Many industries are in the final stage of a transformation process – a process that will change their business forever. A number of interconnected global megatrends are putting them under greater pressure and causing them to change their value chain models, and consequently the core functions of their organizations. This transformation has a particularly strong impact on procurement.
More than any other function, procurement is a seismograph for global change – an early indicator of the shocks, disturbances and innovations that today's highly complex international networks of companies are subject to. Furthermore, disruptions in industry, manifested as changes in value chains, inevitably trigger a revolution in the functions that control those value chains. The final stage of transformation for industry also means the final stage of transformation for procurement.
"The procurement function is taking on an increasingly entrepreneurial role."
Four factors will shape the procurement function of the future: Digitalization, automation, commoditization and industry-specific disruptive processes. These factors will have enormous consequences on the future organization of procurement. The procurement function will take on an increasingly entrepreneurial role. It will more and more operate as a network facilitator and innovation manager.
Taking the four factors together, it is clear that the final stage of transformation for procurement is far more than just an evolutionary process of digitalization. It is the result of a revolution, triggered by new requirements from industry and businesses combined with radical opportunities offered by digitalization . This is a unique chance for procurement to reinvent itself as a value creator – and for chief procurement officers to become playmakers within their teams.
We identify six core questions that CPOs now have to answer: What does the procurement endgame look like? What performance level does the business require from you in the near and distant future? What are your relevant future scenarios? Where are you today? What is an ambitious and realistic target for you? How do you get there?
Only by addressing and answering these six questions will procurement succeed in navigating the final stage of transformation successfully and putting strategy, rather than operations, on the agenda.
Four factors are shaping the procurement function of the future: digitalization, automation, commoditization and industry-specific disruptive forces. This offers a chance to put strategy at the top of the procurement agenda.
