In the future what will purchasers do every day from 8 am to 5 pm when routine work has been digitalised away? Kai Nowosel, CPO at Accenture, explains in an interview what operational and strategic purchasers will have to do in the coming years to create value for their companies and avoid losing their raison d’être to algorithms.
What will purchasers do in the future?
Mr Nowosel, for you, the future of procurement means transferring a large proportion of what currently makes up procurement to computers. Briefly explain your vision.
I would differentiate and say: many of the process-intensive procurement activities related to contract implementation, orders and accounting can be reliably mapped for machines. There are certainly exceptions, but this is precisely my vision for the majority of standardised, volume-intensive processes. However, this is only part of what constitutes procurement. Many other things that I think are often neglected, such as innovation management, cannot be integrated into a programmable process. That’s all about interaction and creativity. I see technology, for example collaboration platforms, more as support for employees there.
As you have now described, there is something in procurement that cannot be replaced by machines.
This is true, and purchasers will be doing themselves a favour if they identify and take care of exactly these fields of work. There will be a shift in the value creation chain in which machines will relieve us of recurring work steps. The employees then need to do what the machine cannot: communicate or maintain networks. Perhaps AI will be able to do this at some point, but probably not for ten to 15 years. Machines have long since taken the helm in transactional procurement; I see a change in operational procurement within the next two to five years. That’s why I say: the procurement book must be rewritten! The value proposition of procurement is no longer about managing processes; procurement must manage business, that is the task.
How exactly does the change that digitalisation is bringing affect the work of transactional, operational and strategic purchasers?
First of all, it is important not to lump transactional and operational procurement together. Those who do this have already missed an evolutionary step. Transactional procurement maintains master data, converts purchase requisitions into purchase orders and takes care of tracking helpdesk tickets. In corporations, it is often outsourced to shared service centres – for example to China or India – and is largely anonymous. Algorithms are already taking over parts of this work today, and will also take over transactional procurement in the future. However, it is not the German purchaser who loses his job, but the employee of the service provider in India, who was already aware years ago that this would happen. This service provider must also prepare itself for new, value-adding tasks.
What changes for the operational purchaser?
Technology will enable him to become more productive in the first step. In the second step, while he is more productive and has fewer operational tasks on the table, he has time to deal with processes that cannot be handled by machines, and possibly teach systems. In any case, it is necessary to abandon the expectation of carrying out all of the processes yourself and to instead concentrate on understanding why processes are designed and in what way, and how they could perhaps be optimised. Last but not least, purchasers will also have more opportunities to undergo professional development.
How to develop – what will the new tasks in operational procurement be?
I assume that it will support relationship processes, for example; it will also intensively seek new sources of supply for solutions and orchestrate meetings. It will also be much more about quality and data management, so that data can be used to prepare decisions. I could imagine that, as these tasks are a very good match with the profile of an operational purchaser – which includes a great deal of process handling.
What exactly does “relationship processes” mean?
When I think about how meetings with business partners or suppliers go today, many people too often attend such meetings unprepared. In most cases, the purchaser has his own needs in mind and, if he is good, he has once again read over what was discussed at the last meeting. That’s not good. It would be better if someone could prepare this meeting; know which topic the supplier is currently dealing with; have read the annual report and be able to say which projects the supplier has recently won. Then you could talk on a completely different level. Und preparing meetings in this way is time-consuming and complex. Perhaps artificial intelligence could take over at some point. But we are still a long way from that.
What skills are needed to take over the new tasks?
Experience has shown that procurement only works well if specialisation is brought about. So, as a manager, you need to consider: who is a specialist in which subject? There are employees who know how to maintain networks, others have a talent for analysing data or managing complex schedules. The manager has to compare how the purchaser matches the new tasks and processes in terms of his training, experience and skills. If he has so far been a diligent operational purchaser who has performed high-quality work in a process-oriented manner and on schedule, then I can well imagine that he could be someone who, for example, prepares network meetings after completing certain training courses.
That sounds feasible.
Absolutely! When it comes to managing networks, soft skills and common sense are essential. Of course, analytical skills are also important in some areas, such as evaluation. Let’s be honest: procurement is not rocket science. Analytical skills, for example, can certainly be developed. If the change in the company fails, it is because of missed training courses and not because of the intelligence of the employee.
So, operational procurement is abandoning the process-heavy tasks that computers can take over and will work on strategic procurement in the future?
Yes, exactly, the operational purchaser will remain closer to process management but, as already explained, the processes are different. It’s more about preparing strategic topics. And the colleagues who are now referred to as “strategic” purchasers will dive further into relationship management in the future. By the way, I’m not a fan of the terms “operational” and “strategic”. For me, what is called a strategic purchaser is the one who is close to relationship management, while operational procurement today is, and will remain, more to do with value-adding process management.
What changes will strategic procurement face?
There will be a division between those who buy standardised and describable products and services and those who buy complex solutions. The former will not be around for long because the only thing they have to do is find the right platform where the products are. But the purchaser will no longer differentiate himself by procuring the products better than the platform. In other words: a great deal will also change for strategic procurement. Anyone who believes that strategic procurement is protected from development by the term “strategic” alone is mistaken. First of all, they will have to part ways with tasks that they currently use to define themselves. There are still companies that put out calls for tenders for toilet paper and consider this to be strategic procurement. Only when you get away from that will you have the time to finally get to grips with complex topics for which the end product has not yet been described. The task here will be to align internal needs and strategic goals with the opportunities on the market.
What tasks will strategic procurement have in the future?
It has to bring the market together, find and meet solution providers and, of course, be able to match a supplier’s offer with its own requirements and perhaps even change its own requirements in order to get a solution from the supplier market. This could be a pharmaceutical purchaser thinking about access to biotech companies or a bank purchaser who is incorporating new start-up software. These are highly complex tasks for which you have to talk to vendors and suppliers or look into product development. I like to compare this to the project purchaser from the automotive industry, who has to find solutions before a car goes into production. But that’s exactly what many purchasers fail to do today. Although they want to be involved at an early stage, they can only make a small contribution because they have dealt with neither the market nor the topic. Therefore: solving tasks that are not strategic and coordinating their own entrepreneurial challenges with external offers. This means that strategic procurement certainly has just as many changes ahead of it as operational procurement. I believe we will see greater employee rotation among strategic purchasers if we discover that they are no longer worth their money. Far too often, they don’t develop any further, but are instead more likely to pull operational tasks onto the table.
A glimpse into the future: what is the interaction between man and technology like?
This thin front line of “strategic purchasers” or “relationship managers” is supported by operational purchasers, apps, Plattformen and AI. The front line is the face shown to the outside world and which is seen by customers and Lösungsanbietern. Of course, operational purchasers must not remain in the offices; they must be present at trade fairs, conferences and annual general meetings.
When must the procurement department reckon with all these upheavals?
I think we’ll see a great many use cases and isolated solutions in the next three to five years. The majority of companies will be affected by this in perhaps ten or 15 years, that’s difficult to say today.
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