the next decade of Supply Management, the leading Supply Management minds at Hackett sat down and came up with their vision of Procurement in 2020 which was a heck of a lot better than most of the stuff I’ve seen this year (with a notable exception being Bob’s Next Level Supply Management).
In Hackett’s 2020 Vision For Procurement: A Revolution Through Evolution of Capabilities and Value (which was released as their Procurement Executive Insight on April 15, 2008 and followed by their 2020 Vision: Delivering on the Evolving Value Proposition of Procurement which was detailed in their 2008 Book of Numbers), Hackett identified the emerging trends that will define tomorrow’s world-class performance and help an organization move up the capability path. Realizing that transformation in most organizations is evolutionary, and not revolutionary, Hackett’s leading minds lay out an evolutionary path that takes organizational capability from reactive to strategic in a four-step process that passes through planning and alignment along the way.
The authors note that while an average Supply Management organization starts out with the goal of assuring supply, this is a very reactive strategy. Supply Management has to get to the point where it is harnessing the power of supply markets to maximize the value it is getting from its spend, to enable business strategy, and to optimize its tactical execution. Along the way, Supply Management will progress through TCO and demand management. As it progresses to harnessing the power of supply management, the organization will continually expand its circle of influence, dig deeper into its customers needs, and provide better service as time goes on.
In addition, it will also need to acquire the following strategic capabilities:
Business Process Sourcing
Supply Management will need to become the starting point of BPS activities and skillfully integrate disparate methodologies surrounding core competency analysis, resource management, service delivery models, business process management, and portfolio management into its overall supply management practice so that it is the first business unit consulted, and not the last, in any conversation surrounding business process (out)sourcing.
Supply Performance Management
Supply Management will go beyond simply managing the inbound supply chain to shaping strategies, goals, and objectives for the business as a whole based on its knowledge of global supply markets for materials, talent and technologies. It will need to seamlessly integrate supply planning with financial planning and operational planning so that each decision is best for the business overall.
It will need to master content-driven analytics which integrate external data into internal data models for supply prediction, planning, and risk mitigation that will allow it to build robust and agile (virtual) supply models that can be redesigned as needed in response to significant events.
Supply Management will need to adopt a cradle-to-grave talent management framework that includes knowledge management and advanced training models that allow it to advance its personnel to the next level. The framework will need to contain an innovative “brand management” model that will differentiate Supply Management as the career path of choice for new talent.
New Product Development and Introduction (NPD/NPI)
Supply Management will have to include advanced design-for-supply support that incorporates multi-tier cost modelling, scenario
planning and optimization that will allow the organization to understand the critical relationships between requirements, specifications, costs and constraints and make the best design decisions for the business overall.
Supply Management will have to proactively engage suppliers and extend internal competencies and knowledge into suppliers’ operations
to increase their process capabilities, financial health and goodwill toward the buyer. Supply Management needs to progress to the point where it is able to detect a potential problem before the supplier detects the problem, and then step in to help the supplier resolve it before it materializes.
Next Level Strategic Sourcing
Strategic sourcing has to advance well beyond TCO modelling and the application of the best e-Sourcing tools to the point where it is using deep supply intelligence to identify unseen risks and anticipate supply capabilities that can deliver breakthrough improvements in innovation, environmental sustainability, new market entry, brand enhancement and other key business strategies. It will utilize scenario planning on the extended supply network to provide visibility of opportunities and risks that will guide Supply Management to the right buy for the organization every time.