Category Archives: Technology

Intelligent Spend Management – Your Next Smart Move

Photo by Val Vesa on Unsplash

Bringing it all together by bringing Intelligent Spend Management to the business.

If you’re just buying office supplies, you’ve probably got a good idea what you’re spending on paper and pens. But odds are your budget goes beyond a few reams of ultra-white printer stock. And while you are specifically tasked with procurement, you actually help hold the reins and hold influence on multiple categories of spend — from direct and indirect goods, to services, contingent labour — even T&E.

True, this spending is spread out across your organisation and, yes, in many of these categories, spending is more decentralised than ever with employees all over the company buying what they need when they need it. And, it’s true that all of this spending and all of these categories aren’t even in your charge.

However, the business needs you to help bring all that spend under control across all those categories, so you can not only reduce costs, but also help your company:

  • Manage supplier performance holistically
  • Diminish delivery and reputation risks across the board
  • Improve compliance and enforce purchasing policies equally in all categories
  • Increase productivity across procurement and throughout the entire company

Changing Expectations

Organisations are expecting this and more from procurement.

  • They want you to collaborate with finance and supply-chain leaders and address spend management across the business.
  • They’re expecting you to bring more spend categories under control, to unify how you manage suppliers across all categories, and to help bring direct and indirect spending together with services and T&E to increase visibility into all your spend.

They want more, and there’s an easy way to deliver and manage every source and every category of spend in delivering one, unified view.

Unfortunately, the systems most businesses use to manage all of these different spend processes can create barriers between spend categories and keep people from working together. Intelligent Spend Management, on the other hand, is a strategy designed to bring those barriers down, so you can get visibility into and control over each and every area of spend. In one place.

Why Intelligent Spend Management Matters

Intelligent Spend Management means comprehensive policy and supplier management. This gives you oversight over indirect and direct suppliers while bringing that same level of discipline to services/external workforce suppliers as well as key travel suppliers.

And, integrated with your ERP system, an Intelligent Spend Management solution creates a common set of spend data — a hub where you can unify and clarify the information. You’ll also be able to:

  • Capture and centralise once-invisible spend like p-card transactions, non-PO invoices and direct travel bookings that used to slip through the cracks in your systems
  • Apply sourcing best practices consistently to all of your suppliers across all categories
  • Centrally manage supplier risk as well as tax and other regulatory requirements

It brings you best-in-class control of each spend category. This means you can manage the entire procure-to-pay process for direct and indirect expenses from a single solution. Imagine being able to:

  • Deliver a guided user experience that makes it easy to follow policy
  • Give users a simple way to make procurement requests, plus tactical purchases directly from suppliers
  • Ensure the suppliers you source, the prices you negotiate and the terms you establish are pulled through right to the point of purchase, so policy compliance becomes everyday practice
  • Capture data from across the process and use AI and machine learning to automate mundane tasks and serve up insight-driven recommendations at critical decision points
  • Strengthen supplier relationships and, ultimately, get more innovation from suppliers to improve how you work and what you deliver

And you can bring that same level of precision, efficiency and user experience for services, your external workforce – and the same level of control.

Presenting a Unified View

You get a unified view of spend. The Intelligent Spend Management solution connects procurement spend data with data from across spend categories, giving you a single, near-real-time view — without having to piece together reports from disparate systems.

This means you, your friends in finance and your supply-chain peers can see where every bit of your budget is going, and help the organisation:

  • Ensure that all spending is in line with corporate policy and priorities
  • Get up-to-date views into your KPIs, so you can adapt accordingly
  • Manage discretionary employee spend before it gets away from you
  • Feed this spend data back into supplier management and fuel stronger negotiations

Intelligent Spend Management breaks down the silos, so companies can control spend across the board.

This is about procurement, but it isn’t simply for procurement. Intelligent Spend Management enables you to work across categories and bring all the data together — so you can bring confidence to your company by bringing certainty to your spending.

This article was written for Procurious by Drew Hofler, VP of Portfolio Marketing for SAP Ariba & SAP Fieldglass.

5 Big Procurement Challenges Addressed by Enterprise Contract Management Software

This article was originally published on the Icertis blog.

Procurement is a complex part of global business that carries serious commercial and regulatory risk. These risks are especially pronounced when a company does not have an effective way to centrally manage its contracts.

In a recent survey conducted by ProcureCon, leading procurement officials were asked about contract-related challenges they’ve faced that caused revenue leakage, increased cost or financial penalties. Here were the results:

A critical component to tackling each of these issues is enterprise contract management software, which sees contracts as live documents enshrining all risks and obligations incumbent upon an organization.

Indeed, good risk management begins with good contract management. With enterprise contract management, you can identify and manage risk throughout the contract lifecycle with proactive insights. A configurable risk model helps track risks across different categories, such as financial, contractual, performance and third party.

Let’s look at how each of the above challenges is addressed through contract management software.

Challenge: Higher operations costs

Finding: 43 per cent of respondents said higher operations costs have hurt their procurement organisation.  

Because contracts are the foundational element of modern commerce, they govern every procurement action and transaction a business undertakes. With the power of a modern contract management system with an ability to seamlessly integrate with procurement systems in place, an enterprise can gain unprecedented control over spend.

Through full visibility into all their commercial relationships, contract management software ensures that cash flow is complying with corporate plans, and allows executives to continually monitor money moving in and out of the business at all levels of the supply chain.

Challenge: Slow contract creation and approval

Finding: 46 per cent of respondents cited slow contract creation and approval as a challenge.

With enterprise contract management software, users can accelerate and optimize the contract authoring process. For example, users can self-service contracts with pre-approved clause libraries, eliminating the need for legal to get involved at every level of the authoring process but still control contract language.

Configurable notifications alert relevant stakeholders for revisions, redlines, and approvals, ensuring nothing gets missed. And robust, highly configurable rules increase flexibility while driving quicker approvals and execution.

Challenge: Unclaimed entitlements/lost or untapped revenue

Finding: More than half of respondents cited unclaimed entitlements or loss of untapped revenue as a challenge.

Best-of-breed contract management software draws on artificial intelligence (AI) tools that index and “interpret” every entitlement in each contract across the enterprise, allowing users to achieve the full potential of negotiated contracts through better enforcement of commercial terms.

The software captures the terms of products and services, prices, discounts, rebates and incentives in a structured form after interpreting the entitlements. You can then integrate the data with enterprise systems and help enforce terms for better savings and revenue performance.

You can also avoid missed entitlements or revenue potential. For example, sourcing organizations can automatically check purchase orders against agreed upon contract language to detect incorrect billings issues with regard to slabbed discounts or other innovative payout models.

Challenge: Missed obligations

Finding: 55 per cent of respondents said missed obligations have been a challenge.

Contract management software gives unprecedented insight into these contractual commitments, ensuring nothing gets missed. The same indexing and reporting capabilities used to surface entitlements also capture a business’s obligations to third parties, preventing leakage caused by lost business or penalties.

Challenge: Regulatory enforcement actions

Finding: This emerged as the most common challenge for procurement leaders, with nearly 3 in 4 saying they’re concerned with regulatory enforcement due to noncompliance.

It’s no wonder this was the number one concern, given the serious financial penalties and lasting brand and reputational implications of regulatory violations.

A robust library of clauses and templates goes a long way to reducing ad-hoc, or maverick contracts. Readily accessible templates, combined with a rules-driven workflow engine, helps support compliance throughout every stage of the contract management lifecycle.

Contract management software can cross-check country- or region-specific rules with relevant contracts. Compliance, down to the smallest supply subcontract, can be continually monitored through integrations with external software. Contract management software can even take a preventative role in compliance, via innovative contract creation tools.

Sophisticated contract management software can identify such regulatory enforcement and compliance obligations not just from their own contracting policy and authoring rules but also from customer specific contracts and cascade them to buy-side contracts used for fulfilling commitments. This makes the whole supply chain subject to internal regulatory enforcement and compliance actions.

To learn more about how a modern CLM solution can improve procurement at all levels of the supply chain, download this report from ProcureCon.

Vivek Bharti is general manager of product management at Icertis

The One Thing Everyone Keeps Getting Wrong About Digital Transformation

While digital technologies have made the pathway to digital transformation the opportunity that every organisation is seeking to capitalise on, what many organisations get wrong is the focus on the technology…

By Parilov/ Shutterstock

There’s no doubt that we have been in the digital revolution for a while now. It may have been a slow start as we came to terms with the power and capability of our smartphones that precipitated the customer centric, anywhere-anytime shift.

Futurists pre-empted the transformation that was coming by positioning a future of mobility, IoT and artificial intelligence, while tech savvy organisations made some early investments and experimented with analytics and automation, learning very quickly how to capitalise on technologies many of us were still trying to define.

Fast forward 10 years and we surely must have everything worked out and locked down. After all, we have had enough time to observe those who have gone before and experiment ourselves, both as consumers and as leaders in organisations, irrespective of our role or industry. It should be the very definition of a no-brainer.

The Current State

Taking a look at the current state, things seem to be a little different. Yes, there have been tech-savvy organisations like John Deere who have managed to leverage digital capabilities and redefine their business model to open up new revenue streams. And we are all familiar with the digital disruptors coming from digital natives like Google, Amazon, Uber and Tesla.

And we have all heard the catch cry of Disrupt before you are disrupted. Indeed, it has probably been the opening for many a workshop on digital transformation initiatives making their way into the leadership programs of organisations.

Is it a money question then? There’s no doubt that the global financial crises, combined with the impact of increasing customer expectations and global competition have exacerbated financial pressure on organisations.

The internet has proven to be a double edged sword for many; enabling access to markets of consumers that would have previously been impossible, while also giving the very same consumers access to competitors, feedback and reviews of others, and pricing transparency that has not previously been possible. Everyone has had to up their game.

All About the Money?

With spend in digital initiatives estimated in 2018 at $1.3 trillion, it’s a tough position to advocate that the investment and focus has not been there. Digital initiatives are defined as any digital capabilities aimed at improving customer value, new growth and monetization opportunities and driving improved efficiencies.

So the categories are pretty broad, and the digital capabilities equally so. Moving from a spreadsheet to a web based form could be loosely termed digital, as could automating a process flow, experimenting with RPA, or enabling customers to order from a website. In essence, there are a multitude of different options before we even get to chatbots, customer preference insights, predictive asset maintenance and hypotheses generation.

So why do we keep hearing about how hard it is to execute effectively with consistent research telling us that 70 per cent of transformation efforts fail?

While digital technologies have made the pathway to digital transformation, the opportunity that every organisation is seeking to capitalise on, what many organisations (70 per cent of them as noted above) get wrong is the focus on the technology.

As an innovator in the early stages of the digital era, that may have been understandable. Working with the unknown, and by definition and nature, first-of-a-kind initiatives, it was important to understand what the technology could do and its limitations.

But in 2018, why does this still account for such an overwhelming focus of an organisations digital transformation agenda? The best way to deal with that question may be by taking a look at what the organisations that are in the 30 per cent who achieve success actually do.

People and culture matter

Watching my 10 year old nephew master the iPad with a skill and confidence I can only aspire to is an exercise in amazement and humility; amazement at all the functionality he is able to access to expedite what he is doing, and humility knowing that I am not ever going to come close.

Taking the ego aside, it reflects the very important point that the technology being used has degrees of perceived value generation and productivity firstly, only when it is used and secondly, with an increasing value the greater and more extensive the use.

So when we say people matter, what we really mean is digital transformation is a change to the way a company works and for the intended value to be realised organisations must incorporate education, training, and adoption strategies that help employees understand why the transformation is happening, how it will impact them, and how accepting and adapting to the initiative will enhance the way they work and the business performs.

Process Matters

It’s very easy to dismiss the process of any function or model as the thing that happens behind the scenes. It’s not usually the subject of an extensive marketing campaign and the people in many process areas may not even have a line of sight to the end customer. 

There may be an instances where consumers may complain about steps in the process that they may need to navigate to get something resolved. I need to admit at this point to being one of those annoying customers that will challenge how something works if I am caught up in a cycle of bureaucracy with some unfortunate contact centre assistant.

But process matters because so many organisations will deploy a technology solution and not or re-engineer a process to reflect the new way of working that the technology should enable.  As a result teams end up complaining that they are stuck with a new technology which does not work at best, and creates more work at worst.

The criticism then gears towards the technology not the implementation strategy that supported it.

Challenging Fundamentals

Business models matter: How organisations arrange themselves in a digital transformation matters. Traditional models are hierarchy based and decisions are made on positional authority. Team and role structures define who does what, and everyone’s role is clear and supported by a position description. Digital transformation challenges many, if not all of these fundamentals. 

Implementing change on this scale, for at its essence this is what digital transformation is, requires different ways of working and different mindsets. It requires acknowledging that your nephew may have more experience even at 10 years old, then you do, irrespective of a long career as an executive.

It’s about who knows what, not credentials that may be impressive, however not best suited to that particular piece of work. And it involves understanding that teams are dynamic, decisions need to be made differently, and a shared focus on outcomes is how digital value is generated and how digital transformations succeed.

Is Blockchain The Next Big Thing For Supply Chain?

What does blockchain mean for your supply chain?

By Oleksandr Nagaiets/ Shutterstock

Few people working in supply chain roles have a clear understanding of how this fledgeling solution called blockchain is, or could be, applied in their organisations. There is much hype and misinformation in the marketplace and much of it is due to the unproven nature in practice and unknown long-term costs of blockchain applications.

So what is blockchain?

Without getting too technical, the underlying principle of blockchain is to provide a secure environment where encrypted business transactions between buyer and seller can happen without the need for third parties such as banks and clearing agents to intervene. According to McKinsey,

blockchain is an internet-based technology that is prized for its ability to publicly validate, record, and distribute transactions in immutable, encrypted ledgers”.

Immutable, in this case, means that each link in the blockchain is completely secure and unbreakable. Blockchain’s format guarantees the data has not been counterfeited and that information can be read by any authorized party.

There are two main types of blockchain applications, one private and the other public. In the commercial environment, the networks are mostly private, this type of operation is sometimes referred to as “permissioned”.    Read more detail about how Blockchain works here.   

The world before blockchain

This diagram below is typical of a traditional sales transaction with many intermediaries.  Currently, these intermediaries process, verify and reconcile transactions before the ownership of the goods or services can pass from seller to buyer. How many people does it take to move a container of avocados from a Kenyan seller to a UK buyer?  At least thirty, but more importantly, there are over 200 individual transaction events and communications involved. 

What traditional buyer-to-seller transactions look like today  

What supply chains could look like tomorrow  

The world after blockchain

In a private blockchain network,  the procure-to-pay process is streamlined so that documents are matched triggering payment and creating a verifiable audit trail.   Nestlé is breaking new ground in supply chain transparency through a collaboration with OpenSC – an innovative blockchain platform that allows consumers to track their food right back to the farm.  The initial pilot program will trace milk from farms and producers in New Zealand to Nestlé factories and warehouses in the Middle East.

What does blockchain mean for your supply chain?

How can this fledgeling technology be beneficial? According to McKinsey, there are three main areas where blockchain can add value:

  1. Replacing slow, manual paper-based processes.
  2. Strengthening traceability which reduces quality and recall problems
  3. Potentially reducing supply-chain IT transaction costs  (maybe?).

The answer seems to lie in its potential to speed up administrative processes and to take costs out of the system while still guaranteeing the security of transactions.  Blockchain has the potential to disrupt or create competitive advantage, but the biggest barrier to its adoption is that so few have a good grasp on how it can be of use in their operations.

The potential benefits

  • faster and more accurate tracking of products and distribution assets, e.g. trucks, containers, as they move through the supply chain  
  • reduction of errors on orders, goods receipts, invoices and other trade-related documents due to less need for manual reconciliation 
  • a permanent audit trail of every product movement or financial transaction from its source to its ultimate destination.
  • trust is created between users through using a transparent ledger where transactions are immutable, secure and  auditable

What are the obstacles?

1.The cost

Implementing a blockchain solution may require expensive amendments and upgrades to existing systems which is both costly and time-consuming. Who pays and what is the return on investment?

2. Change management

There will be a need to convince all involved parties to join a particular blockchain and collaborate for mutual benefit. More openness will be needed, the old ways of protecting information won’t work. There is likely to be some mistrust initially especially around market share and sales data.

3. Rules and regulations

Legal advice is essential to understand what regulatory frameworks must be complied with. There are no accepted global standards for Blockchain that align with maritime law, international customs regulations and the various commercial codes such as Incoterms that govern the commercial transfer of ownership.  

4. Security

Is Blockchain really unbreakable?  Hackers would not only need to infiltrate a specific block to alter existing information but would have to access all of the preceding blocks going back through the entire history of that blockchain, across every ledger in the network, simultaneously. Even with encryption, cyber-attacks are a concern and cybersecurity costs money.

Transacting using “smart” contracts

Blockchain can be used to create “smart” contracts that execute the terms of any agreement when specified conditions are met. The “smart” part is a piece of computer code that predefines a set of rules under which the parties to that smart contract agree to interact with each other. Not recommended for beginners.

What industries will benefit most? 

Industries with the greatest potential are those that deal with extensive paperwork such as freight forwarding, marine shipping, and transport logistics. 

Tracking ofautomotive parts as they move between manufacturing facilities and countries is an attractive application as interfaces between motor manufacturers and their 3PL transport partners are complex and often not well-integrated. Toyota is venturing into developing blockchain solutions for its core parts supply chain operations.

Vulnerable and highly regulated supply chains such as food and healthcare

can benefit due to their need for transparency. Real estate has great potential due to the mass of records and documents involved such as transfers of land titles, property deeds, liens etc.  

Avoiding the hype

Gartner says that although blockchain holds great promise, often the technology is offered as a solution in search of a problem. They advise that “to ensure a successful blockchain project, make sure you actually need to use blockchain technology. Additionally, much of what is on the market as an enterprise “blockchain” solution lacks at least two of the five core components: Encryption, immutability, distribution, decentralization and tokenization.”  Gartner’s long term view is that blockchain will only move through its Trough of Disillusionment by 2022. 

Will it work in your supply chain?

The jury is still out on whether blockchain will really create a competitive advantage. Also, the cost of running a blockchain in time and resources is the unknown factor. For companies thought to have efficient supply chain operations with trusted partners and reliable databases, such a complex solution may not be needed. A supplier portal that is housed in the cloud may be more than adequate when coupled with an established ERP system.   

5 Days Without Technology

I spent five days disconnected from technology; this is how, and what I did instead…

By Africa Studio/ Shutterstock

Irrespective of what time of the day you are reading this blog, there is one certainty. You would have spent some time on line whether it was for business purposes or for personal engagement. If you are anything like me, you would have checked the weather before heading out on an early morning run. Not exactly sure why given we all know what Melbourne is like in winter. Cold! You might have gone with some social media scanning. Liked something on Instagram? So have 3.5 billion others. Checked your facebook? You’ve joined 1.5 billion users. Looking for professional connection or posts of interest amongst LinkedIn’s 575+ million users? Let’s not even get to all of the other platforms that have proliferated. After all, it’s not just the social, social media. Chances are you have also been on email, read the news on line, messaged or What’s App’d a connection, or possibly had a call via Zoom or Skype. Even likelier you have had to make your way somewhere and needed an Uber. Phew, busy morning, even busier day! But with so much to do, isn’t it lucky that it is all there on our smartphones or laptops, smart TV’s, or home assistants,  making our lives so much easier. Or is it?

Last year I had the opportunity to be in Asia for a trip that was intended to be a holiday. It seemed smart to tie in business meetings to make the most of the fact that I was in the region. I rescheduled work commitments, let colleagues know I was away and shared my itinerary with family and friends. There was no question of whether I would take my phone and my laptop with me. After all, that’s what the modern day break looks like and with the business tied in, it wasn’t even an option to think about leaving even my laptop behind.

Admittedly and somewhat proudly, I can admit that by the end of week one the laptop had not exactly been in overdrive. It languished after a couple of video calls and a handful of emails. The phone was a different proposition altogether. Rides to organise, destinations to get to, places to eat to check out, messages to family. A combination of business and leisure that made the time not just busy but always-on.

Fast forward another week and an opportune trip for work has unexpectedly taken me to Myanmar. The great thing about being digital that we all know, is that anywhere, anytime, can make all sorts of options possible. So when a friend suggested staying a little longer and exploring what is a fascinating country, I was in. Able to work from anywhere, subject to time zones and availability, makes so many things possible. Wi-fi and mobile data (which can be a financial minefield) make the possible, practical. 

Sounds like a great trip so far, but where is the disconnect you may be wondering? Well that’s got something to do with a trip to a place in Myingyan. You most likely have no idea where that is, and that’s ok, as neither did I. What I did know was that it was wonderful eco-lodge nestled in the heart of a village that offered a unique opportunity to immerse yourself in local life. What I didn’t know until we got there? There was no wi-fi.  I had just arrived for a 4 night stay in a picturesque, but remote village, without a way to get on-line except for a very inconvenient overseas mobile data plan. So what I did I do? I messaged everyone to share the contact phone number and let them know I would be out of touch for the next few days. And then I put my phone and my laptop away.

When I got back to Melbourne a few weeks later and was telling friends about my experience, responses ranged from humour, to dismay, to fascination; How did I survive? How did I spend the time? And unexpectedly from others Would I do it again? Here are the three things I shared with everyone that have stayed with me even now

1. Nothing beats personal connection

It seems simple enough and we all know it to be true, but the flipside of technology means that we often choose to digitally engage with someone instead of actually talking to them. Staying in this wonderful place, talking to the people who lived and worked there, and wandering through the local village created an interpersonal connection that would not have otherwise been possible.  There was laughter, compassion and empathy as well as intellectual challenge and thought. It took me back to being in Greece during the GFC and talking to people about the impact on them. Understanding that a country is its people, and not always its government is something we forget.

2. Your perspective drives your context

For those who know that I have been known to buy a pair, or five, of designer shoes in my time, the idea of me spending time in a remote village with no wif-fi, dirt roads and mosquitos seems unfathomable. The bet may have been that I would have been in desperate need to get back to the city and return to something a little more ‘normal’. What in fact happened, was the opposite. I was humbled by the simplicity of those I met, their stories, and their community and it serves as a wonderful reminder to me even today, that we all define the context we operate in, and what we choose to call a challenge or opportunity.

3. Make time to think, plan, act

Free from reaching for my phone, checking emails, the weather (yes, I did attempt a run on those very treacherous roads), I was able to be completely present every day through every interaction. And it was a valuable way to create space in my mind for things I had been putting off, challenges I needed to work through in my head, even ideas I wanted to explore more but did not have time to think about. Going old school with pen and paper (although I did take photos of my notes) inspired me to refresh and get clarity on what I needed to do when I got back home. All the work was done and well thought through without the distraction of the competing priorities we often have to manage.

It was not a complete surprise to reach the end of the stay and realise it wasn’t enough time so the four nights actually became five. Who would have thought that would be the case on day one. And finally getting to the next destination? I’m pleased to say that it took another day for the technology to really come on again.

AI And The Future Of Work: Why It’s Not Oblivion That Keeps Me Optimistic

With AI encompassing a broad range of technologies, it is unlikely that there will be a role that will not feel the potential impact.

By igorstevanovic/ Shutterstock

With all the media focus and conversation about the impact of technology on the work we do, it can sometimes be a wonder to think that any of us will have anything left to do in the digital world once the machines take over. With the success of AI development from companies like Alphabet’s Deepmind and IBM’s Watson, it seems that the performance and contribution of humans raises some significant and confronting questions about what the future of work will look like, not only for us in the existing workforce, but for the generations that have just entered, or are soon to enter. With four nephews in primary school and just starting high school, this is very much a personal question, as much as a professional one.

In May this year, I had the opportunity to facilitate a panel discussion at the Future Work Summit. The topic, Capitalising on Australia’s Talent, was an interesting one. After all, with all of the talk of the professional wilderness that awaits us, how could we possibly discuss this topic without sending the audience members into a spiral of hoplessness? Thankfully, the speakers on the panel were three very passionate and amazing people who were putting their efforts and experience into addressing this exact question. Notwithstanding different roles and organisations, all are connected in their commitment to improve the potential of individuals in the workplace by enabling training and skills development that will help the navigation through the digital age.

With AI encompassing a broad range of technologies, it is unlikely that there will be a role that will not feel the potential impact. Rules based, repetitive tasks are ripe for the application of Robotics Process Automation. It’s impossible to imagine that any person, no matter their level of skill, attention or capability would be able to compete with an automated application that can process transactions within seconds, 24 hours a day, seven days a week. More sophisticated technologies including Machine Learning and Deep Learning can now look for patterns that would be either indiscernible to humans, or take so long to be identified that organisations shift priorities half way through. Add the ability for simulations and visual processing and it makes for a very compelling, and potentially threatening perspective about how people fit.

That’s certainly one perspective. The other perspective is the one that the panellists and I chose to explore. That is that while the nature of work may be changing, this change is an evolution and we as humans are impacted but we are not redundant. In an analysis of roles, McKinsey found that only about 5 per cent of roles can be fully automated and that 30 per cent of 60 per cent of the roles assessed could be automated. Yes, some roles will go, and along with that, some skills will no longer be needed. The future of work however, presents an opportunity to understand the impact of digital currently and in the future. It is an evolution that will allow us to adapt what we know and the skills we have developed or need to develop in order to position ourselves for what is coming.

As we talk about transformation in industry and organisations and make demands as consumers for organisations to get more in line with what we want to see, we have seen the rise of the ‘woke’ consumer. We all want to think we are one. So, it’s time to apply this thinking to our own personal and professional development. The future of work requires a transformation of how we perceive our place in the world. Skills and learning are not something we did in the past and left behind. The transformation required for us to stay relevant is adopting a mindset that embraces the idea of lifelong learning. Taking any formal learning we have undertaken and combining it with practical experience gets us to the place we are now. In the future of work, we continue to build. That may be through a combination of additional formal learning which is undertaken in a self-paced digital environment; welcome to the world of on-line learning that incorporates elements of gamification, animation and virtual reality. It’s here already although not as accessible as I hope it gets to be soon. What a way to learn. 

In other cases, it may be through experience. We are all familiar with the principle of learning 70-20-10. What if you could choose how you spent the 70? Would you want to spend it on administrative and operational tasks like crunching through a data activity, or would you want to spend the time validating and understanding insights and recommendations to be able to execute strategies that create value for your business? What about the opportunity to spend more time developing your team or engaging with your customers?

Even while we are concerned about machines and technology, we are embracing it when it comes to helping us expedite personal decisions and tasks. Many people are happy to engage with a chatbot to help them solve a query if it means not going through an arduous contact centre protocol. Smart algorithms are being mastered by savvy retailers. Organisations like Spotify and Netflix are personalising the customer experience and helping us discover preferences we didn’t know we had. In my case, I’m observing my experimentation with Spotify opening me up to music by artists I would not have otherwise come across. In leadership terms we call this curiosity, and we welcome it because it is a sign that we are open to understanding that we do not know everything and that learning makes us better. When it comes to the future of work, this is the mindset that will facilitate understanding and success in the man + machine interchange. It will be some time before the machines are really able to do what the hype says they will. In the meantime, what an opportunity to understand how they can help improve how we work and the type of work we do.

Still Trying To Understand Blockchain? Here’s The One Thing You Really Need To Know

Blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay.

By Dean Drobot/ Shutterstock

I’ve had a blog on blockchain on my mind for a while. As far as business buzzwords and hype, it has to be right up there with the best of them. Everyone is talking about it, or asking about it. Questions can be quite generic ranging from what exactly is it, what does it do and do I need to care about? And then then are the questions of scepticism and challenge including; is it even real, and does it even do anything? Amongst all of that, is the one we have all heard, or perhaps been the one we have actually asked; that’s got something to do with bitcoin, doesn’t it?

Ah, bitcoin.  We’ve all heard about it now and many who have followed the heady rise have had the dream of making millions from the cryptocurrency. Hitting dizzying heights of USD$19,000+ in 2017, we were all wondering why we had not invested in 2016 when it was hovering around the USD$600 mark. Thankfully, we were able to quickly congratulate ourselves for not being susceptible to the whims of the market when it fell to USD$3,000 earlier this year. And if you’ve been watching it over the last few months? Well it’s back at USD$10,000+, so you may be either celebrating or experiencing another round of FOMO.

So, what has all this got to do with blockchain? For many, the two are essentially the same, or the mention of one prompts an association with the other. If you only feel like you need to know one thing about blockchain, it should be that it is not bitcoin. Is it connected to bitcoin?  Yes, in so far that the technology that underpins bitcoin is what we call blockchain. But blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay. Here are a few other considerations that may be helpful once you make the disassociation from bitcoin:

Understand the maturity level

The demand and potential for blockchain application saw Venture Capital firms invest more then $1 billion in blockchain start ups as early as 2017. McKinsey classifies blockchain as being in the Pioneering stage of technology development. While there are a plethora of use cases that have been identified by organisations and also by governments, many are at ideation stage. Others have progressed to proof of concept stage. As with anything that is new, there has not been enough time to implement at scale and observe the impact across a whole industry or organisation. That is a question of time and opportunity more than likelihood or value, and there is no doubt that as the technology matures and more experimentation takes place, the more we will learn. The prediction from many industry leaders is that it will become as ubiquitous as the internet. Until then, it is important to manage expectations around what it can and will do. 

Know what to use it for

As with many emerging technologies, the temptation to pioneer and innovate has led many organisations to force a solution of blockchain into a problem or opportunity that it may not be right for. We need blockchain or blockchain will solve this is a refrain that has been heard in many a meeting across industries and geographies. And it could be exactly right. But the important thing to remember is that the principle of value and outcome applies to all new technology, even one as cool as blockchain. Work out what problem you are trying to solve; if it involves many parties, transparency, and trust, it may be exactly what you need. The financial sector has been leading the way with blockchain in KYC (Know Your Customer) initiatives to improve detection of fraud and integrity of financial transactions. In addition to the commercial benefits of mitigating monetary losses, banks and other financial institutions are also expecting to realise efficiencies from process savings. With savings of between 20-30 per cent estimated, it is an experiment worth undertaking.

It will change industries and practices

Blockchain provides a level of transparency, validation and security that has been needed, but has not been able to be achieved previously. Why are these important?  Questions of origin and ownership have become increasingly important as we become more digital savvy. In some processes, it has always been a critical dependency with onerous and time consuming operational activity to execute it. Property is a great example of this. Do you have a right to sell this property, will I be the legal owner if I proceed with the transaction?  In other cases, it may be a factor in a decision making process. As a consumer, how do I really know where this food item has come from? Is it really organic, or is it simply a marketing strategy? Luxury brands like Louis Vuitton and Dior are leveraging blockchain as part of an offensive strategy to deal with counterfeit goods. Initially applying to new items, the eventual intent is to be able to authenticate the item through the resale process and therefore manage it throughout its lifetime.

So, is blockchain more then bitcoin? Absolutely. And while it is still in its very early stages, keep watching. As a technology, there is no doubt that it in its infancy but this should only temper expectations and not prevent experimentation.

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After A Slow Start, AI Is Starting To Make Its Mark

Procurement has traditionally lagged behind when it comes to technology, but does artificial intelligence offer an opportunity for things to change?

By GreenCam1/ Shutterstock

Artificial intelligence (AI) is going to make business better, at least that is what the solutions providers would have us believe. Businesses will be more agile, more efficient and, importantly, more profitable. Yet it still feels procurement is behind the curve when it comes to AI adoption, despite those that have implemented things, such as machine-learning and AI-driven data analysis, seeing the benefits.

Simon Geale, vice president of client solutions at transformation procurement services provider Proxima, says: “It is early days. On the procurement side of things, we are seduced by the hype over practicality. Most of what we are seeing is either aggregating data or speeding up a process, so far.”

That is not to say that businesses are shunning AI. A recent survey by McKinsey found 47 per cent of companies have embedded at least one AI function in their business processes, up from 20 per cent in 2017.

McKinsey’s research showed that while most companies were adopting AI in areas such as service operations, marketing and product development, a significant number have started to use the technology in managing their supply chains.

Some sectors, such as retail, are adopting the technology far more rapidly in supply chain management than others.

It may be time for those businesses on the long tail of adoption to speed things up. Of those that have adopted AI in supply chain management, McKinsey reports 76 per cent have seen moderate or significant benefits.

So how are companies using AI? A survey by RELX Group late last year shows a focus on using AI and machine-learning principally to increase efficiencies or worker productivity (51 per cent), to inform future business decisions (41 per cent) and to streamline processes (39 per cent).

There are those in procurement who believe AI will destroy their jobs. Yet not all are convinced of this nightmare scenario.

Trudy Salandiak of the Chartered Institute of Procurement & Supply says: “Unlike many professionals, we think procurement will be future-proofed from being completely taken over by technology due to the human interaction and relationship management required.

“What it will do is provide much more visibility over supply chains to manage risk and seek out opportunities for innovation. It will also take away the process back-office side of the role to allow procurement teams to focus on more strategic areas.”

Ms Salandiak sees a role for AI in quicker and more accurate fraud detection, intelligent invoice matching and categorising vendors to rank their strategic importance in the supply chain.

AI chatbots have started to be used to help businesses articulate their needs with procurement, instead of completing lengthy requests on enterprise resource planning (ERP) systems. This echoes the voice experience consumers get through the likes of Amazon Alexa and Google Assistant.

Turkish telecoms company Turkcell has implemented a procurement chatbot, which learns continuously and simulates interactive procurement professionals’ conversations with business partners and vendors by using key pre-calculated user phrases and auditory or text-based signals. The chatbot interfaces with the company’s ERP system and it has enabled procurement professionals to cut out non-value-added activities and allocate their time to more strategic topics.

Meanwhile, Ireland’s Moyee Coffee has been working on a project in Ethiopia where farmers, roasters and consumers can access data as beans are moved from farm to cup. Consumers are able to use QR codes on the back of coffee packs to see where the beans have been sourced and how much the farmers have been paid, bringing unprecedented transparency to the supply chain. The project uses Bext360’s Bext-to-Brew platform with AI, blockchain and internet of things technology.

As consumers demand more authenticity and transparency, this trend is likely to continue.

The forecast value of AI to the global economy is being recognised by the World Economic Forum (WEF). In September, the WEF’s Centre for the Fourth Industrial Revolution unveiled a plan to develop the first AI procurement policy.

The work is being done in conjunction with the UK government’s Department for Digital, Culture, Media and Sport. A pilot starts in July and it is hoped it will be rolled out in December. This will include high-level guidelines as well as an explanatory workbook for procurement professionals. A further eight countries have expressed interest in extending the pilot globally.

The reason for putting together a policy now is that “regulation tends to be too slow”, says Kay Firth-Butterfield, WEF’s head of AI.

“From the procurement perspective, it’s drawing a line in the sand, saying this is how we expect AI to be produced in our country and we will not accept AI products that do not meet these criteria. It is agile governance,” says Ms Firth-Butterfield.

The technology will also allow public sector employees to do more strategic work. “In government, there are back-office gains to be had to free up civil servants to do more,” she says, adding that work on AI procurement in the public sector is expected to transfer to the private sector.

“Governments want their citizens to be at forefront of developing and using this tech, and benefiting from the economic gains,” says Ms Firth-Butterfield. “Governments’ significant buying power can drive private sector adoption of these standards, even for products that are sold beyond government.”

The 53 per cent of companies that have not started implementing AI may like to start thinking about it now.

This article, edited by Peter Archer, was taken from the Raconteur Future of Procurement report, as featured in The Times.  


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What Can Yoda Teach Us About The Kraljic Matrix?

The Kraljic Matrix revolutionised Procurement in 1983. Now the world looks very different. Is it time for an upgrade?

By Yuri Turkov/ Shutterstock

The year was 1983. This was the year that the Internet was created. Bill Gates unleashed Microsoft World on the market. Star Wars Return of the Jedi was playing in the cinema. I was nine. And a director at McKinsey in Dusseldorf wrote an article that would change Procurement forever. The author was Dr. Peter Kraljic. The article, published in the Harvard Business Review, stated: “Purchasing Must Become Supply Management“.

A Procurement Transformation

Kraljic recognized that the world was changing fast. He saw that if Procurement continued business as usual, it would expose itself to competitive pressure. If it was to survive, it would have to move into strategic supply management. This was the dawn of the Kraljic matrix. It would have a transformative effect on Procurement. The philosophy (that remains valid today) is that not all spend, all suppliers, all customers & are the same. So, Procurement needs to build tailored and differentiated strategies, notably taking into account profit impact and supply risk.

Fast forward to 2019. A lot has changed. The Cold War is history, and the Internet dominates the globe. The iPhone in my pocket has way more computing power than my first computer, a Commodore 64, also from 1983. Since Kraljic published his famous article, world trade has quadrupled and globalization has exploded. Procurement is operating in a much faster, bolder world than it was in 1983. It faces new challenges like Corporate Social Responsibility and ethical supply chains. In short, our current environment today is more “VUCA” (Volatile, Uncertain, Complex, and Ambiguous) than it ever was.

The Next Evolution Of The Kraljic Matrix

“Since the early 1980s, pioneering individuals and companies such as Peter Kraljic, Michael Porter, and A.T. Kearney have pushed procurement professionals to think more strategically about the art and science of strategic sourcing. […] But times have changed. Today’s environment is more dynamic and is filled with greater uncertainty. The tried and true tools and tactics adopted over the last 30 years as the “gold standard” are not as effective as they once were.” Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement by Bonnie Keith, Kate Vitasek, Karl Manrodt, and Jeanne Kling

In some ways, the Kraljic matrix still works well. The segmentation at the heart of it remains valid. But the world is so complicated now, the matrix becomes more like a Kraljic Rubik’s cube. There are many more dimensions and parameters to take into account than there were back then.

Procurement now needs to win the Holy Grail of strategic supply management: value. Take Total Value of Ownership (TVO), for instance. Before, sustainability and risk were considered as nice-to-have, but not necessary. The TVO model places non-price information firmly within calculation of cost. This is a concept of sourcing in which the buyer has all the cards in their hand. But more than that, TVO enables the buyer to create bonus-penalty systems. In effect, it is a calculation of value that enables Procurement to identify how they can increase value after the award has been made.

Evolve Or Stay In The 80s

“My colleagues developed [the matrix] further and experimented with a nine-box version that allowed more flexibility. But always it must be adapted to the characteristics of the company where it is being used.” Dr. Peter Kraljic

The evolution of strategic supply management is challenging. Seeing the Kraljic Matrix as a Rubik’s cube is one thing. Solving the cube is something else entirely. Collecting the enormous amount of information and data that you need for this is almost impossible on your own. However, the change that makes the world so complicated also gives us the tools we need to keep pace: technology. Procurement must have a digital transformation strategy.

Also, and beyond tools like Purchasing Portfolio Analysis matrixes (that needs to evolve to be subtler), it is critical for Procurement organizations to look beyond the technical aspects of the profession. Procurement activities encompass more “soft” activities that require interpersonal skills. It is all about relationships and, even if tools help in defining the right type of relationship to build in a specific context, they fall short in delivering the “human” dimension. Also, that same dimension should be integrated in the tools and models we use.

The “experience” of working with procurement (for suppliers and for stakeholders) is as essential. Procurement delivers a service in a human-to-human context and becoming the supplier/customer of choice requires more than just tools. Digital transformation is not just about tools!

Therefore, just like Yoda “burns” the Jedi Books in “The Last Jedi” to teach Luke a last lesson by symbolizing the need to be able to move forward while being mindful and even respectful of the past, it may be the time for Procurement professional to “burn” the matrix.


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Lessons In Risk Management: Unity Is Strength

In a digital future, relationships will continue to matter when it comes to risk management…

By View Apart/ Shutterstock

I recently attended a procurement event, and, over lunch, I had an interesting discussion with other procurement practitioners about supply chain risk management (SCRM). One of the people at the table stated that his organisation was not looking into increasing its SCRM capabilities because technology cannot help in preventing issues to happen. To reinforce his theory, he told us what had recently happened to his company. The factory of one of his key suppliers was reduced to ashes by a fire. That incident led to disruptions that, according to him, technology could not have helped preventing or mitigating the impact.

Even if it is true that SCRM technology cannot have a direct impact on the cause of incidents, it is not a reason to ignore potential threats and behave like an ostrich, sticking its head in the sand. The story above is one of the many examples demonstrating that organisations don’t learn and reproduce the same mistakes, again and again.

“Insanity Is Doing the Same Thing Over and Over Again and Expecting Different Results.”

Albert Einstein

SCRM technology together with SRM and Category Management can have an impact on reducing exposure by, for example, highlighting sensitive areas (single sourcing of critical components, suppliers in dangerous zones…). They also can help in reacting faster than the competition when problems occur. And there are many examples of that. However, there is more to it…

Being the customer of choice helps

During that same conversation, I mentioned another story I had read about as it was to some extent similar but with a very different outcome.

A buying organisation using a SCRM solution had received a notification that an incident had happened at one of their supplier’s factory. Therefore, the buyer in charge was able to

  • immediately contact the supplier to discuss with him
  • build a business continuity plan.

The immediate action was to have the supplier produce the component in one of his other factory that had some free capacity.

In addition to the speed advantage that technology provided, the buying organisation benefited from the good relationship he had built with the supplier. Because they were considered as a customer of choice, the supplier gave them access to possibilities that less preferential customers probably would never have had.

Get help from bigger than you

The story above reminded me of another one, with a different twist. I heard it a few months ago at a procurement conference in Czech Republic. A buyer (I will call him John) had in his portfolio a certain raw material. He was buying modest quantities of it but the material was nevertheless critical. Also, only a handful of suppliers were selling it. John knew that, in case of peak in demand, he would never be the one served first. In order to prevent shortages, he developed a clever alliance strategy.

John attended a fair where he knew that the major sellers and buyers of that raw material would be. Using the research he had done before the event and his observation skills, he connected with the big players on the buy-side of the market because he knew they would have better contracts and conditions that his. Conditions that would most probably integrate capacity agreements.

Months later, when demand peaked John did not contact his supplier to try to convince him to deliver to him; he knew it would be a vain effort. Instead, John reached out to a buyer (Bill) who he had met at the fair and with whom he had built a good relationship. He explained his situation to Bill. After listening, Bill explained that he could help because he had a contract that stipulates that the supplier must cover his needs as long as they vary within a certain range. As John’s needs were small in comparison to his, adding them to his would remain in the contract’s terms. After agreeing on the condition of this deal, Bill called his supplier to inform him that he would need larger deliveries. The supplier agreed and delivered the requested quantities to Bill who then forwarded what John needed.

In a digital future, relationships will continue to matter

John’s story has a particular resonance for me as I had lived a relatively similar situation when I was a buyer. But, I hadn’t done my homework like John, so I could not seek the help of a larger customer to help me. It took months and lots of efforts to recover.

These stories illustrate that Procurement professionals have to prepare for the worst and hope for the best. The fact that black swans exist is no excuse for not being ready! It also means that having the people, process, technology, and data to:

–                 identify weaknesses and risks

–                 build contingency and mitigation plans

–                 constantly monitor risk sources

These are the conditions for being proactive and not passive with regards to risks. Also, they should not forget the importance of nurturing relationships as business is human-to-human, H2H, (and no more B2B or B2C). At the end of the day, organisations having a competitive advantage are the ones that get the best out of their relationships with technology AND people; augmenting/enhancing each other.