According to Natacha Tréhan, Doctor of Management Science and Professor in Purchasing Management at Université Grenoble Alpes, the main challenge ahead for companies is to reinvent their business models, and fast. In the report that she co-authored with Ivalua, she analyses eight fundamental trends that illustrate this economic paradigm shift and represent the future challenges procurement departments are set to face.
1. The noetic revolution
The data revolution is in full swing. The total amount of data created worldwide in 2018 amounted to 33 zettabytes, a figure which is expected to exceed 2000 zettabytes by 2035 [1]. Moreover, artificial intelligence technologies have enabled data to be transformed from information into knowledge. Procurement departments must inevitably use data to their advantage and embark on journey of digital transformation to unlock their full potential.
2. Industry 4.0
Closely linked to the noetic revolution is the Fourth Industrial Revolution, which is characterised by a total real-time interconnection between machines and systems. Based on the Internet of Things and cyber-physical systems, Industry 4.0 turns the concept of "smart" factories into a reality. Procurement professionals must therefore help to reconfigure the interfaces between the various departments (sales, production, supply chain and procurement).
3. The servitisation of the economy
By 2030, companies will be buying services, and even personalised solutions, rather than products. As a result, suppliers will be able to collect and analyse large volumes of data in order to find out more about the use and performance of their solutions. Procurement departments have much to gain from rethinking value creation with their suppliers.
4. New economic models
The growth of peer-to-peer networks has enabled new economic models between individuals to emerge. As well as encouraging disintermediation (i.e. removing various intermediaries from the distribution circuit), these models also open up new opportunities, such as the use of freelancers for example. To truly take advantage of these newly emerging models, procurement departments need to rethink their sourcing approaches.
5. The age of social, societal, environmental responsibility
In business, value creation is no longer solely financial or shareholder-based. It has now become inseparable from corporate social, societal and environmental responsibility. Procurement departments must undoubtedly be part of this shift and contribute to improving the non-financial rating of their companies.
6. The era of consumer-stakeholders
Shopping habits are changing. Consumers have become consumer-stakeholders: they are highly informed and use their purchasing power to support the values and causes that they believe in. With this in mind, procurement departments must focus on the end customer and fully understand their company's value proposition in order to drive innovation.
7. The changing global barycentre
China is on track to becoming the leading world power. Its leading position is primarily built on innovation and advanced technologies (artificial intelligence, robotics, new materials etc.). For instance, the country now exceeds the United States in terms of the number of international patents filed with the World Intellectual Property Organisation (WIPO). Procurement departments should therefore be on the lookout for new global technological opportunities and threats, and learn about Chinese culture in order to better prepare for increased exchanges with the country in the future.
8. The age of absolute uncertainty
All indices measuring global uncertainty, whether it be the International Monetary Fund or the Federal Reserve, indicate that global uncertainty has never been higher. This uncertainty, combined with the technological challenge of cybersecurity, highlights one of the main priorities for procurement departments in the coming years: to protect their company and contribute towards its resilience.
These fundamental trends foreshadow the top priorities for procurement departments in the future: to contribute to the economic performance of their company, to protect it from risks and to support the transformation of its business model.
[1] Source: Statista Digital Economy Compass 2019 (1 zettabyte = 1 billion terabytes)
