How will procurement departments work in 2025?

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January 15th, 2019
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After hearing the thoughts of procurement decision makers on what their field will look like in 2030, it is now time for consulting firm McKinsey & Company to let its imagination roam free. "How will procurement departments work in 2025?" This is the question that the firm is trying to answer with its fun video featuring various scenarios about how a company manages its procurement.

Scenario 1: Task automation

In this first scenario, new technologies take over time-consuming and low value-added tasks, previously completed by procurement departments.

The company's e-procurement solution manages orders using a fully automated process (detecting requirements, sending purchase orders etc.) while a chatbot* manages payments by integrating information provided by human users.

Meanwhile, the buyer focuses on the human relationship and meets the company's supplier to optimise the level of service.

Scenario 2: Artificial Intelligence

In this second scenario, Artificial Intelligence independently manages supplier negotiations based on requirements provided by an employee. According to the employee's criteria, the solution will search for suppliers in its existing supplier list, sourcing external suppliers if required. It will then compare quotations, negotiate contracts and provide a carefully selected list of potential suppliers.

The employee who made the request will then meet each supplier pre-selected by Artificial Intelligence and make a final decision, with help from the purchasing department if required.

Scenario 3: Advanced analysis

In this third and final scenario, the company's e-procurement solution automatically sends spend reports to the relevant individuals. In addition, an advanced analysis programme allows this data to be cross-checked with external data to interpret results and identify areas for improvement.
Using this information, the category manager** can go and meet internal customers to discuss these areas of improvement.

These three scenarios highlight how new technologies can play a supportive role. Whether this involves automating low value-added tasks or analysing large amounts of data, these solutions complete tasks in a more efficient and cost-effective manner, serving a simple purpose: to facilitate decision-making.

Humans, whether buyers, internal customers or even category managers, can therefore concentrate on tasks where human skills are essential, such as human relations and making strategic decisions.

 

*Also known as "conversational agents", a chatbot is a computer programme that aims to simulate a conversation with human users.

**Category managers, or product managers, are responsible for a product family or category.