The Future of Procurement
"Within the next five to seven years, we expect digital platforms and technologies to have totally transformed the way most procurement organizations do business" according to Accenture's latest Procurement white paper "Is Yours a Procurement Organization of One" outlining ideas on the future of technology and procurement.Accenture's research in consumer goods indicates that digitally enabled companies will be incurring procurement costs of just 0.22 percent against net revenue compared with 0.50 percent for their peers . They will also be driving more strategic value for the enterprises they serve.
According to Accenture "they will have leveraged digital to become what are, in effect, procurement organizations of one:
- “One” with the business as an embedded, strategic team
- “One” with an expanded ecosystem of suppliers
- “One” with re-imagined processes as digital evolves
According to Accenture, leading players are already beginning to envision such procurement organizations of one. They say three key characteristics distinguish those visions:-
Smaller organizations that pack a bigger punch - Leading procurement organizations foresee not only a more prominent strategic role for the CPO, but also a dramatically different organizational structure—a structure enabled by digital to make procurement “one” with the business.
An Extended Ecosystem- Digital supply networks that boost competitiveness and fuel growth increasingly distinguish industry’s high performers . Moreover, 60 percent of companies are already investing in digital collaboration platforms to stimulate ideas, facilitate idea collection, and foster new partnerships and forms of collaboration. Procurement leaders, meanwhile, are leveraging digital platforms and technologies to extend their supply networks into an “ecosystem of 3”: strategic, transactional and uncharted (new, or not yet known).
A Process Revolution - Achieving digital’s true potential necessitates the questioning of even the most fundamental of procurement processes—especially as one disruptive digital innovation in particular promises to transform those processes almost beyond recognition. That innovation is the Industrial Internet of Things (IIoT), which combines sensor-driven computing, industrial analytics and intelligent machine applications into a single universe of connected products, processes and services.
Accenture's research shows that "32 per cent of C-suite executives recognize that this digital game changer will significantly improve supply-chain transparency, and boost the value of analytics . But some leading players are more far-sighted still. They know not only that the IIoT can help their processes do the same things significantly better—but also, and more importantly, that it will help them re-evaluate and re-imagine those processes."
To see the white paper "Is yours a Procurement Organization of One". The paper is also discussed in Spend Matters.