How the Procurement Industry Can Prepare for 5G
June 10, 2020
While a 5G network will allow companies to more efficiently execute operations, enhance decision-making, and improve service delivery, the procurement industry in particular expects to benefit from increased cost savings, faster speeds, and enhanced communication. 5G has the power to transform people’s lives and change the way the world connects. Providing greater connectivity, and increased access to information, this next generation mobile network will shape the end user experience across sectors – from healthcare and entertainment to financial services and transportation. For example, 5G introduces possibilities such as shopping via augmented reality, developing smart cities, and enhancing video game experiences.
Despite the benefits it offers, 5G introduces new challenges in managing the long-term total cost of ownership (TCO) and return on investment (ROI). To leverage 5G successfully, procurement professionals will need to practice holistic planning and strategic sourcing. Procurement professionals must prepare for the future implementations of 5G, and WBD is keeping in mind the following changes:
Keeping Costs under Control
With the development and deployment of any new technology, procurement professionals must ensure that the costs incurred are not too high for their organization to bear. As procurement teams are becoming increasingly involved in product development, they can play an important role in keeping 5G implementation costs under control. Traditionally, procurement professionals simply ensure the availability of goods and services are delivered at reasonable prices at the end of product development; however, modern acquisition strategies and new product design methods view product development as a joint venture between engineers and procurement professionals wherein information on market prices and materials are continuously communicated during development. While 5G capabilities are expected to ultimately provide cost savings, the research and development phase could incur higher technology costs. The procurement industry should be prepared for the rise of unanticipated costs so that the overall costs of 5G implementation are kept under control and provide a high ROI.
Expanding of Procurement Activities
In the fast-paced environment of procurement, the amount of time it will take to download data and software on a 5G network will be significantly faster, which will enable the expansion of procurement activities and enhance developing requirements. According to Gartner, one of the issues affecting supply chain leaders is the latency of data, and technology can play a key role in reducing data latency. 5G technology has the potential to deliver data up to speeds of 10 Gbps, which can offer real-time in all stages of the supply chain. Rather than focusing strictly on the initial purchase and final delivery of goods and services, procurement professionals can focus improvement activities for the often-overlooked intermediate stages of the supply chain, such as sourcing, warehousing, and transit.
Enhancing Communication and Collaboration
By making communication easier through improved data transmission, 5G technology will enable procurement professionals to better collaborate with suppliers and introduce new opportunities for value, which will in turn result in cost savings and increased effectiveness. The improvement of 5G cellular technologies can enhance collaboration among supply chain/procurement and artificial intelligence industries through the improvement of robotics, which often depend on inflexible wired systems. Faster communication systems and removal of structural hurdles will improve the efficiency of the supply chain.
Like all emerging technologies, procurement professionals must be prepared to embrace the changes that will accompany the deployment of a 5G network. Until 5G is in place, and we better understand the environment that will result from it, acquisition professionals should be actively paying attention and waiting for this new generation of technology to unfold in the procurement industry.
To learn more about WBD’s service offerings, check out our Acquisition page.