At the beginning of 2020, my team and I were prepared to launch a large series – “Procurement 2030” on CPO Rising – what procurement would look like in 10 years. It was our plan to make that the primary theme of our research in 2020. But then COVID…
Our procurement research theme for 2022 will focus on Procurement Data. In fact, my 17th annual survey is live and I would love it if you would spend 15 minutes completing it. Anyway, I wanted to share some of the work we had started on “Procurement 2030.”
Three “Macro” Predictions for Procurement in 2030
Today, I am sharing my first take on where we’re going – the big picture and where Procurement will be a decade eight years from now. I’ll start with three Macro Predictions that will impact Chief Procurement Officers and their teams directly.
Prediction #1: AI Will Exponentially Improve Worker Productivity
Now I know that this prediction may not surprise you, but many studies over the years show that the introduction of new technology, while driving gains in the long-term, actually reduces productivity at the outset. This is due to adoption and change issues mostly. Sometimes the technology does not do what it purports to do, sometimes it is difficult to use. With AI, we are eliminating moist of the traditional hurdles to productivity. And the opportunities are so vast that that the productivity impact will be broad-based within the enterprise.
What will this mean for procurement?
First, it does not mean that you will be replaced by a computer. But it does mean that a majority of your work will be on the systems that drive procurement operations. It will mean that procurement teams will be able to deliver a higher-level of service with greater efficiency. It will also mean that procurement teams will be making smarter decisions using scenario analysis and simulation. Finally, it will mean that procurement teams can start to go after the spend they are not currently managing in a more aggressive way – Many have stalled out at about 60%
Prediction #2: The Balance of Power (Trade, Political, Intelligence, Resources) Will Swing Heavily to the East
I was going to call this prediction the Decline of the American Empire, but it is actually bigger than the United States. Today, China vs the US is proxy battle for power. In reality it really is an East versus West battle. The west had a huge head start but China has caught up and is passing the west in many ways. Other eastern countries are also making major strides forward. When you realize that China graduates more new doctors each year than the US has total doctors, you start to understand why the balance of power is shifting.
What will this mean for procurement?
It will mean that trade policy will be more volatile and less uniform so that for teams in the west, it will introduce new considerations in sourcing decisions. It will also mean that finding leading-edge innovations in supply markets will require a deeper look into different regions. Finally, it will mean that in time there is a strong likelihood that the dollar will no longer be the world’s reserve currency.
Prediction #3: Climate Change Becomes a Unifying Global Cause
Global problems require global solutions and climate change is a global problem. This is not a political statement and the fact that I even feel the need to say that shows how effective the forces fighting against change are. My view is that despite a strong push towards sustainability and zero-carbon targets, climate change is going to get worse this decade over the next 8 years. That is because despite all of the positive things global citizens are doing, the massive infrastructure in place in the world is driven by older energy sources. Did you know that US military impact on climate is greater than most countries’ impact? While there are many wedges driving different countries and regions apart, climate change will be a unifier
What will this mean for procurement?
Outside of a few industries, it will mean that sustainability will be a primary consideration in more and more supplier contracts. It will also mean that many procurement teams will have sustainability targets with more quantifiable metrics. Finally, it may mean that procurement develops an expertise to conduct sustainability audits of large suppliers as well as internal.
Watch for Part 2 Next week!
RELATED RESEARCH
Ardent’s Other Predictions (through the years)
