What does the future supply chain look like?

The Chartered Institute of Procurement & Supply (CIPS) has recently launched The Future of Supply Management, a white paper produced in conjunction with the University of Liverpool and Aston University, Birmingham. This significant piece of academic research explores what the future holds for the procurement and supply profession

How might the supply landscape change in the coming years and what are the implications of these changes?  The paper explores two future scenarios entitled Titans and Networked.

The Titans scenario for the supply landscape

The Titans scenario suggests that the business landscape will polarise with a few, very large and powerful organisations, and move to many much smaller organisations.

Under this viewpoint many supply chains will have been radically reconfigured, driven by widespread adoption of additive manufacturing (3D printing) and servitisation. Many more products and services would be commoditised through the rise of commercial exchange platforms.  Decision-making will be brand and sustainability “blind” unless such criteria are explicitly written into algorithms, therefore there may be reduced attention to environmental and social factors, just enough to comply with legislation or regulation.

Decision-making will be brand and sustainability “blind” unless such criteria are explicitly written into algorithms

Here it is expected that tendering costs will fall dramatically through automation, removing a key barrier to entry for many and increasing market dynamism. We would see significant reductions in regulation, leading to a regulatory wild west, creating a far more dynamic business landscape, enabling innovation, but also increasing unpredictability. So as costs fall, automation will increase in low-cost countries, their prices will fall and there will be a swing back to global sourcing.

Data security will be a huge risk, with supplier breaches having the potential to destroy firms. Robots and analytics will be more widely used for procurement and supply activities. Contracting, ordering and payment along with most sourcing decisions, including the more strategic, will be automated, supported by competitive intelligence derived from big data.

The Networked theory for supply landscape 

The Networked theory on the other hand predicts a more evenly distributed market power where organisations are more interconnected. Procurement’s principle strategic contribution will centre on network co-ordination and supporting network strategising. Transparency and accountability will be increasingly valued over speed and there will be far more consultation with stakeholders.

A crucial point, apparent within these two scenarios, is that supply managers are not passive actors within them. The procurement community needs to initiate debate, challenge current practices and build capabilities and their capacity to develop new, appropriate supply management options, rather than sleepwalking into undesirable futures.

The future of the procurement profession

The procurement profession continues to evolve with opportunities for professionals to play a more strategic role. The move from tactical procurement to dealmaker and value creator will require a broader and more complex skillset that not everyone has. This will inevitably result in a contraction of roles, but an elevated status for procurement.

The move from tactical procurement to dealmaker and value creator will require a broader and more complex skillset

Questions must be asked where this leaves junior entry-level jobs to attract new talent. Or indeed those who cannot adapt to the changes? The early days in our careers where we cut our teeth on processing orders and expediting will be long gone. In fact, the roles for young people leaving school in the next ten years or so are unlikely to even exist yet. Nor can you expect to make a lifelong career in the same role any more.

No one has a crystal ball in any of this but, in today’s pressured environment, it’s hard to find time to sit and consider such substantial questions and so the white paper starts that process, looking 15 years out. These are not predictions and I’m sure not all will agree with the narrative presented, but it at least provokes the debate and gets us thinking.