B2B Purchasing is in an unprecedented period of transformation after a century of very little real change besides efficiency improvements. The enablers of this transformation are: Big Data, Cloud, XaaS, Mobile, Open, and IoT/M2M. This digitally driven transformation is part creating massive value for new companies and market segments as well as bring competitive value to existing organizations. While B2B Purchasing professionals will need new skills there will be new global opportunities that will result in better advancement and higher compensation.

1. B2B Purchasing Transformation
B2BPurchasingTransformation
Big Data
Cloud
XaaS
Mobile
Open
IoT & M2M +
Bill Kohnen July 2014 1

2. From 1887 to recently …………

3. • Purchasing as a B2B function is in an
unprecedented period of transformation after
a century of only improvement with efficency.
• 6 technology drivers of the transformative
change
B2B
Purchasing
Big
Data
Cloud
XaaS Mobile
Open
IoT
M2M

4. Purchasing Has Not changed in 100 Years
• The Handling of Railway Supplies—Their Purchase and Disposition, written
by Marshall M. Kirkman in 1887 “Need control and planning”
• 1915 founding of The National Association of Purchasing Agents. (Now ISM)
“Effort to build professional credibility”
Harvard University offered a course in purchasing as early as 1917
“Operational necessity with efficency focus”
• World War II Brought Temporary Focus on Purchasing and Supply Chain
“Credibilty through necessity and law”
• Historical Evolution of the Purchasing Function" By H.E. Fearon, Winter
1968, Journal of Purchasing “Purchasing Evolving from clerical focus”
• 1983 Harvard Article Purchasing Must Become Supply Management
“many purchasing managers’ skills and outlooks were formed 20
years ago in an era of relative stability, and they haven’t changed”
• 2013 Inside Supply Management Editorial “need for procurement to remain
visible and valuable”

5. Purchasing Ready for Change Now
As Other Conditions Transforming
• Not keeping up
• Inflexible
• Expensive
•Drivers” normal in
personal life
•Expectation of technology
turnover “new phone every
2 years
•New paradigms mean that
traditional backgrounds
and roles are less relevant
• Greater Velocity
• Aversion to
Infrastructure Cost
• Flexibility
• Big Data
• Cloud
• XaaS
• Mobile
• Open
• IoT/M2M
Digital
Drivers
Business
Current
Process
and Tools
People
Skills

6. Big Data
• Volume , Variety and Velocity of Data so great there is a massive
divide in what actually is available and what is being analyzed
– 90 % of Data created in last 2 years
– 80% of what people look at was created in last 4 to 6 weeks
• Purchasing and Supply Chain has plenty of data but not the
ability to use it all
• Strategic Sourcing set standards for basic dashboards and
analysis of Purchasing Data
• Focused departments can grind out the standard analytics using
Excel Pivot tables but difficult to scale and maintain consistent
• Initially Big Data Analytics tools very expensive but disruption
from the
Cloud

7. Bottom Line: Cloud dramatically reduces cost of what were Enterprise solution
with updates and flexibility that allows almost any function to take place remotely.
This untethering and resulting mobility with access to even better tools will result
in Purchasing moving away from the office and to where supply chains live with a
personal base of operations anywhere they want.
It also means the talent pool for Purchasing professionals is global.
CLOUD

8. “X”aaS – Anything Can Be a Service
• Infrastructure
• Capital equipment transformed of variable output
agreements
• Even raw material inputs focus shifts from just
physical delivery of a “widget” to full lifecycle support
for
– collaborative design, market development, optimized
operations, product support and ultimately
disposal/recycling
• The skill sets of even Professional Buyers and the tools
they use will need to evolve

9. “X”aaS - Anything Can Be a Service
• Consider simply buying “widgets” vs. buying the input lifecycle
• Negotiations and agreements take much different route as a
result.
– Today most B2B commerce occurs very close to point off operational need with
little forewarning and a compressed period of time 6 to 12 montsh to recoup
investment and make a profit. Even though the total product cycle may be been
3 to 5 years.
– Imagine that with confidence backed by big data analysis and other
enablers you engage a supplier at the start of a 3 year product cycle and
negotiate a service agreement across the entire cycle. Not just
amortizing the old model cost over a longer time but truly using
collaboration and technology to reduce cost .

10. Smart Phones and Tablets are the Main Source
of Interface with the Digital World
Business Quick to embrace for B2C but
momentum gaining for B2B
Next Generation Purchasing
Tools optimized for mobile
and offer best in class
features as APs
MOBILE

11. Open
• Disaggregation of proprietary solutions and creating open
standards for the basic features for hardware, software and
services.
• Unwillingness to pay for any form of supplier deigned “vanity”
• Reduced cost and optimized performance
Prediction: Given there is not much real differentiation in core purchasing process
and techniques by 2020 there will be open AP based purchasing operating systems
in use by most companies.
This common standard will drive unprecedented efficiencies

12. Markets intent on cutting costs
will see some of the largest
growth in M2M applications.
• Energy,
• Automotive,
• Healthcare,
• Retail,
• Manufacturing,
• Semiconductors
Internet of Things (IoT) and Machine
to Machine (M2M)

13. SalespersonBuyer
Purchasing Machine to Machine Interface
Not likely anthropomorphic Buyers and Sellers
However the Internet of Things will result in 50 Billion
Connected Devices soon which will enable efficiency way
beyond common present linear notion of supply chains

14. Conclusion
• After nearly 100 years of stability business to business purchasing will
transform.
• The enablers and conditions exist now for this change which will
ultimately be part of value creation for new and existing companies.
• The transformation will result in the need for new skill sets and purchasing
organization models.
• Not only will the pool of purchasing professionals become global but there
will be people with backgrounds in Computer Science, Engineering, and
Science that are needed and might be more attracted to purchasing and
supply chain.
• Ultimately this will create massive opportunities for those that can lead
the transformation for their organizations.
Bill Kohnen July 2014