On a fair September Tuesday in Scottsdale, Arizona, Christian Lanng took the stage at ProcureCon Indirect West to discuss the future of procurement. Lanng began the chat by addressing the concern on every procurement professional’s mind: is the procurement role facing extinction or is it ready for a leap forward?
“Most companies gain from cost savings from procurement as it is. We go through contracts and harvest 80% of our savings from negotiations, and spend the rest of our time squeezing smaller margins out of smaller vendors. If we continue like that, procurement won’t be around in 10 years,” he said.
But Lanng sees a way to divert procurement from the meteor’s path: “We should consider whether or not procurement is the right word. It’s a lot more about supply chain agility, it’s about creating and shaping the supply chain that can deliver on your company’s mission and values.”
Lanng pointed out that disruption is changing the business landscape for Fortune 500 companies. Being a sizable incumbent is no longer a guarantee for success. Any company, new or old, big or small can alter the status quo.
If a company views cost savings as the primary goal in their supply chain, they can fall behind the competition and open doors for risk. Agility and flexibility will be equally important to cost going forward, according to Lanng. The speed at which you can detect emerging risks and respond to change will depend on the level of integration and digitalization in your supply chain. True value comes from moving beyond savings.
What does moving beyond cost savings look like?
- We will move from document-centric supply chains to collaboration-centric supply chains.
- Buying a standalone solution to solve the same needs over and over again will be history.
- People, not processes will be the core of interactions.
- The future is one platform for your supply chain, flexible enough to run any process you want and change when you need it, connected in real-time with all your suppliers.
Get a glimpse of how we’re building software for the future of procurement: