As part of a campaign looking at the trends impacting procurement in 2020, Procurement Leaders has invited a number of thought leaders to provide their insights across a range of different areas.
In this blog, Ninian Wilson, group procurement director and CEO of the Vodafone Procurement Company, the company’s Luxembourg-based subsidiary, which centrally manages strategic procurement for Vodafone, shares his thoughts on how digitalisation will shape procurement over the next few years and asks whether you are ready for what is to come next.
If you would like to hear more from Procurement Leaders on future trends you can you can tune into our webinar, which is examining the results of our 2020 Trends Report.
Like many other companies, at Vodafone we are looking to transform our operations by embracing digitalisation, and while we’ve made a good start within the Supply Chain function, so far we have only completed about 5%–10% of the journey. When you consider the opportunities that digital technologies have already opened up and the potential they promise, the remaining 90% represents the most exciting future for procurement since the advent of eProcurement at the turn of the 21st century.
Digital technologies like Blockchain, Artificial Intelligence, Internet of Things and Big Data analytics, are going to be the systems that tie everything together, providing procurement executives with unprecedented supply chain visibility and the opportunity to build new ecosystems to deliver new products and services to customers. As such, the role of procurement professionals will change from running category strategies to thinking and acting more broadly to orchestrate and align more complex relationships and partnerships.
However, it won’t all be golden uplands and sunny days ahead. Geopolitical risk is one of the challenges that many procurement professionals will not have had to deal with in their professional careers. Although the global order has been relatively stable over the past 20–30 years, we are now seeing massive change.
The norms that we are used to are collapsing – global trade deals are being renegotiated, and trade barriers introduced. This disruption is not going away and, as such, the way that businesses have configured their supply chains will no longer be relevant.
Of course, you could just ignore these trends and hope they all just goes away – although I would suggest this is somewhat unlikely.
All companies need to consider developing more agile supply chains to be able to deal with the consequences of this global re-alignment, although I do recognise the challenge of trying to reconfigure your entire supply chain based on only a tweet or two.
The traditional role of businesses is also changing. Customers are now asking: “Beyond earnings per share and total shareholder return, what is your business doing to make things better?”
This was highlighted by the announcement from The Business Roundtable, an organisation for chief executive officers of large US organisations, that it was revising its ‘Statement on the Purpose’ for corporations. This garnered a lot of media attention because it called on companies to serve all stakeholders by delivering value to customers, investing in employees, dealing fairly with suppliers, supporting the communities in which companies operate as well as working to protect the environment.
This shift away from a narrow focus on delivering value for shareholders highlights the increasing emphasis on corporate social responsibility and what corporations can – and are – delivering for wider society. This is not a return to the business philanthropic approach of the 19th century per se, but rather a more connected and in-touch approach that recognises that companies need to reflect the values and aspirations of the broader communities in which they operate and that, by doing this, they have the opportunity to differentiate and win market share.
When you think about these three trends, there is an unprecedented opportunity for procurement and supply chain professionals not just to influence the future development of business but to also shape it. As we implement new digital technologies, they will form the foundation of what we do for the next 20 years, supporting and mitigating the downside risks and maximising opportunities.
As a simple example, blockchain will give us visibility into product veracity, how goods are moved around the supply chain, their carbon footprint and the positive impact that they have on communities; helping us all to understand the process more fully and build more sustainable supply chains.
As such, connections with our partners and all other stakeholders within our ecosystems will be on a much deeper level.
I’m excited about this future, but I know what you’ll be thinking: “How do I get my function there?”
It’s a good and very important question.
All of us need to be prepared to try new things, in the hope that they succeed and build confidence, but also in the knowledge that failure builds experience and fuels learning. At the Vodafone Procurement Company, we have set up what I call our ‘Supply Chain R&D capability department’, which works in 90 day sprints, and tests, learns and synthesises new technologies and ideas.
As an example, we are currently testing a number of blockchain solutions. One of those is focused on contract management; while another, in consortium with IBM, is addressing the topic of on-boarding of businesses into our supply chain.
We are also looking at what we are calling ‘narrative analytics’, which is essentially using machines to produce our monthly procurement reports without any human interaction. The potential for this to save my team time and let them focus on other, more strategic initiatives is really exciting.
What comes next? The kind of technology that will come down the line really makes my head hurt when I think about it, but I know it will be even more transformative.
How about tenders that generate themselves and pick the best time to go to market? Or robots that make changes to purchase orders and tell you what they have done after the event? What will be the impact of Quantum computing on supply chain or the emergence of B2B marketplaces driven by AI?
With almost limitless computing power, what trends and patterns in data will I be able to see that I can’t right now; and what transformation will this help drive? How predictive are our future supply chains? Will we see POs that raise themselves – even before the purchaser has thought about the requirement?
Your head hurting now too?
For procurement and supply chain professionals, the future really is exciting; are you ready?
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.