Category Archives: Procurement in the future

Procurement in the future

 Trend toward more SRM

Procurement in Future

Research in the USA indicates that future trends relating to Purchasing and Supply Chain Management will include more focus on collaborative Supplier Relationship Management among other, such as:

  • An increase in the strategic importance of the Procurement function within companies
  • Leading organizations will establish strategic purchasing competence centers with highly trained, cross-functional personnel responsible for achieving competitive advantage in collaboration with their chosen supply chain partners
  • Tactical purchasing activities, such as ordering in expediting, will increasingly be automated and selected low-value, non-critical, standard commodity purchases are likely to be outsourced to full-service providers
  • Strategic alliances with suppliers will increase
  • Organizations in the same supply chain will increasingly share resources, including intellectual properties information, people and other assets
  • Global supplier development will be critical to global penetration
  • There will be an increasing emphasis on win-win negotiation
  • While the price paid will be an important measure of purchasing performance, this will be considered as part of the overall contribution of PSM to profit
  • Environmental factors will become increasingly important to purchasing considerations
  • The Internet will be the main vehicle for electronic purchasing, which increasingly will be used for purchasing transactions and also be the key to globalization
  • Personnel employed in PSM will require a higher level of training, including that in leadership and influence skills

Source: Purchasing and Supply Chain Management, Lysons and Farrington (2006)

 

Increasing need for two-brains buyers

Two-brain buyer

Integrating right-brain talent is imperative for winning procurement teams. Buying managers need to develop SRM skillsets beyond traditional procurement skills, in order to: 

  • engage on supplier energy
  • lead cross-functional teams
  • embed communication and change management into the process
  • deeper and more durable value creation to identify new opportunities

Companies that take SRM seriously, determined to capture supplier value and build profitable relationships, must make sure having the right people on the right supplier relationships. The buying responsibility of the most strategic partner suppliers, cannot only be assigned to the most senior and mature buyers – the relationship managers for those critical suppliers need to be equipped with strong right-brain capacity.

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