You may remember earlier this year we published a series of articles on procurement’s role in disaster recovery from Craig Brewin. Craig is a Caribbean-based procurement professional, and he reports now from the recent Global Public Procurement Conference.
“So Star Trek I love it” said Isabel Rosa, Digital Expert for the EU’s DG-GROW, which was a sentiment easy to share in the first session of September’s Global Public Procurement Conference. With a nod to Star Trek the conference was, after all, straplined “the digital frontier”. It was the first, and perhaps last, Global Public Procurement Conference to be organised by the various regional development banks and other inter-national networks. It took the calendar spot of the Inter-American Procurement Network, which is a body sponsored by the Organization of American States. This year, the world was invited to the Inter-American Development Bank in Washington
Digitalisation is a genuinely transformational disruption, impacting all aspects of procurement activity as well as the profession itself. We do largely know this, but making sense of things together is always the best starting point for any change. In this, and two subsequent articles, I will outline the key messages of the conference, but with 40 quality speakers packed into two days, you will only be able to get a flavour. Most of the presentations are, however, online at the conference website, which you can access here. And there are hours of videos on YouTube too, see them here.
The conference was a major undertaking bringing together representatives of over 100 countries, including 80 Heads of Public Procurement, with the biggest contingent seemingly coming from Asia. It was live streamed and the presentations were made available immediately after the event. The conference demonstrated the progress made across the globe but also highlighted the significantly different rates of progress in different countries with different wealth and priorities.
It did seem to be the case that delegate’s views of digital procurement were primarily affected by where they came from. There was, with varying degrees, pride, enthusiasm, polite interest, and concern from different members of the 500-strong audience covering nations large and small, from Montserrat to India. At the end of the two days, delegates from each of the countries represented were asked to sign a commitment to develop digitalised procurement, and there didn’t appear to be any objectors.
In the opening address delegates were advised that procurement had to become a knowledge-based strategic activity, vastly different from how the function is currently seen, with most routine purchasing activity automated. But that does not mean that procurement professionals, albeit with different skills from those prioritised in current training, will not have an important role to play in ensuring ethical standards and the best use of public money.
The conference was organised with the heavyweight key note speakers front loading the first session with real examples of how AI-based procurement systems are being developed and the long-term impact on the profession, with the second day more focused on specific examples of electronic procurement systems from around the word, and how the rhetoric and capability of e-procurement and digitalisation meets the reality of how it operates in different cultures.
The opening keynote speaker was the very impressive Jose Arrieta, Deputy Secretary of Acquisition at the Department of Health and Human Services in the USA. He outlined an immediate future of an automated acquisition function that redefined procurement specialists as experts in law, public policy and goal setting. The systems he has been designing, in his current and previous roles, automate everything: the production of negotiation memorandums, price analysis, spend analysis, market research, identification of appropriate terms and conditions, contract writing, and the analysis of financial information. Systems based on the instant analysis of large qualities of data point the way towards a procurement approach where all information is known, the right price is easily determined, and all administration and judgement is automated.
The rate of return from this transformation is so great that quoting it as a benefit provokes incredulity rather than commitment, so Arrieta plays it down in propositions and business cases. In the discussion that followed it was clear that the consensus view is that Machine Learning and Block Chain will eventually underpin all procurement systems, and the procurement profession will either have to lead this process or simply respond to a disruption driven by other professional areas. Other speakers also emphasised what can be done, what had been done, and the huge benefits that have and can be achieved.
Sheldon Stewart from IBM emphasised that the future was already here, and that the days of taking a month to make a purchase are over. However, he revealed that, although a survey by IBM showed that 80% of companies expected to be digitally disrupted, only 14% thought themselves to be ready for it. IBM have adopted an agile approach, led by procurement, which uses robotics to ensure compliance, manage process, track POs, support relationship building, analyse contracts and thereby increase the capacity available for supply chain management.
It was left to Larry Giunipero, Professor of Marketing and Supply Chain Management at Florida State University to address in more detail the impact on the procurement profession. The answer seems to be dependent on the leadership skills of those currently in the procurement profession, and their current level of influence within companies. Procurement could disappear altogether, or, with procurement at a tactical and operational level automated, become the strategic partnership-building function. This strategic role will not automatically be been seen as “procurement” unless the profession consciously repositions.
If there is a discrete role for procurement it will fall into one of a number of categories. One is what was called “procurement primacy.” With this, procurement has the keys to the data and remains a key strategic sourcing function linking purchasing goals to the overall values and objectives of the organisation, supplemented by, and not replaced by, technology. Other future models include a project management model, where most staff are brought in on short-term contracts to review and redesign systems, or conversely, procurement can become the company’s creative agency. It has the data and the knowledge, and develops the key external relationships, giving it the main role in working with other professions and internal networks to lead innovation and other activities designed to increase value.
As an outline of the potential and reality of digital innovation, and the impact on the profession that those attending the conference belong to, this was a strong lead from the platform, but there are other sides to a global conference. Those attending are either celebrating what they have done, and it was impressive in all cases, or daunted and concerned about the collateral damage.
Furthermore, I described joint ‘sense-making’ as one of the key benefits of the conference, and this was done very well with outstanding facilitation of networking opportunities. But Star Trek isn’t real and I was not convinced that those who were behind in the digital race felt particularly threatened by that at this point. There will be more on this in parts 2 and 3.