Digital Megatrends will propel procurement and shipping into a bright new future, Kate Adamson tells delegates at IMPA London conference
In an enlightening keynote speech, futurist Kate Adamson highlighted the major trends affecting procurement now and in the future, and told delegates that the ‘e-naissance’ would be built around ecosystems and people power.
Driven by exponential growth that is powered by powerful tech and sophisticated use of data, Adamson heralded industry 4.0 as the age in which information flow would become greater and ever more significant, creating ecosystems, new partnerships and profound ways of working.
“Data flow now exerts a larger impact on economic growth than the traditional flow of goods. While flows of goods and finance since the global crash have slowed down, cross-border bandwidth has surged.
“50% of the world’s traded services have already been digitised – and we haven’t really started yet. That’s because global businesses are integrating their services into this seamless digital whole.
“It’s the fourth industrial revolution, industry 4.0. What we’re seeing is these exponentially moving technologies being embedded into this interoperable global value chain that integrates the digital and physical worlds. Connectivity and mobility are beginning to merge. That’s underpinned by data and powerful artificial intelligence.”
The goal of the future organisation, Adamson said, will be to become the centre of an ecosystem, one that collaborates with partners to deliver productivity, responsiveness, automation and security. This will create a necessary shift in the way procurement does business, she added.
“At the final stage of maturity, the ecosystems are essentially very complex value webs. Complex value webs demand different thinking and procurement is critical to that – because it’s had to do that for some time.
“The goal of the future organisation, will be to become the centre of an ecosystem, one that collaborates with partners to deliver productivity, responsiveness, automation and security”
“Along with IT and HR, Procurement has been seen as a cost centre. They’re now transitioning to real centres of opportunity and competitive advantage within the business. 65% of a company’s value comes directly from its suppliers.
“That’s how critical procurement is, yet they struggle to get a seat at the strategy table. But I think this shift to ecosystem business is going to demand that that seat is given because that’s where the expertise is.”
The shift in mentality will also see procurement departments approach digitisation in a different way, Adamson said. Digitisation won’t just be a case of doing what you do now digitally; it will be about reimagining the function of the business and your function within the business.
“In a survey, 85% of ship operators, managers and suppliers said that digital transformation was critical to their success. The number one problem was that they don’t know what it is.They don’t know how to start capturing value.
“There’s a mass of potential there. I talk about digital transformation all over the world and in every industry, and companies tend to fall into one of two categories. Either they view it as a threat to their legacy operations and the revenue streams, or they identify it, correctly, as business opportunity – the chance to create completely new value.“Mindset is what it all
comes down to. Transformation is a mindset. It doesn’t start with how to make or save money. You need to find the big problems and solve them; the bigger the problem you can solve, the bigger the opportunity you have.
“You have to find the right questions, and sometimes you have to turn the questions on their head and start questioning some very basic assumptions you might have.”
“Culture eats strategy for breakfast. And if you want to transform digitally, then people have to be at the heart of it. Technology empowers everything”
Shipping and supply: just not as we know them
Shipping is undergoing rapid change and will be an entirely different industry in 10 years’ time. The current fleet of ships is likely to be the last of its kind as we enter an age of driverless, automated vessels, powered by AI.
“Automation and autonomy will change shipping,” Adamson said. “We really have a chance to redefine what we mean by a ship. If you think, at the moment, a ship is a prototype – each one is individual. If you move to standardisation, you get reliability, which is a necessary step. We could see maintenance integrated with autonomous systems.
So what does that mean for procurement? As we see this fast connectivity rolling out, the intelligent digital mesh – the Internet of Things or IoT – is going to encompass more of that ship. And that’s going to be key because those intelligent end points are going to utilise edge computing to make decisions themselves.
“At the moment, an individual decides when things need to be replaced or refurbished,” Adamson added. “It won’t be long before those end points tell you that they need to be replaced and in a few more years they’ll connect directly to your digital procurement system and replace themselves without reference to the individual at all.”
This leads to a future in which radical transparency and hyperrationality will govern supply chains, Adamson believes. With greater visibility across the supply chain through powerful analytics and tools like blockchain and cryptographic anchors, shipping companies can act faster, make better decisions and automate processes. It will lead to a new era of partnerships.
“The smart autonomous ship requires completely different partnerships,” Adamson said. “New systems and partnerships based around connectivity, blockchain, AI and robotics mean that you can forget about the owner, manager and charterer that we are used to.
“This blockchain-enabled supply will enable any part – for example – to be digitally authenticated at any time; boundaries will blur. The types of supplier you are dealing with now will be radically different to the ones you will deal with in the future. This next generation of connectivity gives us an unprecedented opportunity.”
Despite the overwhelming surge of digitisation, Adamson stressed the overwhelming importance of people within the digital revolution, telling delegates that people had to be part of any long-term strategy moving forward.
“Culture eats strategy for breakfast. And if you want to transform digitally, then people have to be at the heart of it. Technology empowers everything, so what you must be doing is identifying where these new techs can augment people and help them to do a better job.
“For most organisations, this tech will be the ace up your sleeve in the next five to ten years. Those who win will be the ones with the best people, not the ones with the best tech – always remember that. In this e-naissance, we need to remember a couple of things: context and vision. These lead to trust, which in turn leads to resilience and a belief that you can build the future.
“It’s not enough to be predictive. You need a vision for what you want to happen and you need to go about making that happen. The future isn’t somewhere you go. It’s something you create by what you do and choose not to do.