While British Airways counts the cost of its IT failure which left thousands of passengers stranded on a busy holiday weekend, questions are being raised about procurement’s role in technology.
Unions pointed a finger of blame at the outsourcing of some of BA’s IT function to India. Was there a link between cost-cutting and failure to mitigate risks? BA quickly denied such accusations. But it is undeniable that BA could face not only damage to its customer service brand but a huge compensation bill. According to the FT a similar flight-grounding problem cost Delta Air Lines $100 million in lost revenues last August.
There is huge pressure on procurement professionals to balance costs, mitigate risk, deliver tangible returns, satisfy social responsibility, and manage supplier relationships, but now more than ever they’re expected use technology for competitive advantage.
Regardless of whether you are responsible for IT procurement or purchasing completely unrelated commodities, your skillset needs to include applying information technology into responsive and efficient procurement solutions as well as the analytical skills to make sense of data.
For the IT savvy the prize is huge – procurement typically spends between 40 to 70% of a company’s budget. So an efficient procurement business process can effectively cut purchasing costs and lead to better purchasing terms and contracts from vendors. And those who sell these solutions are constantly haranguing the market with veiled threats that those who fail to invest in the right technology-driven solutions could fall behind.
According to CIPS: “Efficiency gains remain the unifying thread across the various trends propelling procurement forward in 2017, as technology continues to drive improvements in processes, data, insight and, as all technology ultimately does, savings.
As a result, the currently trending technologies appear to be:
The cloud – buying, selling and finding the right suppliers across a full array of business services and goods with the removal of rapidly redundant in-house systems.
Online marketplaces – the potential to go global in accessing pools of potential suppliers for business services and goods.
Mobile apps – for time-consuming interactions, like raising purchase orders, approvals and checks on delivery times especially for the procurement of goods.
Social media – As well as providing insights into consumer trends, companies are more instantly accountable and the procurement function will have to operate more transparently, with the CPO assuming a new public role.
Data – the Holy Grail. Today, for some companies, spend analysis can be difficult if there is no standardisation in data capture. Yet, tomorrow, as procurement moves on line, the opportunities for data gathering and analysis are enormous. According to multinational professional services consultants EY, advanced analytics will change procurement functions over the next decade. As analytics gets more powerful, it will allow firms to understand unprecedented quantities of data in huge detail and in real time.
Artificial intelligence (AI) – Once you have the data, it is likely that AI will provide predictive analytics that are far superior to human capability. According to Procurement Leaders, AI has the potential to totally disrupt the whole procurement function. From bots crawling the web for consumer behaviour insights, to credit score requirements, the increase in speed and efficiency will rise incrementally while the potential for human bias, error and fraud will diminish.
Within one lifetime we have moved from the birth of molecular biology to today when DNA tracking is being used to verify shrimp supply chains for Marks and Spencer.
The experts predict that technology has the potential to change the face of procurement. And also the talent required by the sector. According to EY’s Empowered
by Analytics, Procurement in 2025 report, in the next 10 years, the people working in the function will also have to change and to make a more strategic contribution to the business. The report predicts: “It will need people from a wide range of backgrounds, who are able to deal with a new mindset and even a fundamentally different concept of cost”.
Whatever the future brings, Bramwith Consulting can advise and help candidates to find the most suitable roles and clients to secure top talent. Why not send us a CV or check out vacancies in procurement and supply chain?
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