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The Complexity Of Choice

December 30, 2010

A high proportion of people think that life today is more confusing than it was 10 years ago. An overwhelming majority of contract and commercial staff feel they have to deal with ever-greater complexity. Over 40% lie awake at night trying to resolve problems.

Increased choice appears to lie at the root of these 21st century challenges. “Expectations have been inflated to such an extent that people think the perfect choice exists.” A consequence is growing indecision, confusion and expectation that every acquisition can be customized to our precise needs.

These trends have had substantial impact on trading relationships and those in functions such as Procurement and Contract Management. The management of choice has become a far more important discipline, with growing executive expectations of the benefits to be achieved – and frustration when their aspirations are not met. As a result, we have seen increased pressure on suppliers and heavy investment in the tools and resources to support their selection and management.

Yet has the explosion of choice actually led to improvement? In general, the answer appears to be yes. Overall global wealth has increased at an unparalleled rate, driven by rapid improvements in productivity and reductions in prices. Suppliers have been forced to differentiate through more creative solutions, better quality, higher levels of customer service.

As we enter 2011, far from a reduction in the volume of choice, it appears the trend will gather pace. The continued emergence of new competitors from emerging markets, plus reducing barriers to market entry, suggest that the Procurement and Contracts community will face growing complexity. As we are already seeing, this is likely to be handled through increased segmentation of relationships, with the sale and acquisition of commodities, solutions and strategic products or services demanding major variations in approach and resources. It is this evolution on which we should be focussing our plans for the year ahead.

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