by Malcolm Harrison, Group CEO, CIPS
No one can accurately foretell the future, but we will forever continue to try to do so. For the procurement and supply chain profession, there is much debate about what we might be seeing 10, 20 or even 30 years ahead, and there is no doubt that the digitalisation of procurement and supply chain practices will bring significant change.
Organisations are increasingly investing in technological “enablers” as part of their desire to be at the leading edge in the digital era. Those organisations leading the way are currently focusing on being able to increasing efficiency and productivity. The market for the enablers is shifting at a frightening speed so staying on the pace is no mean feat.
The expectation is that, as we standardise and harmonise through technology, our interconnections will be greatly enhanced. The greater transparency among organisations, suppliers and customers will unveil a whole new world of possibilities, which is presently difficult to truly understand. We need to find a way to cut through and show the path to real benefits.
CIPS has been involved in a study carried out by The University of Melbourne on Digitalisation of Procurement and Supply*, to gather intelligence on the adoption of supply chain digitalisation and what this means for procurement and the wider business community. This research aimed to shed light on the nature of digital technologies that have already been applied across an organisation’s supply chain, and also to ascertain what benefits can be achieved from pursuing a digitalisation strategy. What was critical in the study was the identification of the challenges facing managers moving from having a desire to digitalise through to implementing full supply chain digitalisation.
Findings revealed significant insights into how digitalisation is shaping future procurement and supply chain management practices. The research highlights that organisations will no longer be trapped in transactional procurement and supply chain routines – new digitalisation enablers will merge the physical and digital worlds. In the embryonic digital era, certain human interactions might soon be replaced by autonomous machine-to-machine communications. Thus, it is imperative to understand the implications of these inescapable changes, the potential dangers and the possible opportunities for further progression.
The Future of Supply Management White Paper from CIPS, produced in 2018, explored two scenarios as plausible futures for the overall profession – called Titans and Networked. The Titans scenario involves more automation, greater use of technology, polarising the business landscape with few very large, powerful organisations and many small organisations. The major focus for procurement professionals will be risk management and supporting business strategy. The dynamic marketplace will be volatile and unpredictable. Procurement will have to be adept at interpreting large amounts of data.
The Networked scenario, on the other hand, predicts a more evenly distributed marketplace, where organisations are more interconnected. It assumes reduced inequality in organisational income and power. Procurement’s principle strategic contribution will centre on network co-ordination and support network strategising. Transparency and accountability will be increasingly valued over speed and stakeholders will be consulted on decisions, including those made by commercial businesses.
What’s clear in both these scenarios is that supply chain managers are not passive actors. The procurement and supply community needs to initiate debate, challenge current practices and build capabilities and their capacity to develop new, appropriate supply management options, rather than sleepwalking in to undesirable outcomes. The focus must also be on selecting the right technology to deliver specific desired outcomes, not falling into the trap of digitalisation for digitalisation’s sake.
For more information please visit www.cips.org
* The survey was conducted in mid-2018 with over 700 managers in more than 20 different industries from 55 different countries taking part in the study.