As we approach the new year, we examine the trends that will influence the way you work in 2019
The times they are a-changing! A lot of the focus in procurement for 2018 has been on the growing rise of digitisation in the profession; that is unlikely to change in 2019. As industry 4.0 gathers pace and ushers in a new slick and highly functional age, procurement teams across the world are adapting and optimising for the future. Here we summarise some of the key trends for 2019 and how they’re likely to affect you.
Industry 4.0 and the e-naissance
The world is changing very quickly. Industry 4.0 – the age of autonomy, connectivity and advanced computing – is kicking linear growth into touch. In life and in busineses, exponential growth is the name of the game, and it’s driving the fourth industrial revolution at an eye-watering pace.
This is the e-naissance. Exponentially moving technologies are being embedded into interoperable global value chains that integrate the digital and physical worlds. Connectivity and mobility are beginning to merge. These are underpinned by data and powerful artificial intelligence, which are the lifeblood of industry 4.0.
We have horizontal tech moving across organisations, monetising idle and physical assets. Businesses are beginning to break down and organisations are structuring differently to capitalise on this. Procurement is at the heart of that.
That means a paradigm shift for the profession – procurement 4.0, as some are calling it. We’re beginning to see new value propositions with procurement moving from a cost centre to a value creator. We’re seeing the development of new skillsets that involve the management of value networks and the harnessing of cyber-physical systems to create greater value and eliminate waste.
Meanwhile, the use of data is exploding. Now it’s no longer something used to learn from the past, but something used to predict, quantify and forecast the future – that data is yet to be properly harnessed in procurement is an exciting and mind boggling proposition for the profession.
Ecosystems and collaboration
Speaking at the IMPA London conference, the futurist Kate Adamson said that the goal of the future organisation is 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.
“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.
“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.
“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 a business opportunity – the chance to create completely new value.”
“Technologies that are growing and transitioning – blockchain, IoT and AI – will be at the forefront of procurement’s thinking”
Digital transformation, blockchain, AI and the IoT
As digitisation becomes widespread, its uses and applications will become more refined and more products, systems and applications will enter the market. In our industry, the best performing teams are accelerating their approach and are beginning to see a return on their ROI.
To a degree, tech has always been an enabler in maritime procurement, but now capable and sophisticated systems are allowing procurement to reap tangible benefits. Data linked across the organisation – instead of being sat in silos – is pushing improved forecasting and performance, while procurement is making better operational decisions from greater transparency across the board.
Technologies that are growing and transitioning – blockchain, IoT and AI – will be at the forefront of procurement’s thinking and are now developing into mediums that alter the profession’s processes.
In 2019, the hottest tech topic will remain AI for which procurement has a voracious appetite. It will undoubtedly be the most disruptive tech and, alongside the IoT, will become increasingly common in procurement departments. Tools capable of smarter processing and sophisticated automation are becoming increasingly refined and will allow procurement to have a big impact on the organisation’s bottom line through greater transparency, among many other things.
Though less obvious, arguably the biggest win AI can give procurement is more recognition among the C-suite, raising its profile from support function to strategic enabler. 2019 should see a more widespread adoption of AI in the shipping industry as data becomes consolidated and sophisticated and powerful tech enters the market.
While it’s not in widespread use in shipping, blockchain is being used to good effect in other industries, providing unparalleled transparency in the supply chain, allowing information to be shared clearly, easily and safely. Blockchain gives procurement greater visibility and more opportunities to interact with external stakeholders, all of which lend themselves to the hyper-connected value chains of industry 4.0. Gartner meanwhile has predicted that by 2020, companies will have invested nearly $1trn of spend in cloud software as they look to become more agile.
The IoT, meanwhile, is about shared opportunity where enhanced communication and data insight unlock value and deliver efficiencies for organisations. For example, connected facilities are providing new opportunities to Chinese super-company Alibaba. The company operates warehouses where up to 70% of the work is completed by robots – connected machines carrying up to 500kg loads and orchestrated by a smart connected network.