Tag Archives: AI

The Rise of the Procurement Robots

Yes, robots may be on the cusp of usurping the roles of many procurement professionals, but are the tasks being automated those that we really want? 

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In 1991’s “Terminator 2: Judgement Day,” the Terminator character, played by a certain Austrian bodybuilder/actor/governor/reality star, revealed how Skynet computers became self-aware and began waging war against the humans.

Is that the future of procurement? Will The Machines, not content with the procurement duties they’ve already taken over, rise up to enslave us? Will they take away our coffee?

If that seems far-fetched and silly, that’s because it is. The future is not set, but procurement professionals should feel confident about their place in it. The importance of human beings in procurement roles will only increase, not diminish, in the years to come.

For evidence supporting that prediction, we need only look at the trajectory of the procurement function over history. Like most important developments in civilisation, it all started with the Egyptians.

The Pharaoh’s Supply Chain

One of history’s greatest capital improvements was the construction of the Great Pyramids. From a procurement standpoint, there was a lot to coordinate. Materials like limestone and alabaster had to be brought in. Hieroglyphics had to be planned. Thousands of slaves had to be managed.

While the Egyptians didn’t follow today’s strategic procurement processes, they did in fact task scribes with recording material and labour on papyrus. And the procurement business was born.

Over the millennia that followed, the role of procurement evolved from recording supplier information to influencing business decisions. The annals of procurement history are cloudy on where and when strategic procurement began, but it seems likely it happened during the 15th century in France.

That’s when French military engineer Marquis de Vauban began qualifying suppliers of buildings and fortifications in his efforts to strengthen France’s defences. About 200 years later, during the Industrial Revolution, businesses recognised procurement as central to their operations.

The first 5,000 years of procurement history yielded only a few milestones. It’s only been very recently that the real change has taken place.

In More Recent History

In the last few decades alone, products and services have become dramatically more complex. As consumers demand more innovative and personalised products, they have become more intricate and varied. At the same time, the demand for business-oriented products and services has followed suit.

This has led to a broader range of materials, components, services and suppliers. Companies have more to consider when sourcing the right products and materials to support their missions. There are also more external factors to consider. Sustainability and corporate social responsibility are becoming more important in how companies are perceived.

On top of that, organisations have more constrained resources than ever before. With increased competition from emerging markets, and volatile changes in the marketplace, companies need to be smarter and more strategic with their sourcing.

All of these trends are being driven and facilitated by the use of computers, the internet, the cloud, and other technologies. Information technology and globalisation have spurred the biggest change to procurement in decades.

People Can Do Stuff

Without a doubt, automation will continue to take over most of the fundamental functions of procurement, displacing humans. We know this because it’s happening in industries like journalism, where computer programs are writing stories.

This is not a cause for concern, but instead a cause for celebration. We have to ask, are the procurement tasks automation is taking over the tasks we really want? In the automated journalism example, computers are writing mundane stories that reporters would sooner “poke their eyes out with sharp objects” than write themselves. They much prefer to write in-depth stories that make use of their intuition and analytical skills.

We have to ask, are the procurement tasks automation is taking over the tasks we really want?

In the same way, automation enables procurement to spend more time developing strategy, building relationships, and evangelising the function. You know, stuff that people can do.

Specifically, there are five areas where procurement will have a significant impact on business in the very near future:

Five Ways Procurement Will Impact Business

  1. Predictive Analytics/Cognitive Procurement – When companies can gain a detailed understanding of the dynamics that impact material pricing, they can see changes earlier, manage around negative events, and gain a competitive advantage.
  2. Agile Procurement – Negative market events can also present an opportunity for flexible procurement teams with the ability to respond and capitalise on them.
  3. Advanced Sourcing – Today, many companies are optimising their supply chains, but only one section at a time. Through advanced sourcing, companies will be able to optimise their entire supply chains simultaneously.
  4. Supply Base-Driven Innovation – Where procurement in the past has been responsible for cost reduction, in the future it will impact the top lines of companies, as well. Managed by procurement, the supply base can provide ways to change the selling channels or even offer innovation to create new products or categories.
  5. Supplier Relationship Management – For companies with many suppliers, managing them – communicating with them, managing risk, segmenting, evaluating performance – is a daunting, but important task.

Let’s see a robot try to advise the CEO on how to adapt to market changes or select suppliers that can help the company innovate!

Transforming Procurement

And that’s just the beginning. New ideas, solutions and technologies have the potential to transform the procurement function in untold ways. What that will be one can only guess, but the result will certainly be greater convenience, efficiency and transparency into the supply chain.

Procurement will play an increasingly vital role in modern business operations, now and in the future. In the coming years, procurement will have a seat at the table when it comes to setting companies’ strategic direction, help them adapt to market changes, and innovate to take advantage of opportunities.

Procurement has come a long way in 5,000 years. While the future is uncertain, it seems likely that the importance of the procurement function – and the people who perform it – will only increase.

Skynet will have to look elsewhere in its quest to enslave the human race. Perhaps the marketing department…

Christopher Thiede is a staff writer at Jaggaer

Best of the Blog – 3 Ways To Build A Match Fit Procurement Team

You never know what’s on the horizon, so you need to be prepared for anything. For procurement that means staying agile and always being match fit.

Everyone loves a good throwback article, which is why we’re hopping in our time machine to bring you back some of the biggest and best Procurious blogs. If you missed any of the golden oldies, look no further!

This week, we’re revisiting an article about procurement agility in the digital age, featuring advice from Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader at The Hackett Group.  

Given the pace of change in the external environment, being agile means constantly changing, never standing still. It’s not about putting out fires, it’s about ensuring that fires never start in the first place.

For procurement, this means creating and maintaining agile teams, and staying match fit for what comes next. Staying ahead of the curve, be it change, risk or technology, is critical for the future of the profession.

Procurious has spoken to Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader at The Hackett Group on a number of occasions about why procurement needs to put agility at the centre of all its activities.

This year, Chris took the conversation one step further, discussing ways to enable agility through digital transformation and creating an agile team. However, to do this procurement needs to ensure it’s thinking ahead, not just looking at the problems it needs to solve now.

Chris outlines three top tips below on how procurement can be prepared to handle any future issues.

  1. Be Match Fit

As we’ve said above, the key to being agile is ensuring flexibility. A quick way to lose agility is to create a rigid environment that doesn’t allow trying new things.

Define what procurement can and can’t control, and what activities it can drive. Make sure that your procurement team is aligned to the corporate strategies and objectives. It’s a good way of making sure that new ideas will be fully considered as part of the overall organisational strategy.

For example, if Procurement decides they want a diversity programme and the CEO isn’t behind it, it will never reach its full potential. The same goes for technology. If the CEO isn’t invested, the project will never get off the ground.

But even if your company isn’t focused on technology yet, you can be sure it will be in the future. It might be six months, or it might be five years, but it’s better not to be forced kicking and screaming into this new era.

Procurement needs to be ready to go when the business is. You don’t want to be asking for six more months of planning if your CEO wants a transition now. Be ready – have a list prepared of the top three initiatives for technologies, and how they will be implemented. That way you won’t be caught short.

  1. Educate Yourself

If you want to be prepared, you need to be in the know. Don’t be scared of new technology and bury your head in the sand – be aware of what’s out there. Have a list of the most relevant and best technology and know what it can do for you.

Part of that awareness is also preparing for new technology. Procurement teams need to know what’s happening in the market place, and how it impacts them. You don’t need to know everything, but you at least need to be cognizant of it.

That way, procurement can look at the big issues in organisations through the lens of how technology can help. Is there a technology out there that could help with this issue?

If global collaboration is a major issue, there are social platforms that could help connect all your teams to each other, and even their suppliers.

Maybe there’s a technology that could augment (not just automate) a procurement activity that you are performing today. You might finally have access to all kinds of data, but it’s about knowing what you can do with it to extract competitively differentiating insights.

  1. Create Agile Teams

If you aren’t agile then you can’t prepare for any of this. In fact, it’s unlikely you’re even in a position to be ready to start preparing.

To create agile teams you need to have the basics in place, get ahead of these issues, and aim to be predictive. If you knew what was going to happen (sadly crystal balls are in short supply), you would have the ultimate level of agility, and be able to get ahead of any issues.

However, it’s critical that procurement retains the ability to deliver against organisational objectives at the same time. There’s no use being agile if it means that procurement fails to deliver on the basic requirements.

If you can’t get the basics done, then there’s no point in even trying the ‘fancy’ stuff.

Reimagining What We’re Trying to Achieve 

The main problem at the moment is that we can’t even imagine what is going to be possible in the future. The pace of change is so fast that technologies are adapting and evolving in a matter of months, rather than taking years as it did in the past.

It is critical that procurement becomes more adaptable, and ensures that professionals are as informed as possible. Until you have this understanding of technology, you’re losing out. It’s not about the problems you want to solve, it’s also about the problems you’ve not even thought about yet.

The future is an ‘Unknown Unknown’, but with a match fit, agile procurement team, at least you’ll be prepared for what comes next.

Can Procurement See Past The End Of Its Nose?

Procurement must learn to think the unthinkable, predict the world weather forecast and look further than the end of it’s own nose when it comes to technology in order to remain relevant!

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The Procurious London Roundtable was sponsored by Basware

Procurement 4.0, Cognitive Procurement and Thinking the Unthinkable were among the hot topics canvassed at last week’s inaugural meeting of the Procurious London Roundtable.

Packed with leading-edge speakers, a ready supply of valuable expertise, peer-led market intelligence, and networking, CPOs were unanimous that a reimagined Procurement must be the business’ source of market intelligence on these issues – if it is to secure and maintain a “seat at the table”.

Speakers addressed everything from global politics to AI and making it ito the C-Suite. If you’re intrigued to hear what they had to say, look no further; we’ve managed to pack the finer points into one, handy article!

Learning To Talk Across The  Lily-Pads

Nik Gowing, BBC Broadcaster,  Visiting Professor at King’s College and Big Ideas Summit 2016 Speaker,  joined the roundtable to provide an update on Thinking The Unthinkable.  Unthinkables are critical events that are not being considered or prepared for by organisations or by our governments around the world.

From Brexit to the election of President Trump;  from Putin’s invasion of Crimea to upcoming European elections, unthinkables have been occurring frequently over the last few years and they’re not letting up! In fact, if anything, unthinkable events are happening more rapidly than ever before.

Nik firmly believes that, in a world of social-media, time-scales for unthinkables which were once 20 years could now be 20 months, 20 days or as little as 20 minutes!

Take the infamous United Airlines (UA) flight as an example. Last month,  a passenger was violently dragged off a plane, the incident was filmed and then instantly shared around the globe. In a matter of minutes, UA’s reputation was destroyed and has perhaps threatened  the way airlines will operate in the future.

Nic’s advice for preparing for the future? Instead of destroying mavericks within our organisations, we need to turn them into visionaries and harness a culture where they can thrive. Nic has likened the current situation to frogs on lily pads – everyone is sitting in the same pond but not talking to one another – we need to find a way to come together and talk.

Grab An Umbrella And Face The Future

Justin Crump, CEO Sibylline, shared Nic’s concerns for the future and expressed his desire for organisations to address the current void of awareness about, and study of, the corporate security intelligence environment.

An intelligence-led approach to managing risk and predicting disruptions to your business  is absolutely the  way to go. It allows you to work out when you might be forced to take risks and when it’s worth taking them!

But how do you go about doing this? It all starts with reading your morning paper with purpose! Justin suggests you ask yourself why you’re reading it  and how and why it’s relevant or interesting to you. Consider where your clients work and where your supply-chain  is based. If missiles started flying over a particular country, would it be critically damaging to your business?

It’s possible, and preferable, to turn reading the news into a data-collection process by collating information and highlighting the important areas to disseminate to people within your organisation.

If in doubt, implement the ADAM model:

ASSESS – Understand your business and your world and what these interactions mean to you

DECIDE – Derive actions to help mitigate risks and refine into an achievable plan

ACT – Implement planned actions

MONITOR  – Use ongoing world risk register outputs to understand what is changing in your world. This will help you predict the world weather forecast and figure out when you’ll be needing an umbrella!

Looking Further Than The End of Your Nose

Eric Wilson, head of Basware‘s Purchase-to-Pay business for the Americas and APAC, discussed the critical actions CPOs can take today in order to safeguard against technology obsolescence. When 90 per cent of technology is about to become irrelevant can procurement implement a watertight process that evolves with industry trends?

Eric asked our roundtable attendees to consider the following scenario:

A new CPO comes into an organisation and instantly sees that there is  a problem with procure-to-pay and maverick spend.  They know they can save a whole load of money for the business. They challenge their employees to develop a business case, which a cross functional team evaluates and a score-card of criteria is developed.  Whilst this might sound like a totally reasonable approach there is a one major problem. Eric explained that the challenge with this process is that it focuses five inches in front of the CPO’s face; they’ve seen a problem and they’ve fixed it.

Remember Siebel? Not so long ago it was the best CRM system you could possibly use and was responsible for shifting the entire workplace environment into customer relationship management. Anyone who hadn’t bought Siebel already was about to and huge investments were made.

But, almost overnight, it became completely obsolete thanks to arrival of the Cloud. Siebel went bust, many a CMO lost their job and money was wasted, all because no-body looked further ahead.

Eric explained that the next wave of procurement technology is not just about the traditional goals of visibility, control and savings.  Harnessing the value of the transactional data running through the system will be key.

Given the way tech is trending, particularly AI, within three years 90 per cent of procurement tech will be obsolete.  People will not raise requisitions – robots will! And procurement must prepare for that.

What’s Holding Up Cognitive?

Pascal d’Arc, former GM of Cognitive Scale, talked us through the journey to cognitive and what some of the practical applications are in today’s world. Is cognitive really all the fuss it’s hyped up to be?

Judging by some of the fascinating examples Pascal gave us, absolutely! One such example was a cognitive system that had been given the ability to experiment with building a drone. The resulting machine had a frame shape which was modelled on the pelvis of a flying squirrel, representing something very close to nature.

But why is the progress of advancing and using cognitive tech so slow, what’s holding us back in procurement? According to Pascal it comes down to a number of things:

  1. The technology so far has been very experimental. There has been a sense of frustration towards IBM but they are still experimenting
  2. Expectations are huge. We are often missing the low hanging fruit when it comes to deciding what to tackle
  3. Procurement isn’t a key investment area…yet! Fintech and healthcare are the current priorities

Aiming For The C-Suite

Damian Walsh, Partner at Heidrick & Struggles,  gave our CPOs some top tips on what it takes to get to the very top. How do you successfully move on to a bigger CPO role, step up to CEO or take on a non-executive role.

  • Whatever it is you want to do, tailor your approach accordingly
  • Be clear about what you want and position yourself for it
  • Be clear about what you have to offer – think in terms of business solutions. There is no such thing as a “transport”company any more
  • Get your CV in order and make sure it’s accurate- so many people don’t!
  • Manage the search firms – be selective and understanding and clear about what you’re looking for
  • Work on your personal brand- thought leadership, speaking engagements etc.
  • Work your business and personal networks

The Procurious London Roundtable was sponsored by Basware

If you’d like to secure your seat for our second London Roundtable on 11th October 2017, please register your interest with Olga via [email protected]

Do CEOs Dream Of Robotic Sheep?

…Or are they kept awake at night worrying about how to adapt their business to a robotic-centred future? KPMG Australia Chairman Peter Nash reveals two concerns playing havoc with the sleep patterns of business leaders.

How can I adapt my business to a robotic future?

The thing about technological disruption – and machine intelligence in particular – is that people tend to regard it as a challenge to deal with at some point in the future. The key to understanding the scope of the challenge is to break it down into two categories – disruption that we’re already dealing with, and disruption that is yet to emerge.

Robotic process automation (RPA), for example, has been around for decades, with disembodied robot arms a common sight on production lines. Typically, they automate a series of existing processes that were once carried out by humans. We’re just starting to realise the full potential of RPA, with the emergence of bots that sit inside software to automate administrative labour becoming more common.

From his viewpoint into many of KPMG’s client organisations, Peter Nash has seen what an RPA bot is capable of. “If you go into any call centre, you’ll observe staff doing a series of processes as they engage with customers – typically around data capture and data entry. Through observation, you can create “process flows”, and then build software that can be inserted into the call centre and automate the data capture. That’s a classic example of robotic process automation, and it’s happening at pace.”

Interestingly, RPA is resulting in the reshoring of capability from overseas. Nash comments: “You can track the life cycle of offshoring and reshoring. 10 years ago you may have had 100 people doing a job in Australia for the cost of $5 million. Those 100 jobs were offshored to India, resulting in costs being reduced to $1 million. Today, with robotic help, you can have only 10 people doing the same work that 100 used to do – at a cost of $0.5 million. Yes, 90 jobs have disappeared, but there’s the exciting potential for completely new jobs to be created with each technological leap.”

“Artificial (or Cognitive) Intelligence, for example, is only just beginning to emerge. People are very excited about AI’s enormous potential, but at present it’s essentially a solution looking for a problem.”

How do I effectively harness innovation?

Nash comments that there are several models that have emerged in the ways corporations seek to harness innovation. “Many CPOs look for innovation to emerge from down the line, and encourage people, whether they’re in-house employees or suppliers, to bring ideas forward. Other organisations set up innovation capability ‘hubs’ or ‘accelerators’. Another approach is to acquire, or partner with, innovation capability outside of your organisation. Some business are doing a mix of all three.”

“What’s encouraging is that most businesses understand that today, it’s innovate or perish. A culture of innovation, partnered with a culture of flexibility where people have the ability to react and respond to disruptive technology, will ensure businesses are able to take advantage of anything that comes their way.”

KPMG Australia Chairman Peter Nash will deliver a keynote speech at PIVOT: The Faculty’s 10th Annual Asia Pacific CPO Forum.

 

IBM CPO: You’re Finished If You Think You’ve Finished!

Even in a world where data is king,  IBM CPO Bob Murphy believes there is nothing so important as professional development and human relationships.

Graham Needham/Shutterstock.com

The numbers are eye-watering. IBM CPO Bob Murphy looks after a $70 billion spend – $25 billion internally and $45 billion 3rd-party. The company has around 150,000 contracts across 17,000 suppliers, with its flagship cognitive technology, Watson, reading 900 million pages in multiple languages per second.

As we prepared for our interview with Murphy, it’s understandable, then, that we expected to find him entirely focused on data analytics, automation, AI and the other tech that’s rapidly impacting so many professions. We were wrong – what comes across loud and clear is that this is a charismatic, engaging leader where people and relationships matter.

Think 40 and other professional development

Talking to Bob, it becomes immediately clear that his personal commitment to professional development is enormous. “If you want to be a leader, you have to stay current and replenish your IQ through learning and new knowledge. Ultimately, talent development is about making sure you have excellent people to replace outgoing leadership – it’s also vital for driving innovation.”

IBM’s Think 40 program mandates a minimum of 40 hours per year of self-initiated professional development. For the procurement team, this means having the option to select from a range of internal and external courses (often online), including offerings from Six Sigma, Procurement Leaders and ISM. For Bob, it comes down to inquisitiveness and a love of continual learning.

“We look for logical, friendly, humble, smart and inquisitive people. Anyone with a rudimentary knowledge of supply management can be trained to become outstanding procurement leaders. Making people aware of what is possible is absolutely critical – most successful people around the world put aside time to regularly read and educate themselves. They’re inquisitive; they enquire after things.”

Two critical skills for future leaders in procurement

  1. Digital literacy

“Data”, says Murphy, “is omnipresent and omnipotent.” He stresses that leaders who want to thrive in the procurement profession need to develop an understanding of:

  • Data analytics – we can gather data but how do you use that data to gain insights?
  • Robotic processes – how can you automate tactical processes so human capital is used to the greatest effect?
  • Cognitive computing – understanding how to digitise a process end-to-end so it is interconnected and insightful.
  1. Relationship building

Murphy tells Procurious that while leaders need to be able to use technology to get the insights and knowledge they need, their main focus should be on developing their emotional intelligence (EQ) rather than their IQ. “You need to have the ability to talk to clients in a consultative manner. We have one mouth and two ears, and that’s how we ought to apportion our time in any discussion. When we’re talking, we’re not learning.”

How can you train someone to be adept at building relationships? “It’s about attitude, not aptitude”, says Murphy. Whether leadership is innate or taught, the results are the same. You need to be able to work collaboratively with your suppliers, show them what’s important to you and understand what’s important to them. “Your relationship-building skills will ultimately enable your suppliers to drive innovation. For example, we have 17,000 suppliers at IBM. I want each one to wake up every morning and think: ‘How can I make IBM better’?”

Have you got a cognitive journey map?

Where is your organisation headed with cognitive procurement technology? Where do you want to be? How will you use people, processes and technology to get there? What can we automate?

Murphy recommends that every procurement team should have a roadmap that lays out the strategy for its data, analytics and cognitive journey. “All CEOs need a vision for their cognitive journey, and every function needs one too.”

According to The Hackett Group’s 2017 Procurement Key Issues research, only 32 percent of procurement organisations currently have a formal digital strategy in place, and only 25 percent have the needed resources and competencies in place today.

In reality, we can’t all be first-movers. But even if your company isn’t yet ready to act on cognitive technology, CPOs will be rewarded for raising the question, thinking through the issues and putting the challenge on the Board’s agenda. Most importantly, there needs to be milestones and deliverables, as Murphy warns: “Strategy without execution is a daydream”.

To end on a gem of a quote from Murphy, he spoke about how the constantly evolving nature of technology means a never-ending journey. “’Journey’ is a good description, because it is never finished. Anyone who thinks it is finished, is finished.”

Fancy Sharing The Procurement Workload With AI?

Technology will help procurement pros to do their jobs faster and more efficiently, lessening their workload. What are the key AI trends we can expect to see in the coming months?  

MielnickiStudio/Shutterstock.com

Nearly every day we encounter stories and predictions about how artificial intelligence (AI) will fundamentally change a variety of industries. The challenge is explaining what this type of technology could do to improve certain functions and jobs. Let’s take a look at the trends we can expect over the coming months.

Artificial intelligence will expand in analytics, intelligence gathering and visualisation

We’ve already seen speculation about the industries who will benefit the most from AI, and we’ll continue to see improvements as more and more companies adopt the technology. We will further see the expansion of the way humans in the workforce interact with AI-based solutions.

When it comes to the analysis of data, especially unstructured data, AI can be taught the nature of words and sentences and string together concepts and gists within the text. This goes far beyond the basic keyword search functions most people are familiar with. AI can then present the information to business users, and not just highly trained data scientists, in a format suitable for them. In understanding the contents of extremely large numbers of documents, AI can take a huge workload off human reviewers and help them do their jobs faster and more efficiently.

Through the use of AI, companies will have an advantage on a competitive global stage, without sacrificing the well-being of their employees, and these applications alone will be the first area of widespread use this year.

M&A activity in 2017 will rebound with a record year

Last year was a disappointing year for mergers and acquisitions. Between the broken deals with Allergan and Pfizer, Halliburton and Baker Hughes, and many more, investors and companies alike were starting to panic about the future of the economy. This year things will quickly change and we’ll be on the rebound with a record M&A year.

According to a new Deloitte report, 86 per cent of private equity and 71 per cent of corporate dealmakers are expecting to close more deals in the next twelve months. While many people feared the uncertainty of major events like Brexit, it will present a whole new opportunity for M&A deals in 2017.

Contract intelligence solutions can help to alleviate some of the challenges M&A brings. By gaining a much stronger insight into the contract portfolios of companies they are targeting for acquisition in the due diligence phase, they dramatically reduce the risk and liabilities they may be acquiring. This insight is fast and efficient, and provides significant transparency in to contract obligations while keeping the deals on track.

Contract Management – CLM will need to change

Contract lifecycle management (CLM) vendors manage contract processing through technologies such as document repositories, workflow, and authoring. It has been recognised that the utilisation and ROI provided by these CLM technologies is not where it needs to be, and they are lacking in the management of contract data. These systems provide user defined fields, and users must manually input this data to manage obligations and run analytics on key fields such as term, renewals, counterparty information, pricing and incentives. The data manage with CLM is generally inconsistent, error prone, and inefficient, and organisations with CLM systems will clearly struggle with understanding the data in their existing contacts as they go into the CLM, but also new contracts.

This year, organisations will realise CLM only solves part of the problem they are working to solve, and complement CLM with contract discovery and analytics tools — based in AI technologies. The combined solutions will create the needed efficiencies in the contract lifecycle, but also allow them to dynamically extract the data they need from contracts, when they need it, allowing for deeper analytics and increased insight into critical business relationships. The old way of data management with contracts will be considered obsolete this year, and richer analytics will become the norm.

Contracts – the “new source of Business Intelligence”

Right now, businesses spend a lot of money and time extracting insight from structured data. The current “big data” solutions process sales data, manufacturing data, financial data, social data, etc., but not the data buried in unstructured documents. Solutions exist now to analyse data from large quantities of documents and provide very valuable insight that can be used for effective decision making.

This is especially important when it comes to contracts. Instead of legal teams reviewing contracts to ensure an organisation is complying with the law or with new or changing regulations, contracts will be seen as a valuable new source of business intelligence.

Dashboards are now being created that bring together structured and unstructured data to provide new views into the business that were not possible before. Contracts will be appreciated as a new, and untapped source of business intelligence that a new generation of technology can now mine in a very intuitive and cost effective way.

This article was guest-written by Seal Software, a leading provider of contract discovery. Seal Software uses artificial intelligence and natural language processing to help companies efficiently uncover what’s in their contracts.

Four Ways To Ensure You Still Have A Job In 2020

Futurist Anders Sorman-Nilsson warns that unless we act now, there’s a good chance we’ll find ourselves unemployed as early as 2020. 

ProStockStudio/Shutterstock.com

Sorman-Nilsson spoke with Philip Ideson as part of Procurious’ Even Bigger Ideas, a 5-part podcast series sponsored by State of Flux. You can access the series exclusively on Procurious.

Futurist Anders Sorman-Nilsson wants procurement professionals to ask themselves two crucial questions.

  1. Firstly, think about your future career, your employability, or your entrepreneurial plans for the future. Given the kind of work you’re doing today, can a computer, an algorithm or artificial intelligence do it faster, cheaper, and more efficiently in the future?
  2. Imagine jumping into a time machine and travelling to 2020. You step out of the machine, expecting to find yourself further up the career ladder, successful and wealthy. Instead, you discover yourself lying on the couch, watching daytime television, and no longer employable. What happened?

Roll up your sleeves and conduct a pre-mortem

Business are familiar with conducting post=mortems, particularly after a project or initiative has failed. Sorman-Nilsson advocates for “pre-mortems” instead: “Imagine that in 2020, your personal employment brand is now defunct. You’re no longer employable. What were the trends that you missed? What were the signals you chose to ignore? And what were the education investment decisions that you chose to delay that led to your personal brand’s demise?”

“Finally, ask yourself what change will you make today to prevent that outcome from happening?”

Job-stealing robots are already here

It’s notable that when Sorman-Nilsson talks about time-travel to the future, he doesn’t pick a far-off date decades down the track. He chose 2020, less than three years away. That’s because the AI disruption is happening already. Self-driving cars are a reality, machines have automated a lot of blue-collar work and AI is already impacting white-collar work. “In Japan recently, 34 humans in complex insurance claims processing were made redundant in favour of an insurance firms’ investment in IBM Watson to do those claims instead. We’re really just scratching the surface of what’s possible with artificial intelligence and computing power.”

Four actions to take today to save your career in the future

  1. Examine your skill set and focus on where you, as a human being, might still have some kind of competitive advantage over a robot. Where can your emotional intelligence (EI) compete with, or complement, artificial intelligence (AI)? In a world where everything that can be digitised eventually will become digitised, what are the fundamental human skills that you add to a profession that’s largely about numbers?
  2. Learn to speak digital: “You don’t need to speak Java or know the intimate details of cloud computing and data science, but you need to be comfortable in speaking digital. Digital really is the global language of business for the future.”
  3. Embrace the gig economy: As corporates start opting for robots instead of humans, it’s time to take matters into your own hands and offer your personal brand through increasing entrepreneurship.
  4. Invest in your education: “While we’re already experiencing fundamental shifts, we do have some time to prepare ourselves, but this means we need to really invest in our own learning, and our own agility in the way we position our skills. Aim to invest in at least one new skill every year.”

Anders Sorman-Nilsson is the founder of Thinque – a strategy think tank that helps executives and leaders convert these disruptive questions into proactive, future strategies. His latest book is titled Digilogue: How to win the digital minds and analogue hearts of tomorrow’s customer. 

Are you a CPO in the Asia-Pacific region? Don’t miss out on seeing Sorman-Nilsson’s keynote at PIVOT: The 10th Annual Asia-Pacific CPO Forum in May 2017.

The Flaw At The Heart Of Trump’s America First policy

5.6 million U.S. manufacturing jobs didn’t move to China and Mexico – they simply disappeared with the march of technology. And that’s the flaw in America First! 

Trump’s stunning election win has been linked to his successful portrayal as both a friend of Corporate America and a champion of the working class. His business-friendly policies include large-scale deregulation, slashing tax rates and a huge infrastructure spend, which (in theory) are designed to boost jobs through trickle-down economics.

But the support of Corporate America isn’t enough to remain in power. In order to retain the presidency for another four years after the 2020 election, Trump will have to deliver on the key promise that won the support of the disillusioned working class – bringing industry home and reviving jobs in America’s once-thriving industrial rust belt.

However, there’s a miscalculation at the heart of the rhetoric around bringing jobs back from overseas factories.

Robots, not overseas workers, have taken 85% of manufacturing jobs

A recent study from the Centre for Business and Economic Research at Ball State University found that:

  • Employment in the manufacturing sector fell by 5.6 million between 2000 and 2010.
  • Productivity growth (automation) accounted for more than 85% of jobs lost in manufacturing in this period.
  • Only 13% of the overall job loss resulted from trade (including Chinese imports).
  • Meanwhile, U.S. manufacturing output has risen steadily, growing 17.6% between 2006 and 2013.

Simply put, American factories – and factories worldwide – are producing more goods with fewer people. Automation is rendering millions of low-skilled jobs redundant, yet Trump’s key policy aim to “bring back jobs” seems to be mistakenly focused on increasing trade protectionism.

Protectionism could backfire by further accelerating automation

ABC’s business editor Ian Verrender writes that even if Trump “slaps massive import duties on Chinese goods and forces his country to start producing everything at home via the magic of ‘America First’”, it risks leading to a domino effect where business will be forced to find efficiencies in order to survive.

  1. The loss of access to low-cost labour would drive up the cost of consumer goods, meaning Americans would find themselves unable to afford the goods to which they’ve become accustomed.
  2. This lack of affordability would spark demands for wage rises.
  3. Firms would respond by pushing even further into automation, using robotics and AI to cut costs.

Verrender comments: “Where once corporations scoured the globe for low-cost labour, and duly shifted their operations, they [would] now seek ways to eliminate labour altogether, particularly in manufacturing.”

Accelerating automation is inevitable

The loss of jobs to robots is only expected to broaden and accelerate. A report from two Oxford researchers found that an incredible 45% of U.S. jobs, across all sectors and professionals, are vulnerable to being automated within the next 20 years.

For example, self-driving technology alone could lead to the unemployment of 1,000,000 truck drivers in the U.S., along with approximately 160,000 Uber drivers, 230,000 taxi drivers and over 600,000 bus drivers.

Some of the big names to comment on the coming social disruption include Stephen Hawking, who wrote last year: “The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”

In February, Elon Musk asked the audience at the World Government Summit in Dubai: “What to do about mass unemployment? This is going to be a massive social challenge. There will be fewer and fewer jobs that a robot cannot do better [than a human]. These are not things that I wish will happen. These are simply things that I think probably will happen.”

Bill Gates commented: “You cross the threshold of job-replacement of certain activities all at once. Warehouse work, driving, room clean-up – there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, [will go away].”

What’s the answer?

Marc Benioff, chief executive of Salesforce.com, warned the World Economic Forum in Davos of the “digital refugees” that would be created by AI. “This is the moment … when we have the highest level of anxiety because we can see advances in AI that are beyond what we had expected,” he said. “It’s happening at a rate and a capability that we are worrying about how it will impact the everyman, the broad range of workers around the world . . . There is no clear path forward”.

One hopeful sign is that a public discourse on the disruptive effects of automation has begun. Thought-leaders have already put forward some solutions, although they may seem politically unpalatable at present. Elon Musk recommends that the U.S. adopts a universal basic income (such as that being trialled in Finland) to keep the economy going and guarantee a standard of living for the millions of workers expected to be displaced by automation. Bill Gates has suggested taxing robotic workers to recapture some of the money displaced workers would have paid as income tax. Education, too, will need to transform to equip future generations with the skills needed to find work in a highly-automated future.

Although Trump appears to be currently focused on the wrong job-stealing “villain” (China), there is hope that leaders will listen to the likes of Bill Gates and Elon Musk and start planning ahead for the social upheaval of what has been dubbed the fourth industrial revolution.

In other news this week:

France passes “duty of vigilance” supply chain law

  • Last week, France passed a law that pushes for accountability for multinational companies sourcing from global supply chains.
  • The “duty of vigilance” law requires companies to establish safeguards designed to ensure that labour rights and other human rights are respected in the production sites they source from.
  • The law requires large companies based in France to create a document that sets out their procedures for evaluating suppliers and mitigate human rights abuses. Violating the “duty of vigilance” law can lead to a penalty of up to €10 million.

Read more at Supply Chain Dive

Trump seeks historic increase in military spending

  • President Trump’s first budget seeks to boost military spending by $US54 billion. The US currently spends about $US584 billion annually on defence.
  • If passed by Congress, the 9% increase will be funded by cuts to non-defence spending, including environmental programs, diplomacy and foreign aid.
  • Last year, the rest of the world combined spent a total of $US317 billion on defence. The highest-spending countries under the US were China ($US146 billion), Saudi Arabia ($US82 billion), Russia ($US66 billion) and the UK ($US56 billion).

Read more at ABC News

Food, Glorious Factory Food! – Challenging the Tech Status Quo

If procurement continues to accept the technological status quo as some kind of given, we’ll continue to be fed the same poor diet. Paul Blake explains why it’s time to challenge the hard-and-fast rules we’ve adopted for so long without question. 

Register as an online delegate for the London Big Ideas Summit 2017 here.

Have you ever wondered why food made in factories is so awful?

Please don’t assume this is going to be a rant about organic carrots and the danger of the shop-bought cake. Let me reassure you that it’s on the contrary.

There’s nothing quite like a home-cooked meal 

Modern living and demands on personal time mean that conveniently available, ready-to-eat food is a fact of everyday life. Everything from jam to lasagne is made in factories, often with minimal human interaction. This can be a very good thing in many ways.

So, if we accept that industrially manufactured food is a thing, one question still remains. Why is it just not as good as the homemade or handmade equivalent? Again, we should allow for the dependency on precisely whose hands are involved. But, all things being equal, a dish made by a competent cook, from scratch will out-score a factory-made one.

At first glance, it might seem obvious. Factory products resource lower cost raw ingredients, preservatives and flavourings for longer shelf-life. No wonder your canned chilli ain’t a patch on your own efforts. This is basic profit-driven economics. And, it’s true, you get what you pay for.

But there is another, more subtle reason, that factory food doesn’t quite hit the mark. A reason that is in no way immediately apparent. And it has to do with our relationship with technology.

Robots that POUR!

For a dish to be easily manufactured in a factory, in large quantities, on a production line, it is crucial that the components, from raw ingredients to part finished elements, are able to be pumped.

How do you get the meat sauce for your lasagne from its cooking vat to the line where it’s assembled? The sauce, the pasta and the béchamel must be sent through a pipe, and often for a considerable distance. The pumping of certain traditional ingredients, such as butter, is impossible. As such, the food industry has had to identify, develop and sometimes engineer alternatives.

The infrastructure, the routing process has had such limitations that it has defined the very nature of the outcomes that are possible. But, as the presenters of the great BBC technology show of the 70s and 80s, Tomorrow’s World, used to say “that is, until now!”

The food factory of the future will be populated, not by machines that pump – but by robots that POUR. And with that simple change, a whole new world of possibilities opens up.

By analysing how a chef systematically puts a dish together, and replicating that, with industrial upscaling, into a robotic process – and eradicating the notion that the conventional wisdom of “pumpability” was some kind of hard-and-fast rule. This new paradigm in food production could forgo the need for chemically-altered shortening agents. You know those ones that taste terrible (requiring added salt as a mask), have dubious health impacts but which, can  at least,  be pumped along a pipe.

Limitations in procurement

In business, and without doubt in the procurement business, we have precisely that same relationship with the technology available to us. We’ve been limited in the quality of the results we can produce because of how the tools and technologies we use are built.

Until recently, the software used in procurement has restricted the procurement professional to working in ways determined by how the software was written, and not by what is best for the outcome. This means procurement has become attenuated to these limitations and now accepts them as hard-and-fast rules.

A good example of this is the notion of “best of breed”.  This uses the most sophisticated software tool available for each step in the source to pay process. We’re indoctrinated to see lists of features and functions as the sole measure of suitability of software.

Dividing up the entire spend management process from strategy planning to invoice payment into a set of silos, and then equipping each step with the best tool for that task might at first seem to be a sound approach.  But this is only if you look at the steps in isolation. That’s just the same as looking at each ingredient in your recipe and only considering whether you can pump it around your factory.

How can tech make procurement processes more palatable?

In procurement, the separation of sourcing from contract into entirely different systems does nothing to promote positive outcomes and the isolated software components actively compound the difficulty of realizing savings and value.

However, technologies are emerging that are permitting us to look at the entire source to pay process as a single business requirement.  This allows us to consider how the various “ingredients” interact and work with each other to create the optimum result.

In the future, we will no longer be restricted to working the way the software dictates. Whilst a good part of the process may be run automatically, we will get to determine the ideal set of inputs and outputs to suit us.

The emergence of AI founded on big data, mobile, always-on connectivity and, crucially, the unification of strategic procurement and day-to-day purchasing into a single operational environment are changing the effectiveness of the procurement operation.

Challenging the status quo

By accepting the technological status quo as some kind of given, we will only continue to be fed the same poor diet.

Returning to the analogy, we don’t have to reject the notion of manufactured food entirely. Not if we can see that technology can actually make it better, possibly even better than we can do ourselves. There’s a thought!

The same applies completely to the idea of the automated supply chain. It needn’t (and won’t) be the death of Procurement. The smart use of new technology will actually give our industry new lease of life. As long as we stop adhering to the outdated technology rule book.

There is another way. The time is now.

Paul Blake is Senior Manager, Technology Product Marketing at GEP Worldwide. He’ll be speaking at the 2017 Big Ideas Summit next week. Join the conversation and register as a digital delegate here.

Are You A Procurement Starter Or A Finisher?

Are you a starter or a finisher? According to IBM’s Barry Ward, you’d better be both! Barry discusses the key skills most critical to procurement in the coming years.

Anton Brand/Shutterstock.com

Barry Ward, Procurement Brand Manager, Global Business Services at IBM is a keynote speaker at Big Ideas Summit 2017.  He’ll be explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement. When we spoke to Barry ahead of the event he was keen to remind us that, despite rapid tech developments, traditional procurement skills are far from being made redundant.

How do you stay productive and current in a world of fast-paced innovation?

  • Collaborating with colleagues
  • Networking with others – using social media and other channels
  • Building and nurturing an ecosystem of organisations that are leading or developing solutions that may have or will have an impact in your function

What key skills are critical for procurement in the next 5 years?

We will always need traditional procurement skills such as the ability to be a strong negotiator, to communicate well internally and externally, to be a starter and a finisher. But, on top of this I think the importance of an open mind and curiosity in terms of the role that technology can play in the future is going to be more important than ever.

There will be an increasing need for project management skills, change management, relationship management skills. This is on top of the usual and still critical traditional procurement skills such as category expertise or negotiation skills. I can also say that there is a growing importance in soft skills: communication, teamwork and collaboration and problem solving.

How has technology, the Internet of Things and e-Procurement affected IBM?

Technology has placed a key role in IBM’s transformation over the past 20 years or so. Its importance is perhaps more critical in the the current phase of our procurement transformation. Understanding how digital technology can transform the supply chain and our source to pay activities is critical in terms both driving our efficiency and effectiveness but also to showcase how procurement can drive value throughout our organisation.

This positions Procurement in a much more strategic role than ever before. Procurement data is much more visible than ever before.  Insights through combining unstructured and structured information augment our knowledge, with alerts being posted to mobile devices instantaneously means that buyers can have much better assurance of supply continuity, of being able to understand price opportunities and to focus their time and energies on higher value activities than ever before. Lower value work will become automated or systems-driven. This is all good news for Procurement.

One clear impact of this transformation is that our key stakeholders now have very high expectations of high performance from Procurement personnel, perhaps more so than ever before, but the rewards are clearly evident in terms of the value that individuals can bring as well as the procurement organisation as a whole.

How valuable have mentors been in your career?

Mentoring is a highly personal thing. Some people need to have guidance and direction particularly in an organisation that may be widely spread and fast-moving, and if you are looking to move around different functions. Similarly for those who are in a smaller organization, mentors can bring an external, broader perspective.

Others are confident of their own abilities in charting a course for their own development and progression. I have had mentors in the past, particularly when I was in the early stages of my career. The more confident you are of your attributes and ambitions the less I have found that I needed mentoring. I spend time mentoring others mainly from within IBM and mainly from other geographies.

How did you first become interested in procurement?

I didn’t know very much about Procurement in my time as an undergraduate. It was not a profession that had much coverage when I was at University, unlike Finance or Engineering.

My first job as a business graduate was as a Purchasing Analyst running Bill of Material queries in a MRP system for a large manufacturer. This brought me into contact with many parts of the organisation including procurement. The procurement manager at the time was quite an intellectual and gave me a broad view of the role that procurement can play in an organisation.

Clearly he influenced me as I have spent my subsequent career in procurement and supply chain roles!

How will cognitive technology impact procurement professionals?

Cognitive technology will transform the role of the procurement professional and the impact that he or she can make for their organisation. It will be able to remove some of the more prosaic parts of the procurement role, such as data gathering and analysis, together with augmenting a buyer’s knowledge thus enabling them to spend more time on higher value tasks and ultimately make better decisions and be more effective.

Procurement professionals will need to understand how cognitive technology works – so they can be alert to potential mistakes that can happen from cognitive solutions, so that data input from these solutions is relevant and accurate.  It will eventually help, and force, them with their career progression as well as developing their expertise.

Join the conversation and register as a digital delegate for Big Ideas 2017