The Great Transition

Abstract

The Great Transition There has been a long debate about both the title and the content of that area of management concerned with the acquisition and control of goods and services. In the International Federation of Purchasing and Materials Management the debate has been complicated by differences of language, and differences of meaning in countries that use the same language. There is, therefore, little hope of reaching conclusions which would be agreed by all, but this is not as unsatisfactory as it sounds. Uniformity is not an end in itself and where it does not exist there is no point in trying to enforce it. Unity is of more consequence in a profession that has a worldwide task to perform. In purchasing and materials management there are wide interpretations of what practitioners should do, but there is a unity of concept that the core of the discipline is to optimize the acquisition of goods and services and control them at the lowest level consistent with the needs of the enterprise. It is time for preoccupation with organization structure to cease. Professional purchasing and materials management has more important work to do. The immediate task is to grapple with the changes in the structure of society which are upon us, and in which the acquisition and control of goods and services has responsibility of an altogether new significance. This is not said from any desire to secure a dominant role in management. It follows from predictions of the future made by independent institutions such as the Hudson Institute and the Club of Rome. Although their conclusions about the likely course of events differ, there is wide agreement that the end of the 20th century marks a new watershed in the history of mankind. Our earliest ancestors were nomad hunters and the first great change in their way of life came when they began to settle 10,000 years ago in the fertile crescent of the Middle East and to become farmers as well as hunters. The second great watershed was 200 years ago when power was generated in the Netherlands and Britain to produce artifacts by mechanical means and then to apply power sources to agriculture, mining, forestry and fishing. In something less than 200 years the use of power sources has enabled the population of the world to grow from 750 million to four billion. This has been accompanied by exploitation of material resources of such prodigal disregard that it has become possible for the population of the world to double every 25 to 30 years. But it is at last becoming widely understood that industrial development cannot continue to quicken at its present pace and that world resources are either nearing exhaustion or are being used faster than they can be replaced. This realization has once and for all brought purchasing and materials management from a rather narrow functional base to the very center of decision making in management. An altogether wider view of what purchasing and materials management really is can be apprehended from the use of such fashionable terms as source marketing and resource management. This paper seeks to open up some aspects of the prospect before us as our society stands on the brink of the third and greatest watershed in the history of man. But first it is worth reflecting on some changes in management theory and in historic supply/demand relationships that profoundly affect purchasing and materials managers in their capacity to tackle the problems of the future. CHANGES IN MANAGEMENT THEORY We are witnessing the disintegration of a historic management structure which is military in origin. The framework of a pyramid on which it was based--through which orders pass from the top to the bottom and information from the bottom to the top--is no longer valid. There are political reasons for this change, but the structural reason is the complexity of all the disciplines now contained within the framework of management. …