The Procurement Wasteland …

… is well on its way, as we discussed in our last post. Buying is not difficult anymore. Thanks to the internet, anyone can find a dozen potential suppliers. Free RFX and Auction technology, alongside good old fashioned e-mail, allows anyone to solicit bids, do simple comparisons, and make a buy that’s not the worst buy one can make. Heck, three bids and a buy is still better than what a lot of buyers do. And with Amazon Business and about 200 different major suppliers online with punch-out, anyone who needs anything that’s not custom manufactured can just go out and get it.

It’s a Procurement wasteland because not only are (tactical) buyers unnecessary, but, as indicated in our last post, it’s easy to replace those (tactical) buyers with cognitive systems that, armed with a few rules and a bit of machine learning, can do just as good of a job as the buyers and, with huge databases of potential suppliers at their disposal, outdo the organizational representative who’d just punch-out to her preferred site and buy the first product she found. No need for buyers, and the work they do is replaced by systems.

The big question is, is this procurement wasteland going to exist in:

  • A Mega-Corporate World,
  • A Project Economy, or
  • A Barter Economy

Mega-Corporate World

While this option wasn’t (explicitly) mentioned in the KPMG report, it is one situation where Procurement could gain primacy if, and only if, it could prove more relevant than the machines. So what is the mega-corporate world? It is a world where the M&A Frenzy continues like crazy across all sectors, where the big get bigger and only a few companies dominate in each category, and you have a select few buying from a select few for the majority, but making sure that those that are bought from properly orchestrate further down the chain because even though mega-cos might own most of the little mom-and-pop shops that supply the raw materials, orchestration is still key to cost control, and these little mom-and-pop shops will be bought and sold like shares in the stock market as balance sheet adjustments appear necessary. And since there are only a few real suppliers, you just carrot-and-stick negotiate between the sales folk, as the corporate landscape is now so small they need what you produce too, until you get the deal you want and you’re done.

Project Economy

As more and more professionals go freelance, and more and more companies try to trim the fixed overhead on the balance sheet by outsourcing more and more to freelancers (who don’t come burdened with health care, retirement contributions, and other benefit costs), we switch to a project economy where mega-corporates still exist on paper, but the organization is primarily a balance sheet that orchestrates projects which are led by freelancers in a project economy. In this economy, the project manager is the purchaser, and she buys how she sees fit.

Barter Economy

A solar megastorm produces a solar flare 5X as powerful as the Carrington Event and takes down every power grid on earth, and the internet with it. All forms of instantly electronic currencies cease to exist, and global communication, and trade, status reverts to what it was in the early 1900s. After the initial panic, riots, and lootings, the power grid is restored in major cities and the global internet restored a few weeks later, but faith in any form of electronic currency crumbles. Especially since the global chaos makes foreign currency worthless for a short period of time and faith doesn’t come back.

In this situation, goods and raw materials are of the utmost value and trade is the name of the game. Failing that, payment in the local currency only is accepted. And unless a buyer can negotiate the trade of goods only, there is no need for a Procurement practitioner.

At the end of the day, there is no need for Procurement. it’s not only dead, it’s cremated. Only ashes remain. The only hope is …

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