Tag Archives: future of procurement

AI and Procurement: Boldly Going Where No Team Has Gone Before?

The battle of “human vs. machine” is raging in Hollywood and, increasingly, in the workplace. What does the future hold for AI?

By Willrow Hood / Shutterstock

2001: a space odyssey… Terminator… The Matrix…

If you were to believe some of the sci-fi blockbusters, you’d think our future as humans is pretty bleak. They all offer a dystopian view of the future where, if the machines don’t kill us, they enslave us.

The battle of “human vs. machine” also seems to be raging outside of Hollywood, and we humans seems to be losing more and more ground to machines each year. Some of this ground has been lost in the world of gaming. Over the past decade, machines have been beating us at increasingly complex games more and more often. Looking back at these “wins” for the machines, we can see some key stages in the evolution of Artificial Intelligence (AI):

•    Deep Blue won against Kasparov at chess in 1997. It was rather dumb but powerful. With brute-force & human-created logic, Deep Blue was able to test and evaluate every possible sequence of moves at every turn and choose the best one.

•    Watson defeated Jeopardy champion, Ken Jennings, in 2011 and was smarter than Deep Blue. It had to understand natural language and find the relevant knowledge from various sources like encyclopedias, dictionaries, thesauri, newswire articles and literary works.

•    Google’s Alpha Go won against Go’s world champion Less Sedol in 2016. To achieve this result, it had to learn from humans from thousands of past games. This is because, unlike chess, which has a limited number of moves, Go is one of the most complex board games in the world, with more possible moves than the number of atoms in the universe. The second generation of Alpha Go learned by itself by playing against itself millions of times to discover what works and what does not.

•    Libratus beat four expert players of Texas Hold ‘Em poker. It also learned by itself and was able to understand behavior because poker is a game of luck, deception, and bluffing!

While very impressive, these victories also show that machines are still dumb when compared to everything that people can do. Machines excel at one thing and have the intelligence of a two-year-old or less for everything else.

What we can learn from sci-fi movies and the battles being waged on the gaming front, is that AI has many faces:

Today, despite all the hype and buzz, computers are still only at the narrow intelligence level. But even at this level, the potential applications of AI are endless.

As far as Procurement is concerned, the same applies: machines are far from being able to replace Procurement teams. Instead, new technologies have another purpose: augment people to achieve better outcomes.  This is a definite shift from the last waves of technologies, which were mostly focused on automation and staff reduction.

Machines in procurement get a promotion: from admins to colleagues and consultants

AI, in short, is all about learning from data to develop new insights and using this new knowledge to make better decisions. It is also about continuous learning and improvement. AI is a master of the “Kaizen” philosophy! This makes it a precious ally for Procurement and AI should therefore be considered as a team member within the broader Procurement ecosystem. Experience shows that “people + machines” get better results than people alone or machines alone.

Of course, in Procurement and in general, it is undeniable and unavoidable that AI will impact the future of work and the future of jobs. Work will continue to exist, despite potentially significant job displacements. While some jobs may disappear, new ones will come to take their place, and most will be transformed by the imperative of cooperation with smarter machines. Procurement jobs will also be impacted and future procurement professionals will require a new set of skills. For example, data analysis and modeling will become a core competency next to more traditional business and relationship management skills. This is because the “data analyst” component in activities will grow due to the collaboration with AI in order to:

•    Train AI and ensure that data is relevant, complete, and unbiased

•    Monitor outputs (recommendations, actions, insights, etc.) of the AI system to ensure relevance, quality, take more contextual / soft aspects into account, and safeguard against AI shortcomings.

Space: the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.

To conclude on a more positive and optimistic note than where this article started, I have taken inspiration from another sci-fi classic.  I believe that the future lies in a new type of cooperation between humans and machine.

The duo Dr. Spock and Captain Kirk illustrates, to some extent, how such cooperation is possible and can offer the best of both worlds. By combining Captain Kirk’s instinct and emotional intelligence with Spock’s logic and reasoning skills, they were able to successfully tackle any challenge they encountered.

New developments like explainable AI (XAI) and “caring AI” will make machines of the future even more human and will allow them to take an even more active role in our personal and professional lives. AI will continue to augment us, not replace (or kill or enslave) us.

So, Procurement people, live long and prosper!

3 KPIs for Digitally Transforming Your Business Spend: How Do You Measure Up?

If CEO predictions are any indicator of what’s to come in the business world, buckle up, because we may be in for a bumpy ride. Here are three of the most influential KPIs for purchasing, invoicing, and expenses. 

By Aaron Amat/ Shutterstock

If CEO predictions are any indicator of what’s to come in the business world, buckle up, because we may be in for a bumpy ride. According to PwC’s annual CEO Survey, there’s been a 436 per cent increase in the number of CEOs saying they expect global economic growth to decline this year. Just 35 per cent said they are “very confident” about revenue prospects for the next year.

So, what’s a business leader to do? The most popular answer seems to be “look inside-out for profitability and growth.” Faced with economic uncertainty, finance and procurement executives are increasingly challenged to not only uncover and deliver savings opportunities, but also to reduce risk, support innovation agendas, and create levers for growth.

3 Digitisation KPIs to Measure Your Procurement and Expense Process Maturity

It’s important to set measurable goals to assess the maturity of your procurement and expenses processes. By analysing the largest accessible source of business spend data (the nearly US$1 trillion that flows through the Coupa platform), Coupa Business Spend Management (BSM) experts have identified 12 Key Performance Indicators to help you gain insight into and advance your organisation’s maturity across the spectrum of BSM processes, from sourcing to procurement to payments.

Here are three of the most influential KPIs for Purchasing, Invoicing, and Expenses and how companies with digitally mature processes are performing in these areas:

1. Purchasing KPI: Percentage of Electronic PO Processing: 89.7 per cent

What it is: The percentage of POs processed digitally measures the success of eProcurement initiatives designed to reduce PO processing time and employee and supplier frustration.

Why it matters: A high rate of digital POs often means that procurement teams have time to focus on strategic initiatives, like lowering risk and optimising productivity, instead of chasing lost orders.

2. Invoicing KPI: Invoice Approval Cycle Time: 30.7 hours

What it is: The average time, in hours, from the time of invoice submission to the time of final approval measures the efficiency of the entire approvals process.

Why it matters: A short invoice approval cycle time assures that there are no unnecessary project delays due to payment delays. It also enables early payment discounts and fewer status inquiries while decreasing the risk of late payment penalties.

3. Expenses KPI: Percentage of Manual Expense Audit: 6 per cent

What it is: The percentage of expense reports that go through human audit reflects the precision and accuracy of existing controls and compliance throughout the expenses management processes.

Why it matters: A low percentage of manual auditing implies that expense policies and automated audits are effectively ensuring compliance. Large numbers of manual audits place a costly administrative burden on AP teams.

Learn More About How to Use Benchmarking Data to Drive Success

Want to find out what the other nine KPIs are and find out how your organisation measures up? Read Coupa’s 2019 Benchmark Report to learn more about how focusing on improving these critical KPIs can help you improve profitability, streamline operations, and achieve efficient growth.

For extra credit, join us at Coupa’s next webinar! We’d love to see you at our discussion about Building A Strategic Procurement & Finance Alliance to Enable Growth with Levvel Research and Coupa CFO Todd Ford to explore how business leaders can use KPIs and benchmark data to reduce silos in the back office. We’ll also take a look at:

  • New data on the state of procurement and finance collaboration
  • Procurement and finance efficiency benchmarks of high-performing organisations
  • Strategies for reducing departmental silos and creating spend management visibility

Reserve your spot today. We can’t wait to see you!

Voicemails Are Dead So Why Do We Use Them?

Why do we all have a voicemail system and why do people continue to leave them? Abby Vige discusses instant gratification

By Aniwhite/ Shutterstock 

When we’re stuck in the work grind and we see our phone light up with news from beyond our present moment, our spirits buoy a little! Yay! Then we drop when we realise it’s just a voicemail. It’s almost as bad as when you think have a text but it’s just spam from your telecommunications provider. Sigh.

Confession

I have to admit that I never clear voicemails, some people even state in their voicemail greeting that they do not clear them, so why do we all have a voicemail system and why do people continue to leave them?

Voicemails date back to the late seventies when a chap patented his unique “Voice Message Exchange” and sold the electronic message system to 3M. Since this master stroke of genius, we have never looked back. When voicemails were invented they made sense, there were no emails and faxes were yet to reach their peak. But do they make sense as a business or connection tool in this modern era?

A message from beyond

The reason I don’t tend to clear my voicemails, is because as soon as someone leaves one the news instantly old. Or, there is very little information that warrants the effort of clearing them all and then phoning each individual back “hey, Susan from accounts here, phone me back” why should I?

Enter the experiment phase…

After having this question kick around my head for awhile, I decided to scratch the itch of my curiosity and prove what I thought to be true. I listened to every voicemail across 2-3 days and phoned each person back, the top results were:

  • They had already emailed me the query and was surprised I was phoning them
  • The issue at hand had substantively evolved
  • They had found out the answer themselves

The motivation for them to leave the voicemail had initial merit, but in some instances, just minutes later the situation had changed. My stark conclusion was that most of the conversations were in effect, a waste of time.

Now, I don’t want to be seen as a VM hater, Procurement is a customer centric, customer service industry. But this is not the way I add value to my customers or to my organisation. Voicemails fall in to a “reactive” space for me and I’m much more of a pro-active gal. I love to be accessible to my customers, but you’ll often find me at their desks in person because face to face conversations are worth it.

What’s driving Susan?

The experiment was interesting and somewhat validating but the question remains, why do we feel the need to leave the dreaded VM in the first place? Most people assume that it’s because email as a written form, takes longer to write out verses simply phoning the person and requesting that they phone you back. It’s also generally accepted that voicemails enable us to convey emotions and urgency.

But what is really driving us is more of a simpler basic human need, the need for instant gratification. The term itself is self-explanatory but it in this context what is driving us is our self-centric view of the world. Even though we know it makes sense to write an email and include more information and leave it for when the person is available to digest it, we forgo these long-term benefits in favour of short term benefits that resolve something in our world, we feel better.

This is subject that has piqued curiosity for many years and found its roots in pop culture through the 1960’s infamous “Marshmallow experiment”. This was a major psychological study conducted by Stanford Professor Walter Mischel where children between 4 and 5 years old were given the choice of having one marshmallow to eat right away or they could wait for the researcher to come back and they would get two. The results of watching the kids wait has been the subject of many a video and even adverts.

How this plays out at work

The desire for short term gratification is often exasperated by the pressures of a work environment where the sense of needing to get things done and done quickly rules supreme. What underpins the need for instant gratification? The need for the issue to be passed on, to be received – ultimately to be heard.

We eat the marshmallow over and over, we can’t wait, we can’t help ourselves. Those of us that don’t leave voicemails most likely transfer the gratification to other media or medium. Even your neat and pretty to do list or post it note system fits the short term satisfaction bill.

The biggest insight gained from the experiments was the link proven between delaying gratification and being successful in life. Those 4 and 5 year olds from the 1960’s that waited for the second marshmallow, had higher academic scores, lower levels of substance abuse, lower likelihood of obesity, better responses to stress, better social skills as reported by their parents, and generally better scores in a range of other life measures.

What we can learn

If we train ourselves to be less reactive and to delay those hard wired gratification urges, we can increase our productivity in focused and targeted areas. Ultimately raising our value to the organisations we work for, whether that is a company or working for yourself.

Take the challenge….

  1. Don’t leave voicemails
  2. Pay attention to your inner world, before you take action, think about what is driving that action
  3. Start small and repeat that small action each day
  4. Keep visual reminders about your top priorities
  5. Keep yourself accountable

Make 2019 The Year Your Stakeholders #loveprocurement!

If procurement stays in its traditional role within the organisation, I believe will not achieve its potential growth.

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Last year we asked a group of our customers why they ‘#loveprocurement’, and the answers were really a great testament to the evolving role of procurement. Ivalua is a company that was founded to serve the needs of procurement departments. We are very passionate about what we do, but even we were astonished at the wave of procurement love which came our way when we asked the question “Why do you #loveprocurement?” Here are some of the highlights:

A business function in the midst of a huge evolution, moving from optimising costs to becoming the creator of value and growth

Most procurement leaders have focused on some element of cost reduction and this remains an important area of focus. However, we are now at a point where procurement needs to, and can, look beyond cost savings and move to planning for a seismic change. No-one wins the race by just being good enough. In business being as good as your competitors will not ensure your future success. If you do not innovate you will fade away. We asked professionals why they love their jobs so much, and many called out procurement as being a highly innovative and dynamic department, full of creative people adding huge value to their organisations. Does this sound like you?

Last year we worked extensively with The Hackett Group and they published two excellent reports,

State of Procurement Digital Transformation, Part 1: Value Drivers and Expectations and L​essons Learned by Early Adopters, Part 2.​ In these reports they talk about getting the basics right and procurement getting its house in order ie building a data centre of excellence, getting stakeholders onboard, The latest report from The Hackett Group, ​Procurement Key Issues 2019,​ shows how things are moving on this year. Procurement organisations can move beyond best in class, and clearly the will of procurement teams is there to do this. However there needs to be better alignment between procurement and its business goals. If there is a focus on analytical capabilities (which there is), there must also be teams and individuals brought in with the skills to make this happen, that is when procurement will move to the stage of offering competitive advantage, rather than just as good as the competition.

The future of our profession is not written in stone. It is because of this that it is a passionate adventure for creative people

In a recent blog, Ivalua CMO Alex Saric talks recruitment as being one of the top issues for CPOs and their Senior Directors. What is clear from the comment above, is that the procurement industry is attracting top talent. The comment was repeated by many professionals, and what comes across is that people working in procurement are going above and beyond what might have traditionally expected from this sector. Wolfgang Groening, Head of Procurement Sourcing & Vendor Management at Deutsche Telekom talks in this ​short video​ about the fact that he loves to innovate. Wolfgang in particular calls out digital innovation and how this is allowing organisations like Deutsche Telekom to proactively look for ways to bring more innovation, rather than sticking with the transactional elements of procurement alone.

Fannie Mae, like many other organisations, are recruiting procurement experts that can bring industry knowledge and market insight. These experts are addressing their organisations’ needs to know what are the key trends in the marketplace, who are the movers and shakers in the market and where is innovation coming into play. This is so far from the traditional role of procurement as we could get. Sylvie Noel, CPO of French insurance giant Covéa speaks plainly when she says that has modernised her organisation’s procurement function and that now internal stakeholders or customers now have all the information they need from procurement and they either go for it or they don’t (her words). In Covéa, people can no longer moan about the ‘procurement black tunnel’, because Sylvie has brought in a tool which enables highly skilled procurement professionals to interact seamlessly with their customers, cutting out precious time which can be spend on new product innovations.

A function which has a significant impact on the bottom line AND on the TOP line of an organisation. It is a window of innovation from the outside

If procurement stays in its traditional role, the organisation, I believe will not achieve its potential growth. If procurement is just there to be the police and control cost, then that’s not good enough. Each department in any organisation of a reasonable size is making decisions every day which cost the company money. I’ve worked in marketing for 20 years, and some of the decisions I’ve seen made, and no doubt have made myself, have not always been 100 per cent well thought out! Marketing people are creative, last minute merchants, and this can mean that you do not always dot the Ts and cross the Rs. ​Procurement’s stakeholders, like marketing, need help as they too are going through a massive digital growth curve. I should know – I am a procurement stakeholder. As my department, marketing, steps into the great digital unknown, in a market that is constantly evolving we need skilled procurement professionals to help us make decisions which will be strategic to the company, and we are looking for that expertise and partnership. We need help to look at the innovations in our sector, and strong leadership in both marketing and procurement to make sure we are embracing new technologies, spending the company’s money wisely and driving growth. In addition, marketing and procurement departments need to be recruiting the sorts of individuals who collaborate by nature, who see the bigger picture, who are able to dream big, and also keep the end goal in mind.

What is clear from our #loveprocurement campaign and the answers that you gave us is that many of you love your jobs and are really passionate about the direction in which procurement is going. You are also clear that procurement can make a huge contribution to the bottomline and growth of your organisations. Now you need to make sure that your stakeholders feel this passion and begin to feel your influence on the direction your organisations are going.

Ivalua are sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.  

The Science And The Art Of Procurement

As we move towards a new decade is the emphasis in the procurement world changing – are we going to see a new age, where the Art of Procurement comes to the fore?

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Much of our focus in the last twenty years or so within the procurement profession and within our specific procurement functions has been on what we might call the “Science of Procurement”.

The huge growth in the use of technology has been the most visible part of that developing picture. Over the years, we have moved from the first spend analysis initiatives, laboriously building Excel-based “spend cubes”, through to today’s automated, cloud-based, AI-driven, integrated, holistic (add your own buzz-word here…)  procurement platform. Technology has radically changed procurement activities and procurement roles across virtually all our spheres of activity.

Outside the technology field, we have also seen “science” come to the fore in terms of codifying processes such as Category Management. There may be different models in use, but there is a pretty well-accepted logical methodology behind how organisations approach their management of major spend areas. Professionalisation of the function, logic and analysis has also extended into other areas, with a growth in relevant qualifications, all the way through to procurement and supply chain MBAs and even Doctorates.

But, as we move towards a new decade, perhaps the wind is shifting, and we may see a different focus in the next ten years.  Is the emphasis in the procurement world changing – and are we going to see a new age, where the Art of Procurement comes to the fore, alongside the scientific approaches?  I first saw this term used a few years ago by Philip Ideson, as a title for his website and excellent series of podcasts, and it feels like this may be an idea whose time has come.  

However, we would stress that doesn’t mean forgetting the science and (of course) the technology. After all, we’re only just beginning to see what AI and machine learning might do to revolutionise procurement and supply chain management; the possibilities are endless and hard to predict.

But we are also seeing increasing focus on issues such as;

  • how procurement can successfully influence, engage and collaborate with internal stakeholders to drive value;
  • procurement being asked to support development of unconventional business models that move beyond traditional buyer / seller (partnerships, JVs, large firms running start-up incubators, etc); and  
  • capturing and exploiting innovation from supply markets and individual suppliers becoming a top priority for organisations and therefore procurement functions.

When we look at that sort of activity, we can see that it is very different to the standard procurement processes – spend analysis, competitive sourcing, purchase to pay management. Now those core tasks and issues are not going to go away, and we would not want to suggest procurement leaders take their eyes off those particular balls or stop trying to execute this work as effectively as possible! But adoption of technology, automation, and best practice process is not the ultimate objective; it is a means to an end. 

The emerging strategic priorities for our organisations require different approaches from procurement, different skills sets amongst staff, and critical success factors such as creativity, flexibility, adaptability and even imagination really start to come into play. In addition, our expectations and requirements of technology must evolve as well, to support not just rapid deployment of standard best practices, but the ability to bring our best ideas to life and promote agility.

So, this talk of creativity, agility and innovation all starts sounding and feeling much more like “Art” rather than pure “Science”, and it is interesting to see that technology firm Ivalua has titled the Ivalua Now 2019 conferences this spring (in Chicago and Paris) the “Art of Procurement”.  To support that, the firm hopes to challenge the speakers to go beyond the usual “journey to best in class” descriptions and include their reflections on how procurement is embracing change in their organisations. How will procurement leaders contribute to generating real competitive advantage, to growing business revenues through innovation – supporting the top-line as well as the bottom line, as it were.

I’ve argued elsewhere that actually, if procurement doesn’t change and widen its scope, we in the profession may face existential issues of survival, as technology advances further. So, in our next two articles in this series, we’ll look at case studies that demonstrate the sort of innovative approaches procurement organisations are taking and how considering the Art of Procurement might secure our future. And finally, you can register for the Ivalua Paris event here if you want to participate in what should be a stimulating couple of days, from April 10th-12th.

Ivalua are sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world. 

3 Attributes Of The Future CPO

Why are organisations appointing CPOs from outside of the profession, what’s the no. one category that will produce future CPOs and should there be a new label for the role of CPO. 

The modern day CPO is vastly different to the CPO of a decade ago – both in terms of management style and the expectations put upon them by the organisation.

And so we can only assume that CPOs in 10-15 years will be similarly unrecognisable.

Who will get the top job in the future , what sort of professional background will they have ?

Tom Derry, CEO – ISM discusses why companies are appointing CPOs from outside of the profession, the no. one category that will produce future CPOs and a new label for the role of CPO

It doesn’t take a procurement professional to be CPO

There’s been a real trend in recent years of CPOs being appointed from outside traditional backgrounds. A savvy marketing professional or a cost-conscious operations manager could make a very attractive candidate for the role.  Similarly, IT professionals – the innovation scouts who know how to drive change and understand key threats to the business like cyber security – could be chasing the CPO role.

“Requirements of the job and the definition of the job have to evolve over time and in the not too distance future,” explains Tom.

Tom outlines some of the key qualities of the CPO of the future.

Customer-facing expertise

“Customer-facing expertise, the ability to interact with, understand and even anticipate customer needs, is a critical skill”

One of the key themes in a recent CAPS research survey emphasised the importance of a demand-driven supply chain.          “[This] means an orientation toward, and a sensitivity to, the needs and requirements of the customer, flexing to meet the customers requirements and configuring your supply chain and your procurement activities to meeting those requirements.”

Market expertise

It’s so important for future procurement leaders to have clear vision and strategy – a strategy that your team can implement based on what you’ve identified.

“Another way of saying that is market expertise” explains Tom.  “Understanding where your company is, what markets you’re going after and the characteristics of those markets in terms of customer and suppliers [is really important]. [Someone with an understanding] of where markets are today and where they’re headed would be ideally suited to lead the supply chains and procurement activities of the future.”

Leadership

Tom stresses CPOs of the future do not need to be process experts. “We don’t need someone who has grown up in the ranks of procurement and has become very good at RF processes, scouting new suppliers, or understanding supply markets.  These are key skills but they are not the leadership skills that are required to lead the entire companies  effort-  they’re just necessary functional skills.”

So where does Tom think CPOs will come from in the future? “Some will become category managers and then move laterally into different positions, and then move into the top job. But it won’t be a straight-line path. You won’t be climbing a ladder within the function to get to the CPO job. You’ll have to leave the function and come back, or come from outside the function because you’ve got the vision and strategic skills to lead.”

Part Three of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss CPOs of the future and how we might label the profession going forward. 

How To Enable Smarter Procurement Today

If AI is the light at the end of the tunnel, why are there so few success stories to be found? How do we enable smart procurement?  

Success with today’s broad set of complex objectives requires Procurement leaders to think strategically and process ever greater volumes of diverse information. Unfortunately, this is an area with significant room for improvement at most organisations. A survey of over 400 procurement leaders by Forrester found their top priority to be “improv[ing] business insight on purchasing activity through reporting and analytics.”

The obstacles to more informed, strategic decision-making are quite consistent. The study, entitled “Enabling Smarter Procurement” found three common issues

1. Firstly, despite efforts at automating processes, too much capacity is still consumed by operational or manual activities. Teams must free capacity to work on new projects, conduct analysis and plan, but are struggling to do so.

2.  Secondly leaders struggle to access relevant insights when and where they are needed. The volume of information now available is of little help if not digestible, simply leading to information overload.

3. Compounding this, respondents also cited poor data quality as a key challenge. Duplicate supplier records, inaccurate data and poor integration between systems all were cited as sources of data quality issues.

Fortunately, new technologies are available that can empower procurement to address these and other challenges and rise to the occasion. AI in particular is finally coming of age and often viewed as the answer to many of Procurement’s challenges. The same survey found that 71 per cent of business leaders plan to adopt AI in procurement over the next 12 months. Yet if AI is the light at the end of the tunnel, why are so few success stories to be found?

A key reason is the approach taken to implementing AI solutions to date. As vendors struggle to burnish their innovation credibility, there has been significant marketing ahead of capabilities which has led to unmet expectations post implementation. As capabilities are now coming in line with past marketing, this problem will subside. Of greater concern, the innovation race has led to nearly an exclusive focus on the algorithms, leading to poorly designed implementations. Less innovative but equally important areas, especially data quality, are being ignored. AI relies on a solid foundation of data, in terms of volume and quality, so solutions that offer clever applications alone are sure to disappoint.

To remedy this problem, organisations must implement AI in conjunction with cleaning up their data, rather than using poor data quality as an excuse for inaction. Source-to-Pay suites that are built upon a unified data model partially address the challenge by generating clean data that can be mined by AI applications across all processes. For example, suites with a single supplier record can provide true 360 degree visibility of supplier performance and activity, and enable AI applications to predict potential risks.

That still leaves issues with existing data or data in other systems. Here, master data management solutions should be leveraged that can actually fix issues in back end systems, linking vendor and item master records across systems. This further improves visibility and the potential for new and better insights.

Empowering procurement to make more informed, strategic decisions is no longer an option. There is simply no other way to effectively meet the broad set of objectives now expected. Fortunately, new technologies are finally reaching the level of maturity where they can have a transformative impact. By implementing AI applications in parallel with initiatives to improve their data foundation, leading organizations are both enabling smarter procurement today and ensuring they are well positioned to leverage tomorrow’s innovations.

Ivalua sponsored today’s London CPO roundtable. If you would like to attend or sponsor a Procurious roundtable please contact Olga Luscombe via [email protected] 

Blockchain: The Technology, the Myth, the… Legend?

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet. But we’re also told it’s overhyped, it’s no big deal and that it has some serious limitations. So…what’s the truth? “Depending on who you ask, blockchains are either the most important technological innovation since the internet or a solution looking for a problem.” These are the opening words to a recent Wired article, entitled: The Guide to Blockchain.

And they certainly resonate with procurement professionals across the globe.

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet; it’s unhackable, it’s pervasive, it’s unparalleled and ultimately…it’s coming to the mainstream imminently.

But on the other hand, we’re told that Blockchain is overhyped, it’s no big deal, it has some serious limitations and, whilst it might be a pretty cool piece of technology, it’s certainly not the procurement disruptor that it’s hailed to be…

It’s no surprise that when it comes to Blockchain procurement pros don’t know who to believe when to expect its takeover or how to prepare.

So we’ve enlisted the help of some blockchain experts to give you the truth, the whole truth and nothing but the truth.

On 7th August,  Procurious presents: Blockchain: The Technology, the Myth, the… Legend?

Blockchain: The Technology, the Myth, the… Legend?

We’ll be discussing: 

  • How will Blockchain impact procurement?
  • What are some of the most common misconceptions about Blockchain?
  • How is Blockchain commonly being used in businesses today?
  • How can blockchain help procurement pros to manage their organisation’s contingent labour force?
  • What are the flaws at the heart of blockchain? Is it over-hyped?

Webinar Speakers

Vishnu P Tadepalli, Global Program Manager – Procurement Blockchain Lead – IBM Procurement Services
Vishnu is a highly motivated design thinker and is a digital procurement / supply chain enthusiast. In his current role Vishnu Tadepalli is the Global Program Manager / Lead for procurement blockchain solutions at IBM Procurement Services (IPS) , program managing the blockchain procurement transformation for both IBM global procurement and its procurement services clients. In his earlier role at IBM , Vishnu product managed Procurement Cognitive solutions and earlier worked as a sourcing consultant for multiple Fortune 200 companies. In addition to IBM, Vishnu worked with Unilever , AGCO and Suzuki Motor corporation in supply chain transformation and category manager roles.  His experience spans end to end global supply chain, including both direct and indirect procurement.
Vishnu has an MBA in Strategy & Supply chain from Uni of Wisconsin, Madison and is currently pursuing second Master’s in  Artificial Intelligence. He is a member of Government Blockchain Association(GBA) and Council of Supply Chain Management Professionals (CSCMP).  An active Linkedlner, Vishnu likes to spend his free time social volunteering and mentoring.
Linkedln : linkedin.com/in/vishnutadepalli
Twitter Handle : @vishnu65886588 

Paul Sidhu, Blockchain Practice Lead – IBM

Paul is a senior leader with over 25 years experience delivering business transformation in large and complex business environments. A natural strategy and innovation practitioner, Paul works with business leaders to articulate the benefits of process optimisation, digital transformation and new operating models that impact upon their business and to present them with options and strategic recommendations in a way they both understand and feel passionately about.

Paul leads the IBM Global Business Services Blockchain Practice in Australia. His cross-industry background and working with clients in multi-discipline business functions enables a deep understanding for the needs of diverse stakeholders and the ability to solve business challenges by incorporating new solution offerings built with Blockchain.

Jack Shaw,  Co-Founder and Executive Director of the American Blockchain Council

Jack  is a leading expert on the strategic business implications of Blockchain technology who has spoken and consulted on Blockchain around the world.

He is a world renowned Keynote Speaker. He was recently voted one of the World’s Top 25 Professional Speakers by over 27,000 meetings planners, executives and conference attendees – the only Technology speaker to be accorded this recognition.

Jack has been a Technology Futurist for over 30 years – helping others to understand the impact of emerging technologies. In addition to Blockchain, he is widely recognised for his expertise in such breakthrough business technologies as:

  •   Artificial Intelligence,
  •   Internet of Things, and
  •   3D PrintingHe has advised such Fortune 500 Companies GE, Coca Cola, Johnson & Johnson, IBM, Oracle, and SAP as well as hundreds of small to mid-sized businesses.A charismatic speaker, he’s delivered more than 1000 keynote speeches and executive presentations in 23 countries and every U.S. state. Jack graduated from Yale with a degree in Business Administration and has an MBA from Kellogg in Finance and Marketing.

AmericanBlockchainCouncil.org 

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Blockchain: The Technology, the Myth, the… Legend? goes live on 7th August at 9am EDT/ 2pm BST. Sign up here.  

Attention All Employees: Report For Microchipping

Does the idea of a corporate microchip implanted into your body make you squirm, or are you fascinated by the possibilities?  

andriano.cz/Shutterstock.com

“Hold your breath – one … two … [stab].”

A Wisconsin-based marketing company (Three Square Market) recently hired a piercing professional to inject microchips into 50 of its staff. The radio-frequency identification (RFID) chips are encased in glass capsules about the size of a large grain of rice. They were injected into the fleshy part of participants’ hands, between the forefinger and thumb.

Sounds like something from a corporate dystopia, doesn’t it? Don’t worry, all of the microchipped individuals were entirely voluntary – along with a handful of journalists who were eager to see what it was like.

What can the microchips do?

At present, not much. It’s entirely internal to Three Square Market’s office, where microchipped staff can wave their hand to open doors, unlock computers and pay for items in the kiosk, provided the systems have the software installed and a contactless chip reader.

But in the future, the possibilities of human microchips are only limited by the scale of the technology’s implementation. Scannable items such as passports, drivers’ licenses and credit cards would no longer be necessary. Car keys could become a thing of the past, and of course home automation systems would be operable with a wave of the hand.

There’s a good example of microchips in play in Sweden, where a company named BioHax has implanted nearly 3000 customers with chips that enable them to ride the national rail system without having the show the conductor a ticket.

For data analysts, the potential flood of information from microchip use within a company is alluring – data could be collected every time an employee makes a purchase, enters the building, or uses a photocopier.

Can microchipped people be tracked remotely?

Not yet. The microchips aren’t a GPS device, but are entirely passive until they come within a few centimetres of a compatible reader, just like a bank card. Pet owners familiar with the technology know that microchipped pets can’t be located remotely if they go missing – instead, owners must wait until their pets are handed into a vet with a chip scanner.

Will employee microchips one day be compulsory?

At Three Square, over 60% of the company volunteered to be microchipped. The remaining 40% had a range of reasons for demurring, including a dislike of needles, a fear of having foreign objects in their bodies, and privacy concerns.

The concern is that if this technology becomes mainstream, a refusal to allow your company to embed you may lead to losing out on a promotion, raise, or simply being seen as “not a team player”. Forward thinking legislators in Pennsylvania have already introduced a bill to outlaw mandatory chip embedding, with a spokesperson saying: “If the tech is out there, what’s to stop an employer from saying either you do this, or you can’t work here anymore?”

Another issue is that with an increasingly mobile workforce, a chip that only works within the walls of a single organisation would become useless once that person leaves. One day, perhaps you would simply have your chip deactivated upon your exit interview and re-calibrated by your next employer, but this isn’t yet the case. Of those 50 volunteers at Three Square Market, it’s likely that a handful will move on to other roles within the next few months, but what becomes of their chips? The company won’t be happy with non-employees being able to open doors with a wave of their hands, so will the chips be (painfully) removed? Perhaps they will simply be deactivated, meaning users are left with a useless piece of “abandonware” technology embedded in their hands.


In other procurement news this week:

Are emerging professionals being paid more than experienced hands in procurement?

  • Based on 3808 responses across the United States, ISM’s 2017 Salary Survey revealed that emerging professionals (with under 9 years’ experience) are earning nearly $5000 more per annum than experienced professionals (with 9+ years).
  • This suggests that organisations are having to offer higher salaries to attract new talent.
  • The survey also revealed the following average salaries: CPOs – $259,340, VPs – $135,757, Directors – $153,347, Managers – $109,401.

Coupa appoints new Chief Marketing Officer

  • Cloud-based spend management company, Coupa Software, has announced that digital marketing executive and veteran software industry marketer Chandar Pattabhiram has joined the company as its chief marketing officer (CMO).
  • Named one of five CMOs to follow this year by LinkedIn, Pattabhiram has more than 23 years of experience in both fast-paced and large technology companies including Marketo, IBM, Badgeville, Cast Iron Systems, Jamcracker, and Anderson Consulting (now Accenture).

Intel to build a fleet of self-driving cars

  • Intel announced last week that it will build 100 high-automated cars to test self-driving technology.
  • The project will showcase Intel’s $15 billion acquisition of Mobileye, which closed this week. Israel-based Mobileye makes technology that helps vehicles “see”; collecting, analysing and transmitting data about the outside world.

Long Tail Spend 101: New School Approaches

Procurement ought to care a whole lot about long tail spend and lay out the best way to manage it in the “consumerisation of tech” era…

I have no doubt that agility, innovation, and adding value to the business should be of paramount focus to procurement teams evolving beyond cost-center status. Who wants to be in the back office pinching pennies while the rest of the business struggles to keep up with the new rules of the digital revolution? But as leaders keep one eye on those critical matters, the other must still cover the basics of the procurement practice to deliver the right experience and results. That means continuous tracking and improvement of spend influence, which includes long-tail spend management.

Long tail spend 101

Long tail spend is not strategically managed or under management. This means any spend without a contract framework agreement or negotiated work order. In organisations that have invested significant effort into strategic category management, managed spend tends to be around 80 per cent of all expenditures, leaving long tail spend at 20 per cent. It also includes a small, but significant amount of spend with managed suppliers, which is known as hidden tail. This spend includes purchases made from managed suppliers, but these purchases are outside existing contracts.

The remaining tail spend tends to come from roughly 80 per cent of the total number of suppliers. Often this will be fragmented: ad hoc purchases from multiple suppliers, low-value transactions at one-time vendors, non-purchase order spend, off-contract spend, etc. When all the long tail spend is added together it becomes the biggest overall supplier! This biggest supplier costs you a lot of effort and time, which is not clearly visible within the organisation.

What is the business value of tail spend management?

Until recently, the generally accepted figure for how much sourcing organisations can save through managed tail spend has been 1 – 5 per cent (the less mature the organisation, the more the saving). However, analysts at The Hackett Group, concluded that this figure might be higher: as much as 7.1 per cent. High-value maverick buying that should have been strategically sourced was cited as a factor in raising this figure (30 per cent of respondents estimated 10 per cent or more in savings). This underlines the importance of gaining visibility of tail spend.

Apart from up to 7 per cent  savings, what are the other benefits of managing long tail spend? First, by better managing long tail spend, you can significantly reduce the number of transactions and the related costs of procurement, and in other departments such as finance. This will help minimize the number of internal resources (sometimes senior) working with tail spend suppliers to further reduce procurement costs. These savings can be significant considering that the administrative cost of each pound spent can be as high as 35 per cent. Improving the visibility of low-value spend suppliers will create opportunities to identify sourcing savings and supplier consolidation.

Second, increasing strategically managed spend, and managing long tail spend, will result in increased contract compliance, leading to further savings. Added to this, suppliers are more likely to offer increased discounts when they are the sole providers for a specific category, or when a set volume of purchases is guaranteed.

Third, beyond cost savings, managing long tail spend helps eliminate noncompliant suppliers and consolidate larger suppliers, which leads to reduced business risk, and a reduced risk of fraud across the supply chain. This also increases the chance of your organization being compliant to external legislation.

The visibility challenge

One of the main difficulties with long tail spend management is poor data visibility, caused by factors such as complex supply chains; different IT systems and data sources; and, fragmented and disconnected business processes such as sourcing, contract management, and procurement. Also, the sheer number of suppliers, items, transactions, and the high number of business stakeholders can simply overwhelm some organizations.

There are often not enough available resources with the right skills to analyse the problem and set a corrective action plan. Unfortunately, neither strategic category managers nor operational procurement agents tend to have the knowledge or skills to handle the long tail. Organizations that don’t have clearly set policies or well-defined processes are more likely to lack effective control. Part of this process must be constant maintenance to prevent slippage. A good analogy for this aspect is that of keeping a garden. Just as a neat and orderly garden will become overgrown if neglected, maverick spend will creep into the spend cube. This results in a higher percentage of noncompliant purchases, often with low-value transactions and small-volume suppliers.

Finally, there is often a lack of adequate tools to help the organization analyze and manage long tail spend in an efficient manner. A purely manual approach to tail spend management quickly becomes cumbersome and error-prone without the right tool support. There is no quick fix for overcoming these obstacles, but the benefits of doing so are estimated by different sources to be between 15 – 20 per cent through reduced procurement cost, increased efficiency, supplier consolidation, additional sourcing savings, and decreased business risk.

The smart approach to long tail spend management

Organisations should first analyse their spend data with a thorough spend and supplier assessment. This type of spend analysis exercise helps gain an understanding of the current state and will serve as a foundation for a business case in readiness for the next step. The next step is to gain top management and stakeholder backing. To be successful with a long tail spend management initiative, it is necessary to have the buy-in of your C-suite, i.e., the CPO and CFO, by means of a solid business case and clear description of the savings outcome.

Establishing the support of top management will also help with the third step, which is to set-up clear policies and processes to drive the long tail management initiative. This includes compliance policies, preferred vendor lists, no purchase order–no pay policies, etc. The processes should also include automated procurement, with catalog suppliers, as well as spot buy, and free text orders channeled through a tactical and operational procurement team. The next step involves, selecting and implementing the right tool to the complete solution for long tail spend management. Consider an easy-to-use eProcurement system with a good search engine featuring rich content, efficient buying channels, and support for spot buy and tactical eSourcing.

Finally, setting up a dedicated team to monitor long tail spend suppliers is key to a complete solution for long tail spend. Spot buying and operational-free text orders at preferred suppliers will run more efficiently with a dedicated group managing the process. It is also possible to outsource this work to an external team.

In closing, it is important to realise that there is no silver bullet to managing long tail spend. Without clear policies or processes to guide an organisation on what to do and who needs to do it, there’s little that can be done to optimise and manage tail spend. By combining the right tools with the right approach, you can gain an additional level of visibility and savings, and, in turn, greater spend influence.

This post was adapted from the IBX Business Network white paper, Using Long Tail Spend Management to Achieve Savings, published in 2016. Tradeshift acquired IBX in early 2017.