Evolution of Procurement – Are you a Procurement Dinosaur?

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3000 B.C

Start of Papyrus Procurement

The first traces of procurement can be seen throughout ancient history, including the Egyptians in 3,000 BC. Though there was no designated procurement function, materials management aided in the building of the pyramids. The Egyptians used scribes to manage the supply for these massive projects. Scribes played a clerical role, recording the amounts of materials and workers needed on papyrus rolls. These scribes would track orders through fulfillment and were one of the first known in history to be in the procurement profession.

If you are wondering what is a papyrus.

1983

Start of Strategic Sourcing 

An article by Peter Kraljic on purchasing strategy marked the beginning of Strategic Sourcing.

Information about Kraljic Matrix

Peter Kraljic suggested that purchasing in many companies is based on routine, transactional activities that afford little strategic consideration to potential economic and political disruptions to materials supplies. His 2×2 matrix is set out to provide companies with a way to distinguish between different types of purchasing strategies which maximise buying power while minimising supply risks. It represents ‘supply risk’ (horizontal axis) and ‘profit impact’ (vertical axis) and offers four product classification quadrants (Caniels and Gelderman, 2005).

1990’s

Start of ERP & P2P Buzzword

For more effective spend management, disparate functions of finance and procurement started working in tandem and thus evolved the buzzword P2P

ERP stands for Enterprise Resource Planning, in simple words it helps organizations manage and integrate your business process areas.

2000’s

Start of eProcurement Software Solutions

Technology became the solution to overcome the operational challenges and thus emerged eProcurement software as an extension to already present ERP systems

eProcurement: electronic procurement refers to the process of purchase and sale of goods or services through electronic methods, primarily the Internet.  Many organizations had begun to re-evaluate their purchasing processes, and identify new types of eProcurement tools that will meet their needs. … The purchasing process basically involves the following elements: Identify or anticipate material or service needs.

2010’s

Start of Cloud-based Solutions

Cloud-based, custom P2P process for all sizes of organizations based of world’s best practices have turned procurement into a strategic function

Cloud-based procurement software – delivered either through the Software as a Service (SaaS) or Platform as a Service (PaaS) model – the software provider manages the infrastructure, upgrades, security, etc. to meet your business requirements. Your subscription to the software covers all these maintenance and upgradation costs – you do not have to make any separate investment of your own.

Present and near future

Start of Procurement Bots

Procurement Bots have a great place in the Source-to-pay process for improving reliability, reducing cost to serve and improving efficiency of the procurement processes and it will transform the future procurement org structure and will help the organizations focus more on the strategic aspects of procurement with a lot of support coming from the Bots.

Are you a Procurement Dinosaur?

Can the activity you perform be mapped as repetitive?

Does the activity require a human judgment; can the rules on how to judge be defined to cover all possibilities?

Does the activity make you pull (and put) data from and into the same place every time (i.e., the same field name, same location of the field on a particular screen of an IT system)?

If your answer is a yes to any of the above and it can be potentially be performed by a Procurement Bot.  Then it is better to start involving in more strategic work and upskill yourself.

Don’t be a Procurement Dinosaur!

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