When is Reality of Global Procurement Illusion?

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The scientific community that is working on answering the question of “what is our reality — the universe — made of?” is increasingly coming to the conclusion that the underlying matter of particles, that make up our reality appear to be layers built upon something non-physical– more like a perceived and interpreted reality by ourselves, potentially an illusion or even a simulation.

The question of whether what we see is real or an illusion has perplexed humans since at least the ancient philosophers. But it has been given a new and different edge in recent years with the development of powerful computers and artificial intelligence, which some have argued shows how easily such a simulation could be created. Elon Musk disrupted the debate a few weeks ago by stating that we will probably be living in a simulation in the next 40 years.

As procurement professionals, how can we possibly relate to or even learn from such a profound and mind-boggling scientific challenge? If we take the challenge of global procurement, i.e. having to manage all the spend in our “universe”, curiously we can also identify a challenge around what is the reality of making a real impact and what is an illusion. Here is an example:

You have struck a global supply deal to fulfill critical goods or services for your organisation in multiple geographies. The business’ case is solid with calculated savings and improved services for all. This is now the reality that everyone is buying. However if you do not have all the underlying information, this could turn out to be an illusion– something that is only simulated in the business case. There can be several reasons for this:

When is Reality of Global Procurement Illusion?1.  Supplier capabilities do not meet the service levels in all geographies, and you have to turn to alternative sources.

2.  The deal is complex and not clearly understood by the people who have to implement around the world.

3.  Your staff does not have the experience or stretch to operate across multiple geos.

4.  New processes are cumbersome and staff members don’t have the spare time to manage.

5.  The technology in place does not support the compliance requirements or approval processes for purchasing through the deal.

Each of the above points could be reasons why your global procurement turns from reality to an illusion and therefore does not deliver the business case. They may seem like obvious points to consider, but they are everyday challenges in large organisations. So how can procurement professionals anticipate these better? The starting point to the answer is information and better insight, which is often missing when dealing with procurement on a global scale.

If we now go back to some specific recent scientific theories about information in our reality, some scientists believe that when you “peel back” the layers of the reality we perceive (i.e. matter, particles, etc.), all there is left is pure information and data, in the same way as Elon Musk believes that we are/or will become players in a computer simulation. Everything we perceive can be described in code and maths, so if we can understand how this information is created, maybe we can learn how to manage the world around us. And in a funny way, it is the same for global procurement; if you have access to all the underlying data, you can develop the right business case and ultimately control 100% of your spend – in the “real” universe?