Buyers need not apply by Jon Hansen

Posted on March 24, 2014


Post Update: Of course, everyone knows by now that the person I am teaming up with to write the book is @BuyersMeetPoint Kelly Barner. Look for it to be released later this year.

In the coming weeks, I will be making an official announcement sharing with you the news that I will be partnering with another notable industry expert on a book that will focus on the future of procurement. So be sure to stay tuned for future updates, as this will be a must-read book for any procurement professional.

In the meantime, I was recently asked what “my personal take” on the future of procurement might be.

Extinct purchasing4

Here it is;

Organizations will outsource functional procurement processes such as Indirect Material ORM and MRO spending. At the same time, complex acquisitions will evolve into virtual teams or entities consisting of project-specific experts from participating stakeholders – both internal and external to the buying organization – who are skilled in the areas of relational governance.

While recognizing the interests of individual stakeholder organizations, these virtual entities will have a joint mandate or objective focused on a shared mutual gain or outcome.

With Indirect Material acquisitions, technology’s role will evolve to streamlined fulfillment, while more complex acquisitions will leverage “socialized” platforms to manage relationship output instead of transactional throughput.

Case Study: Department of National Defence: In an effort to boost SLA performance from a 57% next-day delivery capability to the contractually required 90%, the service organization providing support for the DND’s IT infrastructure outsourced their MRO acquisition process to a third party.

Within three months, SLA performance improved to 97%. The purchasing department headcount of the service organization that had previously managed MRO purchases was reduced from a pre-outsourced 23 down to 3. The remaining 3 were more administrative – a function that will disappear with the advent of cloud-based P2P solutions.

Net Result: Even though a 2007 CPO Agenda Roundtable made up of senior executives from major global corporations such as Nestlé, Danone, British Airways, and Merrill Lynch concluded that “there is going to be a continuing need for what was referred to as low-level buyers,” their conclusion that “one strategic business thinker with the right skills and capabilities is worth 10 or 12 of your normal, run-of-the-mill purchasing people,” speaks directly to the evolution of the procurement professional, and the emergence of the project-specific expert.

In terms of the “low-level buyers” reference, we must remember that in 2007 cloud-based P2P solutions were not on the collective horizon, nor would they have been understood relative to the extent of their impact on the market. Once again, these new solutions render the low-level buyer position dispensable.


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