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The nature of the organisation has changed markedly over recent years, and have completely transformed in the last century.
The question is: What will the company of the future look like? And what will be procurement’s role?
In our upcoming event in London, we will be exploring with over 500 senior procurement the future of their organisations. In the World Procurement Congress, the globe’s largest gathering of CPOs, Procurement Leaders will attempt to map the future of the purchasing function.
One of the areas that the research team is interested in exploring is how the structure of the corporation will change.
Over a hundred years ago, the first recognisably modern corporations emerged from the industries of the US East. These monoliths were the first to harness telecommunications technology to build entities which could span large geographic spaces, linking vast regions and administering the transfer of resources to previously disconnected communities.
As technology improved, so did their capacity for further centralisation and expansion. After the Second World War, this model was exported as companies extended their reach across the globe.
Eventually, the increasing scale and complexity of such large structure proved unwieldy, and CEOs began to divest. Outsourcing boomed as companies specialised in more niche offerings in a range of niche markets. Whereas once organisations oversaw all aspects of their value networks, they sought to hire suppliers to subsume more responsibilities for adding value in complex commodity chains.
Currently, the question for companies is how far should their look to outsource? In Procurement Leaders research, we have been polling CPOs on this very issue for years. Interestingly, it looks as though this structural trend will increases. Senior business executives are not only looking to outsource their noncore functions, but their core activities as well.
Where does this leave companies in the future?
It may be flippant to note that there won’t be much to left to outsource. But it seems certain that, at least for the foreseeable future, procurement will have an expanded role of not only managing a higher volume of commercial relationships, but overseeing the fulfilment of increasing business critical relationships within the supply base. In fact, if this trend is to continue, if buyers cannot stand in a central position in the business, helping direct the flow of resources, the success of that organisation might come under doubt.
We can expect organisations of the future to have larger, more complex supply chains, as suppliers subsume wider responsibilities. We might expect ‘corporates’ to be shadows of their former selves, with large operational, fee-earning departments, alongside core planning, financial and HR departments. Emerging from its past back office status, we can also expect procurement to emerge as not only a support function, but a mobiliser of significant supply chain resources which can add just as much value to the business as the sales generating functions.
We hope to catch a glimpse of this future at the WPC later this May. I hope to see you there.