As the procurement in organizations is gaining momentum across the globe, the focus has shifted from cost reduction to a strategic entity that drives for long term sustainable business growth. Enterprise prefers to execute decisions on fact-based to establish its root as a trusted business advisor and strategic partner. Procurement is considered as one the most complex task to any business functions as it includes market pressure to maintain cost, to legal pressures to comply with regulations, to social pressure to source ethically at the same time keeping yourself ready with emerging new challenge. The procurement transformation will allow an increase in engineering, design and innovation skill set to achieve the goal what their business partners are looking for.
Ten years from now, procurement will see a transition from operating in a linear environment to procurement in a circular economy where organizations balance the creation of social and economic value in equal measure. The sustainable approach in business operations will boost economic value creation without causing any damage to the environment.
With the advent of technologies, the demand and supply chain has redefined go-to-market and sourcing strategies on a global scale. The market is growing as global economic powers and bilateral trade agreement between new emerging global leaders are signed and go into effect. Economic trades are dynamically changing, leading to a shift in tax, logistics, and sourcing strategies.
In the coming year, procurement leaders will have to operate in a social environment. The rise of social media and the increasing demand for information transparency will improve the level of a security checkpoint on the procurement strategy. This unconventional change, along with the introduction of real-time social technologies like Google Glass, will transform the procurement process into the most visible functions to the outside world. Google Glass will enable supplier inspections and negotiations to be seen in real time by outsiders. The best CPOs in the future will lead the discussions with suppliers, regulators and handle all aspects of procurement activities inside the industry.
In the next decade, the finance team at the leading enterprise will drive together on one wheel with the procurement professionals on a wide range of analytical roles: right from total domestic and foreign product purchase to supplier financing to quantitative risk management. This change is critical for procurement finance strategies for a basic cause. Procurement’s fundamental objective is to obtain product and services required by the firm’s to run the operations smoothly, so typically it covers between 40-70% of total company capital. In order to gain a good grip over every single spend made from the firm’s capital, CFOs begin to realize that finance and procurement team need to be closely connected in most of the sourcing decisions.
By 2025, the procurement in major enterprise will act as a key channel for accelerating innovative recommendation to/from a global supply hub, and procurement leaders will play an important role in new product design and development.
Over the coming years, the procurement in leading enterprise will establish an external collaboration structure that will be completely different from traditional “procure and audit” models that have earlier defined outsourcing and service management contracts. The goal for the best procurement teams will be to understand all the collaborative model options and to create financially beneficial models, in the long run.
The procurement professional who successfully implements this transformation will become not just “genuine partners” but a true value creation point for their organization.