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December 16, 2017
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Five technologies that will transform procurement

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A research report from Accenture says that "digital disruptors" will change how the procurement function is organized.

A new report from the management consulting firm Accenture predicts that in the next five to seven years innovative digital technologies will revolutionize how procurement is conducted. According to the report, Procurement's Next Frontier: The Future Will Give Rise to an Organization of One, "digital disruptors"—such as cloud computing, analytics, and the industrial Internet of Things—will allow organizations "to gather and analyze more and richer real-time data to drive better, smarter, and more accurate decisions." The most successful companies will use this as a catalyst to question everything procurement does, even such core tools as the purchase order, the report says.

The report's authors, Kai Nowosel, Abigail Terrill, and Kris Timmermans, predict that the procurement organization will use digital technologies to create an IT infrastructure based on the following five "apps":

  1. Virtual company mall: This cloud-based set of virtual "shops" is a site where internal customers can select goods and services. These selections will be guided by business logic based on a company's purchasing policies, preferred suppliers, and contracts.
  2. Supply analytics: Through a standard dashboard, both procurement and business users can look at data-driven analytics and interpret them to solve specific procurement problems or to answer questions.
  3. Virtual supplier room: In this virtual space, company representatives can interact and collaborate with strategic suppliers, sharing insights and ideas.
  4. Virtual category room: This application allows category managers to keep track of in-process projects.
  5. Supplier network: With this IT platform, a company will be able to connect seamlessly with its supply market through the other four applications.

These technologies will enable procurement to create a hybrid organizational structure, halfway between the old decentralized model, where procurement was scattered among business units, and the newer, centralized procurement model. Under this structure, some procurement professionals will be "embedded" within the business units and focus on applying procurement knowledge to specific business issues. This group then connects back to a smaller, central decision-making team that deals with business strategy, global demand and supply, policy, compliance, and global strategic supplier management.

The full report can be found here.

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