100 years ago, nearly 40% of all US jobs were in agriculture. Today, the figure is less than 2%. The same dynamic happened in manufacturing, which in the 1950s dominated the jobs, but since then has consistently dropped as a mass employer. Technology made both trends happen then, and new, disruptive technology shows no evidence of slowing down these trends now.
Digitalization is having disruptive effects on managerial, logistics and other supply chain functions. Automation in plants, artificial intelligence, connected devices in fulfilment centers, and areas like procurement, production planning and maintenance are transforming jobs. Procurement has a unique opportunity by focusing on value creating activities as automation will reduce transactional, bureaucratic tasks and free up resources.
Currently more and more operational, tactical activities are getting automated in all back office functions. The impact for source-to-pay – procurement, operational procurement, accounts payable, finance and travel & expenses – is significant and will lead to less people needed to drive the purchasing activities, finance tasks. The future procurement function will be much smaller, but more strategic, as the strategic tasks are remaining. I like the saying: The future procurement, finance function will be powered by data, but driven by people.
The CPO of the future needs to define an organization with a unique value proposition. The value contribution is and will be key, but with a smaller organization focused on the strategic tasks with category management, driving supplier innovations, highly integrated supply chain, risk management, compliance, sustainability, supplier management and analytics. As the procurement organization of the future owns the relationship with suppliers and can define standards for sustainability, CSR, diversity in the entire supply base, including the balance between global and local supplies. The focus is purpose, because consumers demand to know where the products they are buying come from.
Supply chains are the biggest source of risk and opportunity in terms of finding solutions to today’s challenges and the demand from the consumers. The procurement function of the future must align goals and actions as well as understand how to work with suppliers best to find answers to the purposeful questions that really matter.
By Marcell Vollmer
Keywords: Digital Transformation, Sustainability, Procurement