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Will 5G transform procurement?

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New technological developments always promise to bring with them efficiency gains, high productivity and lower costs. The job for procurement when it comes to such developments, is to understand what they are, how they work and the benefits they will deliver for the function and the wider business.


A faster and more reliable internet service is something that many in procurement would argue is needed despite the wide adoption of fourth-generation (4G) services.


It is a point backed up by research from Chinese technology firm Huawei, which in 2016 found that over one-third of executives thought their existing service was unable to support the ever-growing needs of the business.


That number, the research found, increased to 55% among executives in companies with revenues in excess of $10bn, while the problem was also worst in the Asia-Pacific region, where 38% of overall respondents claimed that they had outgrown their networks altogether.


With operators currently conducting internal trials of fifth-generation (5G) technology, there is the potential that business activity will be radically transformed over the next few years.


Indeed, mobile equipment vendor Ericsson and smartphone manufacturer Samsung have both predicted that 5G will be, at the very least, 100 times faster than its predecessor 4G, making it much quicker than any fixed broadband service currently on the market. Some go further and estimate that it will be as much as 1,000 times faster.


However, speed is not the only advantage 5G offers. Lower latencies will mean fewer internet dropouts, while it is also expected to be more widely available and more power-efficient than 4G.


These factors will allow procurement to work with its suppliers at a greater speed opening up new opportunities for value, which will in turn deliver savings.


What procurement will have to keep an eye on is costs. The technology is still in a development phase and so it is difficult to predict what additional costs there will be. It is likely that data demands will increase significantly and, with mobile data being chargeable, costs could increase significantly in line with them.


As with all of these technological developments, procurements first job is to ensure that costs don’t spiral out of control. Get the costs right and the benefits will no doubt flow from that.


This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Nilen Bhatt
Posted by Nilen Bhatt