The Risks, Rewards and Role of Supply Management in the Future

With the adoption of advanced procure-to-pay and data/spend analytics solutions that integrate AI and other advantages, teams will be able to achieve greater proactivity and agility and be more analytical and business-focused.

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The global Coronavirus disease (COVID-19) pandemic put supply chain management and procurement in a very bright spotlight, and a positive one, for keeping life moving as normal as possible during all the shutdowns, disruption and general uncertainty.

It also highlighted that business and supply chain disruption are ongoing facts of life – witness ongoing extreme weather events globally and a megaship blocking the Suez Canal for weeks, to name two – and the impacts created:

  • Automakers don’t have enough chips to build cars, leading to shutdowns.
  • Construction companies don’t have enough wood to build homes, and the prices are skyrocketing.
  • Cargo is sitting, waiting to be unloaded at ports around the world, creating shortages.

There are many factors at work behind these and other situations the world finds itself in right now, and will continue to in the years ahead. But, one thing is for sure the role(s) that supply management plays will have to adapt to meet a fast-changing future.

Recently, experts have explored the shifting and evolving discipline of supply management and the professionals in it and what the future may/can/will/should hold for the function and job roles. Here’s what that looks like. 

The role of technology

The Gartner Predicts 2021: Supply Chain Technology report highlights a very revealing key finding -- “While the pace of change in supply chain accelerates, only 42% of supply chain organizations have adopted agile methodologies, breaking projects into smaller increments and allowing quicker realization of failures and reallocation of efforts.” That shows a real lag in supply chain management (SCM) digital transformation efforts, in everything from visibility to data analysis and predictive forecasting. These aspects are mutually critical because as supply management professionals and procurement get better at leveraging tech and data, there will be increased demands on suppliers for transparency. This will impact relationships and collaboration. 

Technology adoption is mandatory to effectively leverage all the massive data that is increasingly inundating companies from multiple sources, and to better inform strategy and decision-making. As procurement gets better access to data and better tools to leverage it, more day-to-day activities will center around the insights it provides that are not possible today. In the case of supply management, these include outside sources like weather, global news, supplier financial health, etc. to gauge how global changes will influence spend/supplier relationships. 

With the continuing advancements in the areas of artificial intelligence (AI), robotic process automation (RPA), blockchain, Internet of Things (IoT) and so forth, the role of technology in supply management will become evermore useful for predictive analytics, forecasting, compliance, agility and other areas. This reliance on technology doesn’t mean that procurement and SCM practitioners need to become data scientists, but those most familiar and capable with the tools are going to have myriad advantages. This is something to bear in mind as supply management recruits new (and probably younger) teams.

The role of people  

As supply management itself morphs and changes, so too will the role of people within it. In the years ahead, it’s easy to see that, in addition to the tech skills mentioned above, that SCM professionals will need an increased focus and broader perspective on disaster recovery and supply chain risk, especially for Tier 2 and Tier 3 direct materials, as well as indirect commodities that have the ability to shut down supply (such as N95 masks and cleaning products). Everyone in the field now has been living this since the start of the COVID-19 pandemic (and probably earlier, if not to the same degree).

The increased need for diverse skillsets goes hand in hand with digital transformation if organizations are to achieve the highest levels of agility in staying ahead of natural shifts in demands, as well as during disruption. With that comes the need for improved business cases for technology investment.

There will be a greater institutionalization of knowledge and management of key categories, as well as a renewed emphasis on supplier relationship management, especially multi-supplier cooperation. Whether or not current roles expand to encompass a broader skillset, or new roles need to be created, remains to be seen. Most likely, some combination of the two as supply management attains greater importance (and value) within organizations.

The role of relationships and collaboration

One of the key “benefits” for procurement and supply management teams during the pandemic was the increase in perceived value they bring to an organization (and the public). It became obvious that without procurement and the supply chains they manage, businesses, societies and economies come to a standstill. A lot of the success in keeping things moving has to be attributed to the managing of relationships with suppliers and what that process actually entails. These relationships are gaining in importance and are (or should be) becoming more collaborative. Getting beyond the traditional buyer/supplier dynamic certainly has its challenges, but a shift toward mutual success and reliance (for innovation, time-to-market, agility) is going to provide enormous advantages to both sides.

Procurement and SCM teams will also need to have an increased focus on internal stakeholder education and collaboration. This naturally includes the C-suite, which is critical for not only strategic planning, but also for nuts-and-bolts support in terms of digital transformation/IT budgets and human resource needs, etc. Improving information sharing and collaboration across business silos and systems and working more closely with stakeholders at all levels in the organization, the better placed procurement will be to achieve greater agility/flexibility collectively rather than trying to drive it independently.

It will also facilitate other goals like diversity, sustainable sourcing, etc. This is akin to internal marketing of procurement, which all procurement groups need to be good at, but also will need to be a priority for procurement managers and leaders to increase influence.

The role of risk

In the same way that “leadership” means “technology leadership” today, “supply management” means “risk management.” As disruption becomes a way of life, staying ahead of the risk curve will involve a real focus on everything from geopolitical threats and natural disasters to the increasing problem of global cybersecurity. Ironically enough, this is a direct result of the expanding reliance on technology.

Since every industry, business, department and location increasingly leverages technology, this exposes enterprises to more vulnerabilities from more sources. Internally, there is greater opportunity to try and control these cybersecurity risks, but external control is going to take a more concerted and creative effort. Procurement and supply managers specifically need to be better educated in vetting suppliers (and their suppliers) during the sourcing process, as more and more projects will involve some technology touchpoint with the suppliers, if the buy doesn’t include technology itself. This goes back to the role of people in the future, as this will involve training, certifications, or increased role specialization. 

Where does supply management go from here?

Procurement and supply chain management are better placed than most other functions within organizations to have visibility of and control over spend, costs, savings and risk. With the adoption of advanced procure-to-pay and data/spend analytics solutions that integrate AI and other advantages, teams will be able to achieve greater proactivity and agility and be more analytical and business-focused in order to do their job effectively and bring more value to the enterprise.