When the study ‘Future-Proof Procurement’ was published in 2016, it caused a sensation. The team of authors described four possible scenarios for procurement in the year 2035 ranging from its creative reinvention to the demise of the entire profession. Recently, two of the study’s co-authors, Hannah-Mareen Zühlke and Dr Marcus Schüller, spoke about the two scenarios that are gathering pace on the market. Ironically, these two scenarios are at the opposite ends of the spectrum. They present procurement with a stark choice between all and nothing: purchasers will either become a creative driving force with a networking role – or be replaced by algorithms.
A future without procurement?:
“The four future procurement scenarios in brief:”
The procurement function disappears In the first scenario, humans are relegated to the sidelines. AI assumes the purchaser’s role in a fully networked company, handles operational procurement, and prepares strategic partnerships on the basis of data. Human employees merely monitor and steer the processes in this data-driven environment to make sure things run smoothly.
Procurement becomes the centre of power in a company The second scenario describes procurement as the hub of all important decisions in an organisation. However, it has not yet emerged as the predominant future of procurement. Although algorithms can play a supportive role and in some cases can even participate equally in decision-making, innovation throughout the value chain comes primarily from purchasers. And anyone who wants to become a CEO needs to start out in procurement.
Procurement is procured Purchasers become freelancers who are temporarily brought into a team by project managers for specific assignments. They purchase products and services and are judged by the savings they make. However, innovations and creative thinking are left to project managers.
Procurement becomes a creative agency The procurement department becomes an agency for business model development and trend management as well as a creative service provider in its own right. Purchasers know their company’s products and services inside out. And since they also have a very good knowledge of their suppliers, they can work with them on joint innovations. Procurement reinvents itself and develops creative, innovative solutions in the same way as an in-house agency.
At the 7th Mercateo Executive Summit, two of the study’s authors, Dr Marcus Schüller and Hannah-Mareen Zühlke, spoke about how the world of procurement had developed in the meantime. Zühlke stressed that purchasing departments don’t tend to follow one of the scenarios to the letter. True, one scenario often predominates, but aspects of all four can be seen. According to the co-authors, the main trends observed on the market are the focus on efficiency and automation (Scenario 1) and the reorganization of the entire procurement silo with strands of innovation (Scenario 4). The shades of grey in between remain grey, yet companies seem to prefer an approach which is black or white.
“We will work with AI”
However, all four future scenarios have two things in common: digitalisation and scrutinising purchasers’ role in the organisation. Marcus Schüller is confident that “we will work with AI”. It’s already plain that procurement will be asked to explain how it contributes to the company’s profitability and success. “Cutting costs, providing services and maintaining quality are typical responses – and these are jobs which aren’t going to disappear,” says Marcus.
However, there are also many other demands which don’t have much to do with placing orders or finding solutions, but focus on collaboration, networking, and relationships with suppliers. According to Marcus Schüller, procurement departments in organisations of all sizes currently spend 70–80 per cent of their time on operational tasks like ordering and forwarding, etc. But these are jobs which only appear in this form in the third scenario – one which businesses are largely rejecting.
Who writes here?
My name is Julia Rau and I work as an editor at Mercateo. As a trained journalist, I spent several years poking my nose into all kinds of things for daily newspapers and, among other things, wrote a series on digitalisation. My inexhaustible curiosity drives me time and time again towards all those topics for which the Federal Government has included a “4.0” in the title.
Julia Melissa Rau
- The Study “Future-Proof Procurement” - Ein Vortrag von Mercateo Vorstand Dr. Berns Schönwälder zu Thema Technologieagentur vs. Kreativagentur - praktische Tipps für Einkäufer in der Inside Business von Dr. Marcus Schüller)