Buying flies on autopilot
By By Jeff Herrmann, president CEO, SupplyWorks Inc. -- Purchasing, 12/22/2000 2:00:00 AM
In 10 years, information will be cheap. Transactions will be cheaper. Machines will be at least 10-20 times faster than they are today. These basic facts will create a tremendous shift in focus for procurement and supply chain management.
Some modest predictions-
Supply-chain applications of the future will center on optimization rather than just on information and execution. Optimization will not be limited to inside the four walls but will cut across multiple levels of the supply chain. Problems that seem too complex to deal with today will become easier and easier for machines to solve. Situations that require human intervention today will be handled totally by machines a decade from now. The role of purchasing professionals will shift from a focus on day-to-day execution to true professional management-setting policies, guiding the process, managing exceptions. Like the intelligent cockpits of today's "fly by wire" planes, future procurement systems will empower the procurement "pilot" to focus on important issues rather than be consumed by clerical detail. The more intelligent and inexpensive machines become, the more the technological landscape will begin to mirror the world economy.
No one model will predominate, because as soon as it might, other differentiated approaches will nibble at its dominance. Small and large economic nodes, high-value-added and low-value-added nodes will all find their cost-effective place on the Internet. Supply management professionals will start to resemble network designers rather than shoppers. A whole new generation of technology tools will be needed to define, manage and effectively use these distributed supply chains.
"Virtual supply networks" (VSN's) will become common, in which a network of buyers and suppliers are linked, not by physical connections, but by the virtual connectivity of an automated, intelligent supply-chain model. These networks will have many of the characteristics of hard-wired supply chains, except they will be dynamic, transient, collaborative, and continuously re-optimized to meet changing demand patterns and customer requirements. Product cycles and manufacturing cycles will get shorter and shorter. Thanks to the Internet, "model year" will become a totally 20th-century concept.
Measurement will be everywhere. The increasingly dynamic nature of supply channels, along with the ubiquity of data, will require buying organizations to "measure twice, buy once." Procurement parameters from price to delivery to quality will be measured every step of the way and compared, contrasted and benchmarked. Firms will evaluate the success of their procurement efforts not by the simple traditional measures of price, quality and reliability, but using much more complex models based on profit and strategy-related goals. Buying organizations will be able to answer on a continuous basis the question "How are my suppliers helping me reach my goals?"
The more things change, the more they will stay the same. Although new technologies and solutions for e-procurement will greatly improve manufacturing organizations' abilities to compete, they will also increase the level of competitive pressure. Once again, as always in the technology cycle, the early adopters have the most to gain.
SupplyWorks Inc. is a provider of B2B supply chain e-procurement solutions that leverage the Internet to empower manufacturing procurement.
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