This transcript has been edited lightly for clarity.
Is it time for a procurement (r)evolution?
Mauro Erriquez: Dominique, thank you for being with us today. It’s amazing that we have an opportunity to talk about the future of procurement. Many of my clients are saying they have never seen such a challenging period like the last two years. Is your view the same?
Dominique Lebigot: Yes, there has been this pandemic, the COVID crisis. So of course we have gone through something that nobody has experienced before. Does it mean that the world is much more difficult and much more complex today? I’m not sure. I think procurement has been a function that has been reinventing itself every ten years. Every ten years, the complexity was different.
Mauro Erriquez: What do you think the priorities for you, your organization, and your peers should then be?
Dominique Lebigot: The first priority for all CPOs, including myself, is to make sure that we are aware of what’s going to happen in the next ten years, and prepare ourselves and our organization. Some of them are clearly focused on how procurement can impact, tomorrow even more than yesterday, the business and the growth of the company. So we are now jumping, in the 2020s and up to 2030, into the next generation of procurement. And this next generation is clearly about impacting business growth, impacting sales, or revenue generation.
Tomorrow, it will be about quality, and the frontier—this barrier between the downstream market, or customer market, and the upstream market, or supplier market—this frontier will disappear. Or we will not have upstream and downstream markets; we’ll have an external market, and growth opportunities will have to be captured everywhere at 360 degrees.
Mauro Erriquez: And procurement is in the middle of it.
Dominique Lebigot: Of course!
Who is the buyer of the future?
Mauro Erriquez: So, Dominique, that feels indeed like an exciting time, an exciting decade, but it also feels like a time when probably we need to rethink once again how the procurement organization is structured, is organized, or can we keep the same principle as in the past? What’s your view there?
Dominique Lebigot: In terms of organization, I’m not sure the next generation of procurement will change a lot the way we are organized. For sure, it will change the perception of procurement inside a company on an executive level. They will look at buyers and the procurement function as an enabler for growth; to grow sales, and to grow profits, and to grow market share, and stock share. And that goes much beyond negotiating prices. Managing external resources is about innovation, it’s about influencing and constructing the circular economy, reducing carbon footprint. It’s about exploring all those opportunities for the benefit of the company.
Mauro Erriquez: But do we have a buyer in 2030?
Dominique Lebigot: Yes! We are going to have someone whose name will be different but who is going to impact the business ten times more than today. But those buyers are not going to spend 80 percent of their time managing tenders and negotiating prices. They will be spending their time managing ecosystems of suppliers. This is going to require a lot of time managing all revenue generation and creating a circular economy.
Those procurement activities will be different in the sense they will be less transactional and more strategic and business oriented. The buyers are going to develop business acumen. So they will not only drive revenue generation for the company, but they will also be in charge of going beyond managing supplier relationships and understanding how to manage supplier ecosystems.
So we are moving from supplier relationship management to supplier ecosystem management, and that's critical because today the buyers are being asked to manage suppliers, and most of the time, tier-one suppliers. But tomorrow, managing ecosystems means understanding the entire upstream value chain far beyond tier one, two, three, and so on.
How will humans and AI collaborate?
Mauro Erriquez: You mentioned artificial intelligence. Is that maybe going to help? Is it the superpower of the buyer of the future?
Dominique Lebigot: Yes, because this will limit the transactions, so this will allow buyers to dedicate more of their time to strategic influencing. And I think we should all be very optimistic about what’s lying ahead of us. Now it’s additional pieces in the puzzle, so it’s additional work. How are we going to cope with the fact that today we are already overloaded? Then you have the impact of what is going to happen very soon as AI technology brings new capacities, new software, new cognitive software that will help to very, very quickly automate transactions.
Mauro Erriquez: Can we imagine a future in which we are automating transactions but also giving guidance? Take your example of the ecosystem. For example, artificial intelligence is giving ideas to develop an ecosystem to support a circular economy.
Dominique Lebigot: That would help. The ChatGPT of the buyer–supplier ecosystems— artificial intelligence will bring and will facilitate that. But the huge impact will be the automation of transactions, because this will generate automatically new profiles for buyers and new activities. But yes, of course, artificial intelligence will help you anticipate market volatility and so on.
Mauro Erriquez: So it feels that you are a bit more positive on the impact of digitization than probably many people have been in the in the past. But then you look in the daily business of a buyer, and still it feels a bit old school. Do you think it’s going to change?
Dominique Lebigot: It will change, and there is no way back. Some companies and some organizations will be adjusting themselves proactively. Some of us will just die—that’s it. I mean, if you understand that as part of our DNA, we reinvent ourselves every ten years, it’s just another reinvention, just one more time. And you’ll see in 2030 or 2040, this will drive another interesting change.
Mauro Erriquez: So, are you saying that the only constant in procurement life is going to be change?
Dominique Lebigot: Yes, because we are not indispensable. So we are creating value if we change things, if we create leadership in managing changes.
Can procurement help to manage volatility?
Mauro Erriquez: You were mentioning sales growth as an additional piece of the puzzle. CSR [corporate social responsibility] is an additional one. Shouldn’t we measure procurement based on the margin that we have been creating? Or even, let’s think provocatively, on the share price improvement that buyers create? Is that a better and simpler way to measure impact?
Dominique Lebigot: Yeah, I think both will have to be measured. We don’t measure at all the share pricing, but tomorrow it will. For sure it will, because we are at the privileged interface with the outside world, buyers. So yes, we have a huge impact on building the image of the company, a huge contribution to generating revenues through our supplier relationship.
Mauro Erriquez: So in the context of volatility, of complexity of this new era, is the concept of measuring share price improvement also the right one?
Dominique Lebigot: Yes. And I will tell you, when we talk about volatility, it is clearly something very important today, but it has been very important for the past 50 years. I mean, the world has never been static. The fact is, in this, what is going to be different if we have this approach for buyers, for procurement to manage across systems, is also giving us the keys and the levers not only to deal with the volatility that we have to follow and to deal with, but to manage it.
Mauro Erriquez: Can we create value with volatility?
Dominique Lebigot: Yes, and we can even create value with volatility, of course, if you’re first on the market. But if you project yourself into this ecosystem management expertise, then you will very quickly realize that you can open new doors that you didn’t even know before and you didn’t open before. And one of them is “How can I, by influencing the markets, better control the volatility as well?” So I am sure we have a more active role in influencing more into a supplier market as well, not only for the company but to the suppliers.
What does the circular economy mean for procurement?
Dominique Lebigot: We all know that we are having the worst business stakes of global warming and CO2 reduction, and we cannot ignore it any longer. We know that we can create value with those areas as well—not only with the customer and sales, but with the image that we can bring for the company. We know that regulations are much more restrictive and more demanding, so it is going to bring additional cost. The only way for us to make those two priorities—reducing the carbon footprint and generating profit—is to organize the circular economy.
We know that we can no longer live with that linear-economy concept. We have to put our collective intelligence into organizing the circular economy: producing less, selling services and functions and not any more products, and then recycling those products, reusing, reintroducing it. It is the only way to optimize and have a return on investment for manufactured products as quickly as possible—limit the extraction and then reduce the overall costs.
Mauro Erriquez: But that will mean, in terms of our buyer of the future, discussing—I purposely don’t use the word “negotiating”—discussing with the customer how we can bring used products back into our production system. That’s also procurement.
Dominique Lebigot: It can be procurement, but anyway, if we don’t talk directly to consumers or to customers, maybe we will. At the end of the day, we need to keep that in mind as part of our focus anyway. And the fact is, tomorrow, if we want to be successful in organizing the circular economy and succeeding in this carbon footprint reduction and managing the cost, we need more leadership skills.
Is procurement really a board-level topic?
Mauro Erriquez: Now it feels procurement needs to become even more of a leader, more of a change manager across the company. What can you suggest to your procurement colleagues to deal with it?
Dominique Lebigot: We should stop asking the executive management to recognize us and to give us more power. And we should go through our leadership and capture the power. We have never been asked by the CEOs to do something different—focus on costs, on innovation. And yet we have been able to drive those changes by ourselves, through our leadership. We will continue to do that, but it has to come from us.
Mauro Erriquez: You mentioned also many other priorities: AI, creation of ecosystem, to some extent volatility, management, circularity. Should your CPO peers drive all of these in parallel or rather pick one and then move to the next later?
Dominique Lebigot: In parallel. Depending on the environment of the company, the culture of the company, the business within the company, you will drive those different pieces of the puzzle at the same time. As I said, you will see some of those new purchasing levels progressing faster than others. But if you want to know that, you need to start progressing them all at once and then see which one is progressing a bit faster.
Mauro Erriquez: So now that you’ve shared quite a lot of ideas for the future of this profession, do you have a wish for the future?
Dominique Lebigot: I wish I could see what will be the next generation moving into 2040.
Mauro Erriquez: So you want to already think about the next?
Dominique Lebigot: Yes, it’s going to be amazing as well.
Mauro Erriquez: That’s a very nice way of ending the discussion, and the optimism is there. This is the time for procurement; 2030 is around the corner. Let’s already think even beyond that—and it’s probably going to be an interesting time as well.
