Procurement Intelligence Unit

In late May I was fortunate enough to attend the Procurement Leaders London Forum, which looks to bring to the brightest minds in procurement together to network and discuss the unique challenges that our function faces.

As expected, there were a number of great presentations, roundtables and disc ussion groups throughout the day; however, what grabbed me the most was not part of an organised presentation, but a comment made by an event attendee.

The comment came towards the end of a discussion led by 4C consultants around the future of the procurement function. 4C highlighted three areas they believed will shape the face of procurement in the coming decades. The categories highlighted were: 1) Economic, referring primarily to recent changes in behaviour, but perhaps more importantly attitudes towards purchasing off the back of the recent recession; 2) Sustainability, highlighting the world's increased social conscience with regards to corporate behaviour; and 3) Technology. I think we'll all agree that developments in technology will probably be the most significant trigger for changes not in only the business world but in the way we live our everyday lives.

When the presenter paused for questions, the first question asked was a simple one. But what then ensued was an insightful, at times heated, debate in the room. "What about China?" was the question. The insinuation being that procurement teams are perhaps putting too much focus on what is happening in their own backyard and are missing the bigger picture of what is about to occur in our increasing global economy.

While the media has documented China's (and a number of other developing countries in Asia, Africa and South America) meteoric climb towards economic power house, are we really looking to understand the implications this will have on our function into the future?

Will economic power and activity shift from its traditional hubs in Northern America and Western Europe to what is now referred to as the 'developing world' in the coming years? I think it will and, if it does, are Western procurement executives ready for the shift? 4C's presentation would suggest we are not - while factors like the environment and technological changes will continue to impact the business environment we operate in, the implication of this on Western procurement teams will pale in comparison to the type of changes that organisations will be faced with as purchasing power and economic activity shift to the East.

While it may not happen in the next decade, the fact that China and Indian account for roughly 40% of the world's population, coupled with the increased purchasing power of an ever-growing middle class in these nations, it appears a matter of time before the balance of economic activity and power tilts towards the East.

The question that needs answering here is 'are procurement missing the elephant in room?' While we can (and should) work diligently and stay abreast of changes in CSR policies and technologies, surely the impact developing economies will have on the international marketplace will completely change the business landscape we are currently operating in, meaning we will have a whole new raft of business and cultural challenges to meet in order to operate in these new economies.