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.”
Prediction: The End of Permanence
Fixtures, institutions, products, and relationships will all become more temporary or fluid. The things one generation used to count on, I mean really count on, will become obsolete to those that follow in the next.
What do I mean by this? There are so many examples – here’s one – Higher education in the United States – Imagine you’re the parent of a high school senior who has just gotten into Notre Dame. First congratulations – great school. However, given how the pandemic has introduced new ways of teaching, some parents will start to evaluate if the traditional college experience is worth $400,000 for four years. For the next generation where the cost could be half a million dollars for an undergraduate degree, people are going to reconsider the current model that does not offer a positive ROI, for students starting college in 2022. The good news is that new models will arise. This is a single example of the many mainstays that will be absolutely foreign to the new workers emerging.
“Traditional” employment is another. Visit our “Future of Work Exchange” to read more about the dramatic shift in workforce strategies that are happening in real time
What will this mean for procurement?
It will mean that your traditional relationships will change – perhaps most directly, the one you have with your employer will evolve over the next decade. Who you work for, where you work, what you do and when, and how you are compensated will all change this decade. Now that doesn’t mean we all become independent contractors, but the things we expect from our employers will shift. And, as hiring managers, how we staff our teams and projects will be much more fluid and require greater focus and attention.
More broadly, for CPOs this means that many of the large, legacy institutions that procurement organizations have relied upon for support and information (certifications, training, best practices, and market knowledge) will become sizably less important, if not obsolete. The support and information will be as important as today, but how and where CPOs and their teams access it will be dramatically different. The proliferation of new resources (and the quickly evolving organizational needs) will cause many dinosaurs to fade as new entrants create new delivery models for training (and certification) and other organizational support.
Prediction: Supply Chains Become More Regional, Less Global
With the current push away from free trade and the rise of more nationalistic economic policies, this is all but guaranteed, at least in certain industries. But what remains to be seen is the depth and breadth of this change because there will be huge switching costs to move out and away from lower-cost regions.
Innovation in all forms is and will continue to be the only basis of advantage. The reason why we have a global supply chain is that in the short term, labor arbitrage creates large innovation opportunities. Historically, these advantages have not been sustainable beyond 20 years. In the longer term, inherent innovation capabilities will rest on three foundations:
- Business environment for catalyzing change – competitive markets, access to capital, labor flexibility, regulation
- Productivity tools that support better ways of doing business – software, processes, management insights
- Education system for producing talent of superior skill and motivation
For this to happen, advanced manufacturing technologies will have to help the West make up ground against China and other low-cost countries. This includes:
- Processes like continuous manufacturing and 3D printing (vs. 100 yr. old batch manufacturing processes currently in use)
- AI to replace time consuming and error prone high complexity analyses
- Robotics
It will also require low cost sources of local labor enabled by
- “Our-shore” sourcing
- “Cheap money” availability
- Government incentives
- the development of regionalized supply chains with multiple sources of supply availability
What will this mean for procurement?
Many things, which we will address in an upcoming article.
RELATED RESEARCH
Three “Macro” Predictions for Procurement in 2030
Ardent’s Other Predictions (through the years)
