14 January 2014by Hugo Eckseler
Procurement Transformation part 10: Global Megatrends.
Global sourcingRiskTalent and LeadershipTransformation
Thought Leaders is a series of regular posts from experts from across industries and regions, looking at the issues procurement faces today. This is the tenth and last in a sequence of posts by former Deutsche Post DHL CPO, Hugo Eckseler looking at the different facets to transform procurement to a partner of choice.
There are several global megatrends that will continue to influence our life over the next decades. This includes the shift of global economic power toward countries like China, India, Russia and Brazil; urbanisation and political upheaval; demographic shifts; accelerated digitalisation; and technological breakthroughs as well as resource scarcity and climate change.
Due to the complexity and inter-dependencies of these megatrends and the diversity of affected countries, markets and companies it's difficult to assess the impact on procurement but leading procurement managers foresee major changes in a couple of focal areas within the next decade.
- Global Sourcing. For many people this is still a synonym for low-cost country sourcing in Far East. But times are changing due to the growing spending power in the emerging countries that create new sales markets and require new sourcing and supply chain concepts. Unilever's global Sustainable Sourcing Program is a good example: it's based on the education of small local farmers to improve their agricultural practices and become certified supply partners. At the end it benefits their livelihoods and enables them to buy high quality Unilever products from local stores - a win-win story that re-invents Corporate Social Responsibility by Creating Shared Value.
- Supply Chain Risk Management. Financial and economic risks, volatile supply markets, natural hazards and the collapse of national governments have pushed supply chain risk management onto the agenda of top management over the last few years. In view of the ever increasing complexity and vulnerability of modern supply networks it needs a systematic involvement of internal and external partners as well as professional IT tools, to collect, filter and analyze risk data and monitor/manage them on a continuous basis.
- Supplier management & cross-functional collaboration. Product life cycles are getting shorter and shorter and the hunger for new and innovative features is growing further - smartphones and tablet computers being just the most visible spearheads of a development across many industries. Being ahead of competition requires an intimate knowledge of all relevant technology trends and the ability to integrate them into the development of new products – fast, with top quality and at competitive cost. Companies will be able to win the race only with strong suppliers and a close collaboration with R&D and other disciplines. This needs professional orchestration, a fascinating job for procurement managers.
- Organisational alignment. The trend to move to a more centralised procurement model and to consolidate procurement and other non-customer-facing functions in Global Business Services will gain even more momentum. It means managing in a matrix structure, working with suppliers and procurement colleagues from other countries and cultures as well as active management of all relevant stakeholders.
- Ease-of-use. Procurement's role is changing from a "back-office function" to a service provider, putting customer satisfaction in the middle of the procurement score card. Our ranking will be determined increasingly by our ability to make the collaboration between business units, suppliers and procurement faster and less bureaucratic. The development of future procurement systems must start with the end-user and then deliver for the back-office, instead of the other way round. Cloud-based SaaS solutions that combine latest software technologies and best practice content and allow a fast start-up with minimal use of internal resources to continue their success story.
No doubt, future professional procurement and supply chain management will look different from now and will require strong leadership and change management by CPOs to earn a seat at the table and transform procurement to a partner of choice.
Hugo Eckseler has been working more than thirty years as CPO and manager in manufacturing, logistics and quality management at Deutsche Post DHL, 3M, WELLA and other multi-national companies. Today he works as senior consultant looking for innovative solutions in procurement and supply chain management. You find his blogs here http://bit.ly/1cGfQCu.