Mr. Smith is right. Procurement is dead. It was doomed, entombed, marooned on a desert island, and passed away peacefully in the night long after everyone had forgotten about it. It’s dead and buried. And you should thankful that the Romans closed the door on the Egyptian Empire’s burial chamber or you would have been buried with it.
Just like the industrial revolution laid waste to the armorer, blacksmith, glassblower, and dozens of other occupations (and just like Video Killed the Radio Star), the internet has killed the purchaser. (May he rest in peace with the radio star.)
Let’s face it. Why would a modern organization need a purchaser anymore? What did a purchaser do?
He could find the one product you needed in a wall of catalogs in a minute and have it expedited to you the next day.
But with Amazon for Business, Alibaba, and about a dozen vendors offering integrated and federated catalog search capability that will allow the organization to integrate the third party catalogs of all of their suppliers into a single interface, who needs a paper catalog? Who needs to even remember the supplier or the name of the product? Today’s catalogues are heavily laden with meta-data with full search capability and anyone, anywhere, and at any time can use them to find exactly what they need, order it, and get it. No catalog expert needed.
Create and fax 3 copies of the RFP to the top 3 organizational suppliers in that category and ensure there were timely responses.
Today’s RFX programs, which support not only RFX templates for supplier information, proposals, and bids, but also support mail-merge template capability for creation and electronic distribution, e-Fax, and portal access, allow a buyer to send the same RFP to 30 potential suppliers in the same amount of time as it takes to send to 3. Plus, since everything is online, all of the data is automatically collected into the same online spreadsheet for instant apples-to-apples comparison, and if offline is needed, formatted spreadsheet output is instantly available. No data (re) entry required.
He could shave 5% off a hard-nosed supplier’s bid with hard-nosed negotiating tactics.
With today’s supply market intelligence, cost modelling applications, and in-depth (predictive) analytics applications that can plot trends across different component and raw material factors across regions and timelines, even a junior buyer has a good idea of how much a product from a supplier should cost and knows when the supplier is quoting a 15% margin (when the industry standard is 10%) and when a simple explanation of facts will be enough to convince a supplier to get in line. Plus, with e-Auctions, open book costing, process analysis, and joint inventory and innovation initiatives, costs can be reduced without any negotiation at all. Who needs a hard-nosed negotiator who only knows the carrot-and-stick method (and always eats the carrot before going into the negotiation)?
Procurement is Dead!
To be continued …