The Industrial Revolution helped change and bring prosperity into the world of manufacturing. As time passed, procurement gradually gained a larger role in the scope of manufacturing and order fulfillment. By the mid-1950s, procurement had become a commonplace aspect of minor business, and procurement was almost comparable to secretarial work. However, modern technologies are dramatically changing procurement trends and how procurement professionals operate and their role in the company. Let’s take an in-depth look at procurement’s new and bigger and exciting role in the modern manufacturing and shipping industry.
Manufacturers have often been limited in their capability to extend procurement processes by internal IT departments and physical ability to handle complex, massive orders. As a result, procurement seemed to have a technical speed limit. However, developments into the use of cloud-based technology in the last 10 years have made advanced analytics and processing capabilities near limitless. As explained in a Next level Purchasing Association Whitepaper, the next level of procurement trends in the supply chain is going to focus on how technology improvements in speed, reliability, and accessibility can be leveraged to benefit the supply chain.
Strong procurement processes are vital to the success of any business or enterprise, and procurement professionals are responsible for all order invoicing, customer-company relationship management, and customer service across the scope of the organization. However, many of these processes are becoming increasingly automated.
In our recent blog post on the future of procurement, we discussed how the majority of respondents in a given survey reported procurement as a long-term career in manufacturing. However, some procurement professionals still see procurement as a simple stepping stone, but this stepping stone may actually be in the direction of achieving positions within upper-level management. According to Mickey North Rizza, for some organizations, advanced procurement processes and technologies are already in use for improving collaboration among the top strategic partners in planning, managing, and implementing changes throughout an organization.
Cloud-based technologies and rapid integration with existing ERP systems are allowing artificial intelligence and automation to take a more active role in maintaining and managing procurement processes as well, explains Supply Management magazine. Consequently, the management of procurement and these types of procurement trends in the human world requires someone who is able to oversee all of these processes and associated technologies. Technically, procurement professionals are more like supervisors of all the automated, augmented reality, and artificial intelligence based processes that revolve around improving the efficiency and effectiveness of a given organization’s ability to interact with customers and improve production.
For example, the use of robotics allows more skilled workers to devote time and energy into the design of a given product, which serves to further improve the level of quality and craftsmanship in complex and simplistic products. Ultimately, robotics is replacing humans in physically stressful environments without necessarily eliminating the human component from the environment in manufacturing either.
Similarly, artificial intelligence is using big data to leverage current processes in procurement and identify ways to improve the efficiency without sacrificing the quality of the current processes. Ultimately, modern manufacturers and supply chain entities do not have any risk in using these newer technologies to improve procurement process. After all, proposed solutions do not cost a company anything beyond data review until implementing those solutions. In many cases, the implementation of these solutions is translated into direct cost savings and a better image for the company as a whole.
In December 2015, the Federal Reserve slightly raised US interest rate for the first time in nearly 10 years. Although this hike will help to boost certain parts of the economy, some manufacturers may be worried about how quickly another rate hike will occur in the future and what it will mean in terms of expanding current operations, especially when loans or other funding sources are necessary. However, 2016 will not be the year in which procurement climbs 1,000 percent, but that does not mean the growth of procurement will be trivial.
Instead, the use, speed, and capabilities of technologies will grow in 2016 shaping procurement trends. Additionally, the cost of these technologies will start to decrease simultaneously. As a result, developing new procurement processes will be cheaper, which will further drive growth in this part of supply chain management. The true scope of these changes cannot befully realized until a few years down the road. Yet, some manufacturers have already taken steps to improve production through the use of these procurement-enhancing technologies by redefining the role of procurement professionals, implementing cost-saving strategies, reviewing inefficient processes across the scope of the entire organization, and leveraging this data back to how it relates to and impacts the customer-company relationship. Ultimately the sole driving force of any company is and always will be the consumer or end-user.
Even for companies that manufacture products to sell to other businesses, the consumer remains the party with the POWER. In the supply chain, the role of procurement is growing, and more platform-based services, value-added services, and customized, user-friendly interfaces are being created to promote a healthy, visible, productive atmosphere for consumers, middle partner businesses, third-party logistics providers, suppliers, and manufacturing centers alike.
The role of procurement is changing drastically, and companies that avoid implementing change in the current procurement process will be more likely to fail. However, procurement is no longer defined as simple order processing and invoicing. Instead, procurement is every action, response, question, insight, improvement, and every other part of the supply chain. Procurement is the supply chain, and from executive-level professionals to truck drivers, procurement is growing and taking on new roles and responsibilities. Procurement is only going to get bigger on a daily basis, and everyone in the supply chain needs to pay attention to this trend.
The National Association of State Procurement Officials on Wednesday, Jan. 20, released its list of the top 10 priorities for procurement trends, based on a national survey of its members.
“For the second year, state CPOs [central procurement officials] collectively ranked process reform and reengineering as the number one priority for state procurement in 2016. This includes encouraging streamlined procurement processes, modernize procurement law, reduce laws and regulations complexity.”
NASPO is a nonprofit association based in Kentucky dedicated to advancing public procurement.
The association’s infographic highlights the Top 10 priorities:
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