How buyers see 2010

By Staff -- Purchasing, 2/22/2001

The Dec. 22 issue of PURCHASING Magazine featured thirty-three e-commerce executives' visions for how the purchasing, sourcing and supply management functions will change this decade. Readers were asked to vote at www.purchasing.com for the visions they felt were most "on the mark" (see sidebar on p. 39 to find out who "won"). As well, Purchasing's readers were asked to supply their own prophecies for the purchasing, sourcing and supply management functions in the year 2010.

What's hot with buyers: Fewer tactical, more strategic buying activities for procurement professionals; faster, easier access to the global economy; plus strong supply relationships with better integration of information systems up and down the supply chain. What's not so hot with buyers: Futuristic automation technologies that eliminate people from sourcing and procurement processes.

Stock-market-style spot buying

Shortages will be posted on Internet Web pages where all suppliers can compete for price and delivery. The systems will automatically pull best prices and leadtimes and place purchase orders that will be monitored by purchasing departments.

-Raul Gonzalez, senior buyer, Xetel

Massive industrial e-malls

In 2010, we'll see a hybrid of integrated supply and e-procurement. Large distributors will join forces to create big one-stop industrial shopping malls, offering companies everything they might need. We're seeing this already, but the mistake is in trying to customize each mall to meet each customer's needs. Eventually, this concept will crash, forcing survivors to group together to create superstores with advanced search capabilities.

-Lee Carson, purchasing supervisor, F & P MFG. Inc.

Super-synchronization of processes

Information technology is drastically changing the way we do things in all supply chain areas, from creating RFQs to receiving goods. Transparency will rise. Suppliers and customers will have greater access to the status of each other's activities. We'll establish super-synchronized production and efficient processes that will significantly lower prices.

-Fuad Harhara, assistant director of materials management, (company unknown)

A role for e-auctions

As tools and technologies improve over the next decade, the procurement function will continue to become more automated. Less and less paper pushing will be required and more time will be focused on strategic sourcing and building better relationships with key suppliers.

Time savings will be achieved in the ability to share information electronically such as drawings, designs and specifications. The amount of time spent going back and forth clarifying changes and details will drop significantly. Suppliers' increased ability to work with customers on designs and specifications remotely in real time (e-collaboration) will open doors to more global sourcing options.

Reverse auctions will play a role when supply is plentiful and for generic requirements-such as office furnishings or equipment. Auction sites will consolidate and offer services that assist buyers in focusing their responses.

The biggest drawback to opening up non-commodity requirements to reverse auctions will remain the proprietary nature of those requirements. As long as businesses compete, there will be a need to keep information proprietary. To overcome this issue, purchasing pros will need to pre-qualify suppliers, offering secure Web site access (either within focused auction sites or on customer sites) to a reduced list of players. If necessary, purchasing pros will use e-collaboration to refine requirements quickly.

As technology improves the role of the procurement professional will not go away, it will evolve. It will involve maintaining the types of strong supply relationships that get you through the tough times. As always, partnerships with good suppliers will lead to long-term benefits for both parties. New technology will help companies to globalize their options, but the personal touch will make it work.

-Bill Murphy, director of materials and procurement, Alien Technology Corp.

Tighter buying organizations

In 2010 companies will need fewer buyers to get the same amount of work done. Suppliers will have direct access to a company's MRP schedules and inventory, so they can plan shipments. Buyers will be needed only to negotiate pricing and contracts, to resolve supplier issues (such as late shipments, credit holds), and to adjust shipment schedules for unplanned changes to the manufacturing.

-Tom Enz, buyer, Pierce Manufacturing Inc.

No turning back

The e-procurement world is here to stay and is going to be touching the business world more each day.

-Charles Catania, strategic sourcing manager, UTC

Benefits and disruptions

I believe the issues of concern are those resources most precious. For businesses today that is time, capital and people. If technology can reduce the cost of doing business, reduce the time it takes to do business, and allow people to provide the greatest value to the services they provide then it has done its job. There are always great predictions about what technology can do, but the cost to implement and the disruptive factors involved will always have to be balanced with expected benefits. Reducing paperwork, automating standard orders, eliminating mistakes are all things that technology in the supply chain can do now. Building the collaborative links between stakeholders is where value lies in the future.

-Jim Sams, director, CDR

New job titles

One of the areas not dealt with directly or specifically [in the 2010 vision series] is an element critical 10 years ago and which will be even more critical 10 years from now-relationship management. Purchasing managers will be "corporate relationship managers" or "transformation specialists." Suppliers will be in the same position of strength that purchasers are in today. Managing this new role throughout the supply chain will require modified skill sets.

-Bob Sember, executive consultant, CGI, USA

Reverse-auction backlash

Reverse auctioning will become a niche tool, not as widely used as hyped. Savvy suppliers will use reverse auctions to test and refine their pricing models-using competitive information to establish market pricing. Incumbent suppliers have a distinct advantage in reverse auctions by knowing current pricing. Strategic bidding by incumbents can result in market prices looking artificially high, providing suppliers with ammunition for price increases. Reverse auctioning relies on the assumption that all suppliers are hungry, and are willing to trade margin to address over-capacity. While many reverse auctions have been successful, I suspect the success-to-failure ratio is low, and, as suppliers become more aware of how to turn real-time competitive information to their advantage, that ratio will drop further. The other significant fault with the process is narrow scope-focusing on price rather than total cost of ownership (TCO). The auction format does not allow suppliers to provide innovative alternatives that could create win-win situations. Suppliers might have distinct advantages over competitors in non-price areas such as delivery, consignment, or ability to maintain tighter tolerances that may result in higher prices but lower costs. Auction users who take the lowest price then plan to "work" with the supplier can lose sight of the bigger picture. Reverse auctions may work for pure commodities where the supply base is truly interchangeable and specifications are flexible. But as suppliers learn that they need value-added products to achieve margins, those situations will become more rare.

-Ron Milio, procurement specialist, Stanley Works

Build-to-order manufacturing

The supply chain in 2010 will be nothing like it is today. E-procurement in 2010 will be voice activated. We'll see manufacturing build to order and customers will determine delivery time frames. Interactions between manufacturers and suppliers will take quantum leaps through e-procurement. Companies will share actual order data, inventory data and other requirements. Relationships will be based on contracted volumes, specifications and prices.

-Stathis Katsaros, purchasing manager, Matheson-Trigas

Holobuyers?

Do you remember the movie Weird Science , when two teenagers created the perfect woman (Kelly LaBrocque) with their computer? This could be the future of e-procurement-a holographic buyer! Of course mine would look like Mel Gibson, but basically you could choose any image to your liking. This hologram would possess artificial intelligence (AI) that you could call upon when needed to buy a good or service-either for spot buys or longer-term commitments. With necessary information in hand, the AI buyer would dive into the networks and portals (remember TRON?) and come back almost instantaneously with the "best buy" from a total deliverable cost perspective. If you wanted to, you could view a product in 3D image, right in front of you! With your concurrence, the AI buyer would finish the transaction and your work would be complete! Of course the workplace hazard is that too much will be bought because everyone just wants to spend more time with their holograms. That's when you put a fail safe into the program-Barney the dinosaur shows up to sing a song reminding you of the need for restraint!

-Patricia Moser, regional director, global purchasing, EDS

By a landslide: "Global sourcing-fast!"