During the formation of the ‘Bold Procurement Predictions for 2030′ Insights series, Arroyo Strategy was keenly focused on procurement teams’ maturity levels for accepting new practices and emerging trends. It quickly became clear that procurement organizations are all over the map in terms of the new processes and technologies adopted. Some are still mired in their core practices, while a small group of innovators are ideating new ways to leverage supply chain technology. The focus of Arroyo Strategy’s effort was at the very top of the pyramid below: ideation.
In this Insights series, Arroyo Strategy explores five emerging trends that procurement organizations should anticipate will transition from the top of the pyramid to the bottom by 2030, including advanced crowdsourcing, procurement technology acceleration, cognitive computing, hyper cybersecurity, and virtual organizational design.
Before we examine our final bold prediction in this series, let us review where we have been. These are Arroyo Strategy’s Bold Procurement Predictions for 2030 to date:
By 2030, we expect at least half of all procurement activity will occur within the crowdsource domain and participation of smaller companies will increase by 70 percent. Crowdsourcing’s increased visibility will feed competitive pressures, driving prices down.
Virtual delivery will replace site visits, presentations, and written proposals. 3D-printed prototypes will be standard operating procedure. We predict that virtual assistants will be available to order items from the corporate catalog with the same convenience we see from smart speakers today. By 2030, standard terms and conditions will be controlled and updated by machine learning, and AI will recommend negotiation tactics.
By 2030, thanks to cognitive computing, strategic sourcing will take no longer than two weeks. Nearly every aspect of sourcing will utilize some form of machine learning or robotic processing automation.
Arroyo Strategy predicts that cybersecurity spend will increase by 30 percent and that monitoring and prevention services will become a top category. Firms will work with fewer suppliers who will need to meet rigid data security requirements.
These innovations underpin Arroyo Strategy’s final Bold Procurement Prediction for 2030: By the end of this decade, we believe there will be a widespread shift towards center-led procurement. While leading procurement organizations have been moving toward this model for some time, we predict that by 2030 the center-led procurement model will have evolved to an entirely new level. Procurement organizations will consist of a core business unit, while 90 percent of operational sourcing roles will be automated or outsourced to contractors.
Automation and Center-Led Procurement
Artificial intelligence and advanced automation will be key drivers in the march toward center-led procurement. Research suggests that by the mid-decade, a substantial portion, one third, of all highly skilled work is set to be impacted by intelligent machines or non-specialist personnel supported by cognitive computing. Arroyo Strategy predicts that automation will serve as a great complement to human workforces. Far from the “machines will take our jobs” trope, we expect that automation, as a procurement tool, will improve cost savings, quality, and compliance: Lead times, downtime, and service interruptions will plummet.
The Gig Economy and Center-Led Procurement
By 2030, core procurement organization will be expected to centralize processes, manage data analytics, and drive business strategy. To facilitate this pivot, firms will contract category experts and consultants to handle specialized tasks. This trend has been in play for years with contingent, temporary, and contract labor poised to become the majority of the workforce by 2027. With benefits accounting for 32% of employee costs, organizations using contractors can realize serious savings while enjoying a greater degree of scalability, flexing up or down as the business demands.
What Now?
Arroyo Strategy recommends that procurement firms assess their organizations’ current designs and determine what changes will be required to build more responsive, adaptable sourcing teams. Develop a plan to optimize automation and restructure staff, seeding contracted generalists in the department as necessary. By the end of the decade, procurement organizations will be smaller and more agile, with a heavy focus on relationship building and business strategy.
Sources
1Gartner Maverick Research
2McKinsey Global Institute, Jobs lost, jobs gained: What the future of work will mean for jobs, skills, and wages, November 2017
3Robots and the Economy: The Role of Automation in Productivity Growth, December 2020
4Dell Technologies and Institute for the Future, Emerging Technologies’ Impact on Society & Work 2030
5LinkedIn Workforce Report, May 2018
6U.S. Bureau of Labor Statistics, 2020
7Statistica, July 2022
8Upwork, Freelance Forward 2021
