Procurement as a business function has changed significantly over the last decade, and most experts seem to agree that the next decade will produce even more dramatic changes. Procurement in 2025 will require you to use additional knowledge and skills to solve brand new challenges. The good news is that new challenges, skills, and knowledge create new possibilities if you rise to the occasion.
For most of the 20th-century procurement was considered a clerical job, although an important one. If you were the person in charge of procurement, you bought the goods and services required to produce a company's products. No procurement, no products. Think about how railroads transformed countries. If the resources they needed were not on hand when needed, no railroad. If your company made cars, you, as the procurement manager would buy things like steel, paint, tyres, and whatever other supplies were needed to build cars. You always handled having on hand what the company needed when they needed it.
Your criteria for the supplies you purchased included sufficient quantity, top quality, and timely delivery. As businesses and their markets evolved throughout the 20th century controlling the costs of procurements became as important as ensuring quality, quantity, and timely acquisition. The concept of suppliers bidding for the right to sell to your business became accepted practice. This early price control meant that procurement was contributing to the bottom line of the company in a second way. As a procurement manager, you contributed to the business’s success or failure to the same degree, but in a different way, as a sales manager. As procurement moves into the 21st century, its importance to the bottom line will only grow. Many companies now have a Chief Procurement Officer (CPO), a position that didn’t even exist a few years ago. If you combine increased contribution, changing market forces, and broader responsibilities, you can clearly understand the need for procurement professionals to develop a much wider set of skills.
As a procurement manager, you will need to master a broad range of skills to be successful. In addition to traditional skills like negotiating, you will need to be adept at managing risk and staying abreast of developing technology. Technology is rapidly evolving in the area of procurement. Cloud-based software solutions create a vastly more efficient way to approach sourcing and management. These solutions are doing for procurement what companies like Amazon have done for retail shoppers. Another important area for CPO’s and their supporting staff will be creating and managing productive relationships, often around the globe. You will be called upon to collaborate with people inside and outside your organisation and become an expert in analytics. You as a procurement professional will have to understand the financial implications of what you do. You will be expected to know and explain how your work affects things like working capital and earnings per share.
Many experts agree that much of the traditional day to day activities of procurement will go the way of other manufacturing jobs, and that means outsourcing. What will remain is the broader task of acting and thinking strategically by creating and presenting innovative ideas that add value to the company's bottom line. Part of your strategy must include recognizing and developing the next generation of talent. Many companies are in fact already beginning to prepare for the future by enrolling procurement teams in regular training sessions.
Including procurement as a significant contributor to shaping a company's strategy is a relatively new phenomenon. The technological advances over the last couple of decades combined with shifting market forces have helped push things in that direction. It seems clear that the trend of an expanding role for procurement will continue for many years to come. If you want to be a part of the expansion, you must develop the proper skillset.