Go Bionic – is the recommendation made to CEO’s the Boston Consulting Group’s (BCG) recently published book makes in its recently published book Profit from the Source1.
BCG lays out some ideas for creating a bionic purchasing department combining technology/data and skilled and knowledgeable personal just as man and machine came together in The Six Million Dollar Man. The ideal strategic buyer in the bionic department:
“is a diplomat, strategic thinker, an implementation coach, a negotiator, an analyst, and a data miner-cum-researcher.”Source2
We could not agree more. Technology can enable purchasing departments to:
- drastically cut transactional/clerical workload being performed by buyers and commodity managers some whose total compensation is well into six figures.
- develop purchasing data lakes that can be used with advanced algorithms to move beyond should-be cost models to predictive pricing which provides the probability of suppliers’ quoting a specific price based upon the part or service attributes.
But as one CEO told us, “Technology itself is not a solution. Buyers need to have knowledge and skills to leverage the technology.”
BCG echoes the CEO’s comment indicating that the strategic buyer:
“as negotiator, the buyer must draw on the power of AI; as an analyst, the buyer must expect to increasingly rely on digital technology over the next five years; and as a data miner or researcher, the buyer must expect to become almost exclusively reliant on digital technology.”
To compete and succeed in the bionic world envisioned buyers need to build the data and negotiation and commodity skills.
To effectively lead CPP’s need to develop digital transformation and buyer evaluation and training programs to build technical and negotiation skills.
CEO’s should see spending on purchasing technology and training not as an expense but investment, engaging actively with their CPO’s to define the ROIs’ to be generated.
Bionic includes understanding cost models. To read our process for Building Attribute-based Estimation Models click below:
A Bionic Purchasing Organization needs a digital transformation strategy. To read our white paper on the subject, click below:
1 The Boston Consulting Group
2 Profit from the Source 2 Ibid., p100