*Ways of seeing

Visioning procurement in your organization

 *Why vision the
future?
*As a professional procurement practitioner it is important
to think about knowledge development.

*Focus centres on core and emerging issues for the future.

*It is a bit like betting on horses – you need to know about

their form, the going and the course.

*Nothing is certain but you can use what is in front of you to

figure what might come next.
 *How do people vision change?
* You can back-cast… * You can forecast…

* Or you can
predict the future
by helping to
shape it
 *4 steps of visual thinking
Look See Imagine Show

What is out there? What do I see? How can I manipulate This is what I saw and
these patterns? this is what I think it
What am I looking at? Have I seen this means…
before? Can I fill the gaps?
What are the limits? Is this what I
What patterns Have I seen enough or expected… or not?
Which way is up? emerge? do I need to go back
and look at more? When you look at this,
What stands out? do you see the same
things?
What seems to be
missing?
 Business and procurement have
changed in the last 30 years

Supply chain management, unheard of in the 1970s, core to today’s organization; as a

concept it was born at the beginning of the 1980s.

So why is that? Well, predominantly it is due to the rise of professional managers (from the
1960s on) and the focus on annularity as a consequence of the principle of shareholder
value maximization in the 1980s.

Looking back, the trends are easy to spot:

• The 1980s was about the demands of just-in-time

• The 1990s was all about outsourcing and offshoring

• The 2000s was the emergence of IT solutions

• The 2010s thus far has been all about risk – which was built in the previous three decades
 *Five key global trends: how
much does this stuff matter?
Trend
Increasing focus on impacts of corporate social responsibility
Potential for Impact
Corporate social responsibility will grow in importance for all
organizations. Changes in demographics and global consumption
patterns will impact the triple bottom line and have significant
impact on green, social and financial strategies.

Burgeoning technological advances Technological innovations will continue to grow and at an ever-
quickening rate, impacting all that we do in society and
business.

Global geopolitical and macroeconomic change There has already been a shift in global markets. These market
changes alter demand and consumption, which in turn creates
increased pressure on the availability of raw materials and other
resources.

Changing demographics Changes in demographics – be they declining birth rates, ageing

populations or migration patterns – will have high-level impact
on the availability of skilled and/or affordable labour.

Shift in the economic centre of gravity Demand in the mature markets in the developed economies of
the world is slowing down, whilst in developing markets and
economies it is quickening pace and strong growth is being
created.
 *Let’s do some thinking:
How might the purchasing and supply management function evolve?

Will a new supply management emerge?

How might supply professional skill sets change/ develop?

What kind of business intelligence will we need in the future? What might it look like?

How might we work with the supply base in the future? Who will call the shots?

Will risk management become everyone’s business?

 *Some food for thought:
The procurement function evolves

Spend management shrinks: as the strategic impact of procurement really comes to the fore,
organizations will still care about managing their spending , they just won’t have large, discrete, enterprise-
level organizations dedicated to doing it.

Profits replace cost savings: today’s focus on cost savings will give way to a broader, more balanced
emphasis on profitability, leaving open the question as to whether supply management concentrates on
cost savings or revenue growth to get there.

Budget fuss fizzles out: there is plenty of effort today around trying to drive sourcing cost savings into
budgets. But that is also a function of having discrete enterprise spend management organizations and
heavy emphasis on cost savings; we predict that both will go, as they are not enablers.

Good bye to the buyers: maybe they are valued highly in today’s marketplace, people who excel at
(buying) processes or at being big-time users of procurement and sourcing automation technologies – the
‘doers’ will find themselves working for third-party services firms — or not at all! The enablers, value-adders
will rule!

Strategic business units absorb procurement: will the future bring a loose network or a tight
function? One of supplier-facing professionals embedded into strategic business lines, communities and
processes wherever needed, constantly moving and reinventing their roles as needs shift.
A new supply management emerges

Outsourcing explodes: many current procurement and sourcing activities — the ones that do not get
redistributed to internal end users of goods and services — will be outsourced by 2020.

Service providers call the shots: with fast-growing demand for procurement outsourcing, both the
quantity and quality of third-party procurement services will increase dramatically; their performance in
many spend categories will surpass what can be achieved in-house.

Strategy scope widens: much has been achieved since the mid-1980s to transform procurement from
tactical to strategic. But the idea of ‘strategic’ remains hemmed inside the function, the process or the
spend category. With a cultured understanding of the (strategic) value-adding capability of procurement,
the meaning of strategic gets much bigger.

Procurement gets financial: we will continue our focus on physical supply chains, but procurement will
also become more strongly linked to financial supply chains, optimizing cash flow and working capital,
implementing dynamic discounting and supply chain financing.
Instantaneous business intelligence arrives

Prices go transparent: market pricing for goods and services will become so transparent — due to e-
sourcing, global trading networks, online communities and procurement’s intrepid scrutiny into still-
cloaked categories — that negotiation might well become a lost art.

Risk information catches up: as the general awakening around supply-related risk comes into sharper
focus we will see consensus develop around how to measure risk, as well as more standardized, more
readily available third-party information and networked communities where people pool data for
operational risk assessment.

Data predicting the future: from 2004–14 procurement has been looking backward— at money spent
last year, supplier performance in the past week, month or quarter. The coming decade will bring
information and models that look forward.

Procurement intelligence moves into context: full visibility regarding spend, risk, performance will
be available by 2020. Ready access to accurate, timely, structured internal and external business
intelligence will create unprecedented abilities to synthesize information in support of decision making.
Collaboration – the ‘new normal’

Innovation from the supply base: since the 1990s the move from closed to open innovation models
has facilitated innovation-oriented cost saving strategies. This decade will see a major emphasis on driving
and taking innovation from the supply base. However, the supply role will be less ‘person-who-brings-
innovation-in’ and more ‘person-who-assembles-innovation-communities-and-gets-out-of-the-way’.

The dawn of the extended enterprise: manufacturing has been on a ‘buy-more, make-less’ path for
many years – creating what is known as shallow depth of manufacture ; the manufacturers intend to stay
there, while services organizations will join the outsourcing fray. The expanding trend to extended
enterprises promises exciting times for supply professional in the very near future.

Goodbye products, hello solutions: suppliers in this decade will continue to take on bigger chunks of
things they already do for their customers. Think of it as ‘turbo-charged integrated supply’ where suppliers
step out of their comfort zones to drive customer performance.

Early is the new black: timing of customer-supplier collaboration will shift by 2020; today, suppliers
may be asked to contribute ideas to existing designs or to help fix existing processes. By the mid-2020s
they will be more consistently in on the ground floor.
Collaboration – the ‘new normal’ (cont.)

Buyer–seller lines blur: supply management professionals will look to extract more value from suppliers
in 2020. But it won't always be about improving processes. Rather, it will be about leveraging supplier
resources and integrating supplier functions one-to-one with their own.

It’s all about networks: instead of enterprises charting their own courses in innovation, a transition from
‘buyers and suppliers’ to ‘integrated supplier networks’ will enable greater coordination of innovation road
maps across connected businesses and industries.

Suppliers gain power: the growth of outsourcing, tighter integration and heavier reliance upon suppliers
means that they are gaining more leverage in buyer–supplier relationships. Instead of them selling to you, it
may be you selling to them – procurement has a new challenge… to remain attractive to key suppliers.

Organizations share risks and rewards: as supply management professionals get better at
segmenting, defining and measuring value, they will begin to incorporate both gain- and risk-sharing into
commercial relationships with suppliers.

Motivational contracting: as well as sharing risks and rewards in contracts, supply management
professionals will accept greater risk in commercial relationships with critical suppliers by leaving out all the
classic kinds of legal protections that might demotivate suppliers.
Risk management is everyone’s business

Everything starts with an E! The procurement world is automated – (P2P), sourcing, contract management
and other automation engines will be de rigueur by 2020; they will be integrated up and down supply chains, fully
adopted, providing full transparency and real-time insight.

Work goes mobile: smartphones, tablets, embedded chips and other not-yet-imagined devices will create a
massively mobile work environment for procurement professionals and suppliers alike. We are seeing it now; it will
only get bigger and faster.

Communities collaborate: Richard Lamming’s world of the dog, the black box and the caretaker comes of age!
Buyers and sellers will increasingly rely upon digital trading networks and communities that allow them to quickly and
easily discover each other, connect and collaborate.

Goal poachers rule!: since 2000 we have seen intense inward cost focus – and it has been all about saving, with
procurement as the eponymous ‘goalkeeper’. The next 10 years into the mid-2020s will see attention turn to growth
via digitally connected networks that empower supply management professionals to discover, qualify, connect and
collaborate with suppliers, peers and partners.

It’s all about complexity: as emerging economies place successful, fast-growing and culturally different companies
on to the global playing field in the coming decade, the process of selecting suppliers will carry more risk, more
complexity and become more fluid.

Everyone wakes up to supply risk: converging trends will make supply relationships even riskier as the decade
progresses than they are today – big increases in companies’ awareness around supply risk and also an expansion in
their perceptions of where risk lies.
Supply professional skill sets must change

Procurement professionals get savvy: professional; polished; intelligent; respected; influential;

persuasive; visionary; strategic; sharp; global; collaborative; executive and business savvy. These skills are
what procurement and business leaders will expect of the future supply professional.

A new definition of ‘expert’: a significant characteristic of the new supply professional is the extent and
depth of his or her knowledge; they will become ‘students of their industry’. They will know everything – the
science, economics, law and politics – of their supply markets on a global scale.

Talent competition heats up: there is considerable opinion regarding the talent pipeline. Is it too sparsely
populated to meet the demand for strategic supplier-facing professionals that will develop in the 2010s? The
outcome will be intense competition to attract the best and brightest, but on their terms.
 *What are you going to do
next?
Group No. Issue

1 How might the purchasing and supply management function evolve?

2 Will a new supply management emerge?

3 How might supply professional skill sets change/ develop?

4 What kind of business intelligence will we need in the future? What

might it look like?

5 How might we work with the supply base in the future? Who will call
the shots?
6 Will risk management become everyone’s business?
Instructions:

Apply the four steps of visual thinking

Don’t limit your thinking to what you do now, or have done in

the past

Think about the validity of the issue you are discussing

Remember we are setting course for the future

Choose a scribe and a rapporteur for feedback