In this extract from the forthcoming Issue 53 of Procurement Leaders Magazine, Flextronics CPO Tom Linton shares his views on how wider shifts in technology are changing the game for procurement functions and creating new types of teams.
Technology is about to expand into dimensions we have not seen since the birth of the Internet in the 1990s. Most of what we do today is based on tools that were invented to leverage the Internet, and based on processes and tools designed before the internet. Although this revolution has created a valuable set of tools that we use to run our businesses today, what is now emerging is something new, evolutionary and exponential in its possibilities.
Traditional sourcing is based upon a buyer-seller relationship that is built on the core offer, acceptance, contract and payment paradigm. This structure is supported by a business and legal framework that stretches back to the time of industrialisation in the 19th century. As a result of the changes that evolved since the invention of the internet, however, new ecosystems have been formed that are not only automating the processes of old but reinventing them as well.
The new ecosystem is defined by four trends:
1) The cloud – much has been written about cloud computing, but the net effect of it for procurement professionals is access to unlimited amounts of information at a fraction of today's cost. The remote, off-premises access to information is lowering the cost of doing business in every part of the procurement process. Intelligence will be richer and faster to access, and the processes to support it will be cheaper and ultimately faster.
2) Mobile devices – access to an unlimited flow of information will be available on our smartphones in app form. The devices will help us access the right information and provide intelligence in the form of options and recommendations based upon exception protocols that we as companies or users set.â€¨
3) 'Big data' – the information we will accessâ€¨in the cloud from our mobile devices willâ€¨be vaster than any single source of information available today. Today we surf the internet, tomorrow machines will surf the internet. Information bots (data bots) will be cognitive and intuitive in nature. They will use theâ€¨cloud to access information and analytics to provide fast, productive solutions to inquiries directly from machine-to-machine. This algorithmic discovery process will result in a ‘self-driving' procurement process which can automate sourcing decisions and supplier performance management.
4) Social and cognitive networks – the growth of cloud, mobility, and data will provide fertile ground for social networks to self-operate. Suggestions, which are borderless while increasing the velocity of our processes, will lead to faster time to value and better total landed cost analysis. Cognitive software will reach into data to link together options and recommendations for managers. As a result, procurement leaders will rely heavily on these new thinking tools to provide analysis, and will focus more on decisions that point to better business outcomes.
The rise of the Internet over the past few decades has been synonymous with the rapid changes in our natural environment. Politics aside, the world's atmosphere is getting warmer.
As a result, new hybrids have formed across the environmental spectrum in response to rising temperatures. The evolution of Galápagos finches happened in just a couple generations – not centuries – in response to the El Niño weather front. Grizzly bears working their way north have crossed paths with polar bears who lost ice and were trending south, creating, what have been described by some scholars as grolar (or pizzly) bears.
Hybrids combine the best features of two species to make them more likely to survive in a new environment. What's remarkable about natural evolution in response to global warming is its parallel to the rise of the internet in a similar time frame; change is in response to change. How quickly the personal computer became a tablet, and the tablet a phablet!
How will we as procurement leaders adapt to the hybridisation of procurement? How will we respond and change as a result of transformation trends brought about by the Internet?
Procurement hybridised with intelligent cognitive robots. Hmmm...
To learn more about the frontier of deciphering big data and building spend analytics register for our latest webinar here.
Tom Linton is CPO Flextronics.