Tag Archives: IBM procurement

6 Ways Procurement Pros Can Dominate Their Data Strategy

Building a nimble process, speaking the right language and gathering your data from the right sources will have you nailing a flawless data strategy in no time!

When most procurement professionals think about data they imagine a darkened back-office room and a huddled group of silently-working number crunchers.

But it’s data that gives your organisation’s senior leaders the most important insights, helping them to win new business.

Data can help procurement climb up the value chain and earn you a seat at the table.

If could only change the time we spend gathering data and the time spent actually using it  from a 80/20 split to a 20/80 split, its potential is limitless.

And this is a mistake procurement makes too often.

Ahead of today’s webinar Basic Instinct: Are You a Data Hunter or Gatherer, we’ve outlined some top advice from data experts; Marco Romano, Procurement Chief Analytics Officer, Global Procurement, Transformation Technology – IBM and Edward D. O’Donnell, Chief Data Officer for Procurement – IBM, on how to dominate your data!

1.Build a nimble process

Ed has, in his own words, enjoyed ten years working in transformation but admits he has made plenty of mistakes along the way! His advice? “If you’re going to fail. Fail early.”

As he points out, making mistakes is not the problem, it’s the way it’s done that makes all the difference, “The most significant challenge [for procurement pros] is managing data of all size and scale.”

In the past, IBM have approached this challenge with the old-school  waterfall methodology; the development team is engaged and a plan is might be made and executed with care over the course of a year.

“It’s smarter if you can do it in more agile chunks,” explains Ed.  “The drops are not quarterly or annually for the big bang but rather maybe in weeks we’ll run sprints.”

“This allows smaller, more manageable content.” Which, of course makes a lot of sense. Why spend a whole load of money to wait for the last two months of the year to realise the value?  “Can’t we build a process thats more more iterative, more nimble, more flexible more agile?”

“Then, of course, if the client doesn’t like it we can get immediate feedback and correct it straight away.”

2. Use your time more wisely

Procurement pros have, for too long, been gathering data from too many sources because that’s what they think they should be doing. It’s time consuming and, often, it’s also futile.

“So much time spent is spent gathering data. Procurement pros need to start at the end and work backwards. First and foremost you need to ask what’s the outcome or insight you’re trying to achieve and what are the business behaviours you’re trying to change.”

Develop a joint understanding of business requirements. From that you work backwards to determine three things:

1. What data you need

2. How you acquire  it

3. What enrichment that data needs

In doing this “you’re not only gathering data that’s fit for purpose, you’re also considering business process that drives that data and building improvements into this process to ensure data quality and data consistency.”

“Of course it doesn’t stop there our role is to automate that takes gathering filtering, sorting data away from practitioners

Ideally we don’t want our practitioners spending time analysing or shipping raw data rather looking at results or process insights. but spending time

So what drives this behaviour off trying to get all sorts of data?

It’s driven by wrong metrics or misunderstanding of those metrics.

“You absolutely have to make sure you measure what really matters, such that you drive the right behaviours in data acquisition and move away from concept where people are just acquiring a whole lot of data and not able to put it to good use or understand why they’re acquiring in the first place.”

3. Gather your data from the right sources

IBM source their data from a wide variety of sources.

“We look at RFX data, procurement and customer contracts, internal client demand and pipeline data,” explains Marco.  “Internally it’s a very broad base of data which includes procurement and our clients.”

They use “market intelligence from MI providers as well as MI from structured and unstructured public data sources, social media and various other sources.”

“The data we get from suppliers  is really important and includes things like machine failure rates, product life-cycles [and ]configuration options.”

“It’s a broad base but it’s not about gathering all of that data but rather targeted to achieve a specific objective.”

Do IBM have a particularly ‘hot’ data source? “Not so much the hot data source” says Ed. “It’s the way you use that data!”

“assembling the data in a coherent way where the buyers can have it at their fingertips – assembling quickly, linking the data and then presenting it to the buyer in a new user experience is where the power comes from.”

4. Listen to your client

“Listen to the voice of the client” says Marco.

“Start with an understanding of what you’re trying to solve, really understand what the practitioners needs are and work backwards from there to figure out what you really need”

Set up engagement meetings, engage with the client regularly and continuously share and showcase your work with your internal team.

5. Focus on data quality

“Focus on data quality and ensure that your procurement processes enable the acquisition and enrichment of good quality data,” says Marco

“It sounds very obvious but it is so often overlooked and it causes tremendous frustration in the system.”

6. Speak the same language

Spending more time in front of our customers or clients and less time behind closed doors, simply gathering and analysing data, is crucial.

When procurement teams start a program it’s important that everyone is on the same page; speaking the same language and communicating regularly with all the key stakeholders.

“One of the things historically that the procurement practitioner hasn’t done so well is being completely transparent with the data,” explains Ed.

It’s important to present it in a way that “it’s clear and simple to understand [and so] that the outcomes are obvious. The best chart is one you don’t have to try to understand, where the messages are clear.”

If you’re referring to units per hour, what do you mean by units?

If you use the term FTE, does everyone know what exactly that represents? Is it a 40 hour week at x cost or a 35 hour week at y cost?

Our webinar,  Basic Instinct: Are You a Data Hunter or Gatherer takes place at 1pm BST TODAY . Register your attendance for FREE here. 

Is Your Procurement Data Fit For Purpose?

How do you know when your data is fit for purpose? Start by putting the why before the what!

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument… 

But, if expertly managed,  you could accomplish a symphony from the entire orchestra! 

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony. 

On Day 1 of the series, Marco Romano – Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM, talks about the development of data strategy, how to determine if a data source is fit for purpose and understanding the data that you want to see.

“To me the cognitive and analytic strategy really starts with the data strategy” explains Marco, “how we acquire, enrich, store and curate our data. Then it really becomes about what you do to that data to bring business value and actionable insights.

“I’d argue anything’s possible quite honestly, limited only by our imagination and one very important point, which is the quality and quantity of the data that’s available to us.”

The orchestra analogy

So where did the orchestra analogy come from?

“When you sit there at the start of a performance invariably you’re hearing these individual members tuning their instruments – warming up.

“It’s very melodic and you really get to hear the class of the instrument and the performer. But it’s really when the conductor walks on stage and all of those instruments are played together in harmony, that’s when it really becomes incredible.

That’s when the goosebumps come in and you hear the power of the sound.”

So how does this translate into data and insights? “One good piece of data is absolutely valuable and can really help you make better business decisions” says Marco. “But like an orchestra, a collection of this transformed data, properly orchestrated to provide these varied and powerful insights at the right time and in the right format for the intended audience really gives you that competitive advantage and operational efficiency.”

“You really need everyone playing from the same sheet of music, or the same hymn sheet!”

Putting the why before the what!

If the foundation to cognitive strategy is the acquisition of data, what kind of data should we be seeking to acquire? It’s easy to think about it in a one dimensional way, only considering one or two sources of data. But in reality data is coming from multiple sources. So where should we be looking for it?

“I think before you even answer the question of what data is it that you need, you really need to address the question of why you need it” explains Marco.

“What is the business outcome that you’re trying to drive? What is it that you want to achieve by acquiring this data? Then I think you can start to determine what data you need, and how you go about acquiring it and enriching it.

“I’ve seen an awful lot of effort go into acquiring data that never results in a business action. Not because it was bad data but it was just not fit for purpose. I think the importance here is that it is fit for purpose at the time that it’s needed and of course for the intended recipient.”

How do you know when your data is fit for purpose?

What are some of the things that you do to determine if a data source or a potential data source is fit for purpose, before you go down the road of actually trying to acquire and cleanse and build it into your models?

Marco firmly believes that you have to start with establishing what the intended outcome is that you want.

Secondly, “there is a point, which we of course have to consider, and that’s ROI. We can’t afford to throw manual resources off to fully invested activities. Some data is extremely difficult to come by, or extremely difficult to get to the level of quality that we need.

“I think you need to have a clear line of sight, of how these insights are going to allow you to change business course or alter business strategy and effect an outcome. Then you can start to also establish to what degree this data will help you achieve that?”

Ask yourself “how much impact is that data going to have, and in turn you can start to then make sensible decisions about ROI and the type of data that you need.”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series starts today! Register here.

I Don’t Have Time To Do Market Price Research

We’ve all experienced it – a niggling feeling that we could have gotten a lower price for a product or service … if only we’d done our research. But who has that sort of time?

IBM’s CPO, Bob Murphy, is concerned that his peers around the globe aren’t getting a proper night’s rest.

“Chief Procurement Officers lose sleep at night worrying that their procurement teams are buying over market prices or that falling prices in a particular category of spending are not being rapidly achieved.”

Access to data on historical prices paid and current market conditions isn’t the problem. The data is out there, and readily available, but it takes time and resources to do the research, and it’s a never-ending task.

Monitoring the market is too big a job for a single person, which leaves our sleepless CPO with two options:

A) Carve out an entire team to do the research, or

B) Bring in Artificial Intelligence through a robot to augment the team capabilities.

And that’s what IBM has done. The procurement team collaborated with data scientists and developers to design a solution harnessing external data and analytics that provides users with market intelligence, historic IBM purchasing data, and market sentiment surrounding subcontractor services. IBM Watson Analytics partners with “PeopleTicker” to ingest real-time, external market intelligence providing a comprehensive view of global markets. By comparing historical data with current market information, buyers get an immediate view on the price difference that may be available, enabling new levels of cost competitiveness to be achieved.

The result is “Pricing IQ”, a product where millions of data points can be efficiently organised with interactive graphics and visually clear dashboards where useful trends and insights can be identified. This solution opens opportunities for live price negotiation via the use of advanced analytics – with significantly reduced manual workload for the buyer.

Alongside Watson Analytics, Watson’s Explorer and Alchemy software capture key words and provides sentiment analysis to indicate rising or falling markets. Additionally, PeopleTicker’s data is integrated within the “Pricing IQ” product enabling a seamless solution for our customers. “We have been using PeopleTicker internally now for over 2 years. As a client, they have provided us with over 10,000 global rates. What started as a client relationship has grown into a Watson Analytics partnership.”

Real time insights

If you’re hurtling down a freeway in a high-performance car, having a speedometer that only shows yesterday’s speed isn’t going to help you. That’s why access to genuinely real- time data is emerging as one of the key competitive advantages across procurement functions. The team that developed Pricing IQ recognised this, and have built in real-time alerts for action.

Take A Bow, Pricing IQ

You’ll be hearing a lot more about Pricing IQ, especially since the solution won the Most Innovative Use of Technology Award at the 2017 CIPS Supply Management Awards.

Like all good innovators, the IBM team identified a significant pain-point held in common by procurement teams across the globe, and came up with an idea that eases the burden.

So, the next time you’re manually wading through reams of pricing data and wondering to yourself if there’s a better way – be assured, there is.

Four Essential Capabilities For Your Procurement 2020 Roadmap

Procurement 2020 will look a little different with new skills, knowledge and tools to address entirely new challenges. Procurement has seen rapid change in a relatively short span, the value creation of this function has increased multi fold becoming more strategic, collaborative and technology driven. This momentum is expected to continue and quicken in the coming years. Procurement will emerge in the forefront as an important and integral function of an enterprise.

The Hackett Group’s research showed that 85 per cent of the procurement organisation believe that digital transformation will change the way they deliver services over the next 3 -5 years. To stay competitive, procurement needs to embrace disruptive effects of technological innovation in conjunction with organisation which is lean, agile and responsive to stakeholders and suppliers.

It is imperative for the procurement function to develop journey roadmap on four essential capabilities that are vital for future – Digital Transformation, Supplier Relationship, Stakeholder Engagement and Talent. The first step in this journey will be to fully understand how the procurement landscape is shifting.

Procurement in 2020 will look very different with new skills, knowledge and tools to address entirely new challenges. Organisations that fail to embrace new procurement models may fall behind the competition, jeopardising overall competitiveness and viability.

Digital Transformation

Procurement is effectively positioned to join the Digital revolution. It can offer a radically different value proposition to the organisation as Robotics Process Automation, cloud based applications, Big Data analytics, Artificial Intelligence and Mobile Computing begin to converge. These smart tools will improve service delivery, reduce errors and free procurement staff for higher value work.

Technology provides dual track opportunities to support ‘upstream’ or Source to Contract (S2C) and ‘downstream’ or Procure to Pay (P2P) which predominately consists of operational, repetitive and transactional activities.

Technologies like Artificial Intelligence, Crowd Sourcing, Live Digital Dashboards can be effectively used for decision making accurately and with speed to support ‘upstream’ while Robotics Process Automation is widely used to drive efficiency and effectiveness ‘downstream’.

Robots interact with different IT applications to enable transaction processing, data manipulations and communication across multiple IT systems. In effect, multiple Robots can act as virtual workforce to process operational and transactional activities. This could allow CPOs’ to rebalance their functions upstream and reducing the focus on downstream activities.

Supplier Relationship

With the advent of technology, the organisations have started to realise the growing importance of suppliers in terms of innovation, security of supplies, corporate social responsibilities, risk mitigation and cost savings. Strategic partnership will be at the top of the corporate agenda and Supplier Relationship Management will be seen as significant differentiator.

Supplier Relationship Management is systematic approach for developing and managing partnership. It is focused on joint growth and value creation with limited number of suppliers based on trust, open communication, empathy and win – win orientation.

The 4C’s model will govern the future of Supplier Relationship Management – Capabilities, Continuous Growth, Customer of Choice and Creating value.

The speed of business continues to accelerate, market expectations are higher, product life cycles are shorter, turnaround times are faster and the risks are wider and deeper. Clearly organisations rely on suppliers to bring innovative and new products to their markets.

Essentially procurement will have sound understanding of supplier market across the world and be able to link their potentials and limitations. Demands on procurement to become more business oriented, more mature and integrated in its ways of working. All of these reinforces the need to re-invent robust supplier relationship management.

Suppliers are increasingly being looked upon as trusted business partners and engaging early and ensuring all parties are on track will propel procurement organisation to  greater heights.

Business Stakeholders

Procurement has been rapidly evolving to keep pace with the changing trends.  The procurement profession has made significant leads moving from price management to category management and in the future it becomes very clear that procurement will move from category management into value creation.

Becoming a trusted business advisor is a long drawn process and time consuming, it varies from person to person. The individual has to not only understand stakeholder needs but go beyond to understand the breadth of business challenges and develop deep personal relationship.

Most stakeholder relationships are at service provider and enhanced service provider level providing answers, sharing expertise and resolving business related problems. Relationship with stakeholders are usually good at a business level but have no real depth at a person level.

The challenge seen by many procurement professionals is to move from been seen as just a service provider into being recognized by stakeholders as a trusted advisor

Elevation to consultant requires more insights and ideas into the stakeholder organisation on broader business issues and also building a stronger personal relationship. This level of relationship could be achieved through focus, time and effort.

Few people achieve the trusted advisor relationship, where there is a comprehensive understanding of all the stakeholder needs and they look up and reach out as first person to help them tackle the difficult issues they are facing.

As the procurement function changes, it will need people with new skills. Apart from being comfortable with data, future procurement professionals will need to be prepared to lead rather than simply serve their business.

CPO’s should fundamentally rethink regarding their organisation and capabilities both of which needs to be reshaped over time. Companies have to create new job profiles such as buyer for new categories, contract experts on intellectual property or Data scientist for data maintenance, analysis and mining. Only if the procurement personnel are digitally capable can a company fully benefit from opportunities provided through digitalisation.

Procurement functions must follow Seven fundamental steps to manage Talent – Plan, Attract, Recruit, Assess, Develop and Retain.

The team must be digital savvy, ability to collaborate and build relationship with internal stakeholders as well as suppliers from diverse array of geographic and cultural backgrounds.

Negotiation skills and market insight will continue to be the fundamental skills but TCO across product lifecycle, cost structure analysis and game theory will emerge highly important skills in this field.

The professional credentials will be measured by their ability to influence, persuade, and provide vision, the mind set must be strategic, global, collaborative and above all commercial.

Conclusion

Shifting the procurement team from being tactically devoted to strategically focused can be a long journey for a company. But this journey can literally make the difference between company’s definite success or failure. There are still several actions to be tackled in order for procurement to gain deep business insight, react quickly to the changing needs, drive higher overall value and greater stakeholder satisfaction. Investing in activities to elevate the role of procurement within an organisation, moving beyond the traditional role of gate keeper and cost hunter will definitely bring added value to the organisation.

Procurement in Twenty 20 will mean developing new value propositions, meeting new business needs, and integrating data across functions. It will call for using data pro-actively and intelligently. Perhaps more important, it will require fundamental reshape of procurement organisation and its capabilities to take on new challenges.

This article was written by Kumaralingam MC, Director, Global Procurement Centers – IBM. It was orginally published on Shared Services Forum. 

2017 Rewind – Do You Have The Right Skills To Deliver On Tomorrow’s Procurement Strategy

As part of our 2017 Procurious rewind, we’re taking a look at the top blogs of the year. This piece looks at why are our procurement teams are falling so short when it comes to delivering on strategy? 

Shockingly, 60 per cent of CPOs believe their teams do not have the skills to deliver their procurement strategy, according to Deloitte’s “Global Chief Procurement Officer Survey 2017.”

Why are procurement teams falling so short?

Originally, procurement was heavily based on process management, negotiation and basic spend analysis. But the procurement function is evolving, and professionals have to adapt to a new environment . There are new and growing expectations that require alternate skills for a more advanced job profile.

Procurement professionals are expected to be much more analytical, with the ability to perform data mining. They also must learn to manipulate and understand financial data and indicators, such as P&L and balance sheets. That’s not to mention that they should be proficient with the latest technologies.

Yet, one of the most important skills to develop is customer centricity. In today’s customer-centric world, this becomes crucial.

In my opinion, understanding internal customers,  being able to communicate in their language, knowing what they want or helping them to understand what they need, is the most difficult skill to learn and develop because it often goes against the conventional and traditional training that many procurement professionals have received.

It’s time to stop hiding behind the processes and get to know the internal customers! Given the back-office environment we are coming from, there is still a lot to do to change the mind-set and the behaviour of those involved. Procurement professionals need to develop their consultative skills and become less process focused, since excessive process significantly impedes speed and agility.

Keeping It Fresh

Another challenge for procurement involves attracting and retaining fresh talent in our industry. This situation needs to be addressed now to prevent a significant skills gap within the next couple of years. While we still have to continue to build traditional procurement skills. We also need to recognise that these skills must evolve as analytic and cognitive solutions provide more refined data and insight. The challenge is less about finding someone who is an expert negotiator and more about recruiting someone who understands data and logic.

At IBM, we are currently hiring maths and statistics majors because they can understand trends and probabilities. Although many procurement skills can be taught,  it’s hard to train someone to find trends in complex data.

Taking IBM’s example, our strategy to recruit and retain talent is reflected in how we communicate our procurement roles. “Our Procurement strategy is about collaborating with customers to ensure they have best in-class solutions, with access to the most advanced technology available on mobile devices. We partner with our suppliers to be as innovative and creative as possible.”

Presented like this, a job in procurement sounds pretty exciting!

The party ain’t over yet!

And the party isn’t over once we’ve found the right skills and talent, we also need to keep that skilled staff within the procurement function! If we help employees build on their competencies as well as add new ones, and if they can see that their contribution to the company’s mission clearly makes a difference, it will help us to keep those employees in procurement.

Ultimately, modernising the procurement profession and making procurement a “cool” place to work will help retain a talented, skilled and motivated workforce.

Three Risks Every Procurement Organisation Needs To Manage

Experts around the globe tracked the terrifying advance of Hurricanes Harvey and Irma earlier this month, plotting and estimating the potential damage to life and property as the monster storms approached the U.S. mainland. Can the deployment of cognitive AI lead to more accurate predictions and better risk management?

IBM’s global supply chain has been acknowledged as one of the world’s most complex. With scale and complexity come increased risk, but the Global Procurement team has it covered with its award-winning risk program augmented by the remarkable abilities of the Watson Cognitive Platform.

Even Watson, however, appreciates some assistance when it comes to risk mitigation, which is why IBM has partnered with an e2e cloud risk service provider named Resilinc. With this new capability, the team provides a composite risk score for every one of IBM’s suppliers based on six risk dimensions – financial, location, recovery, operations, resiliency and sourcing.

The three overall risks that the team has built its mitigation strategy around are:

  1. Loss of supply continuity

The fallout from a supply continuity problem are well-known – missed deliveries, plummeting customer satisfaction and lost revenue. IBM’s risk program is therefore designed to protect supply continuity by monitoring and providing real-time alerts on man-made risks, natural forces or climatic threats, along with financial and economic risks.

Nothing illustrates the disruptive potential of a risk event so much as the recent Hurricanes Harvey and Irma. To demonstrate how Watson can augment risk-management ahead of hurricanes and other crises, the team at IBM shared with Procurious the ways in which Watson’s cognitive capabilities were used to track and provide unique insight into Hurricane Patricia back in 2015 – an approach which contributed to IBM picking up a major award for Risk Management at Procurement Leader’s World Procurement Awards.

Using feeds including The Weather Company and the US Navy Weather database, Watson tracked the storm’s velocity, size, category, intensity and simulated scenarios of possible storm tracks. Interestingly, Watson also engaged in “social listening”, picking up local sentiment by tracking Twitter and other social media platforms. At the same time, Watson alerted IBM about every 1st and 2nd-tier supplier in the storms’ possible tracks.

Once the Risk and Supply Assurance teams had the earliest possible indication of Patricia’s potential impact, mitigation plans (such as closing at-risk plants) were readied for deployment. 

  1. Reputational damage

 IBM’s Conflict Minerals Team must be very well-travelled. From Dubai to China, Indonesia to Vietnam, they’ve conducted on-site visits with smelters and refiners to an impressive 10 levels deep in the supply chain, working with them to certify that they are using minerals controlled by responsible sources.

Every supplier must sign the Electronics Industry Citizenship Coalition (EICC) code of conduct, which IBM has adapted as the single code across its supply base. It establishes standards regarding safe working conditions, fair and dignified treatment of workers, and environmentally responsible and ethical operations. To this end, IBM has conducted +2000 3rd-party audits across 34 countries. 

  1. Regulatory noncompliance 

Although noncompliance isn’t as exciting as a hurricane tearing through suppliers’ facilities, the impacts can still be dramatic. Noncompliance can result in fines and penalties, product impoundment, revenue reversal and adverse press.

IBM’s Global Procurement Environmental Compliance team ensures all products comply with environmental directives, laws, regulations and standards; made incredibly complex by the global nature of the organisation. The team tracks changes in regulations, such as eco-design or restrictions of certain chemicals, then determines if the change will affect IBM products and plots a path to compliance accordingly.

Risk and Reward

IBM Global Procurement’s efforts in risk mitigation were recently celebrated at Procurement Leader’s World Procurement Awards, where the team won a major award for Risk Mitigation, and a second award for its transformation program.

Procurious is working with our Knowledge Partner, IBM, over the next 12 months to promote cognitive procurement to our global community. To learn more about IBM Global Procurement, click here.

4 Cognitive Tools That Are Advancing Procurement

Don’t let yourself be overwhelmed by the magnitude and potential of cognitive technology. The greatest journeys start with that all-important first step and, when it comes to AI, you just need to get started!

We’re live from the Big Ideas Summit Chicago! Register now as a digital delegate to follow all of the day’s action!

There’s a lot of buzz around how ready our industry is to start using some of the newest cognitive technologies. But the time really is now for CPOs and procurement organisations to put a stake in the ground on where they want to go in the future with regards to digital and cognitive capabilities, to put the roadmap in place for how they want to get there.

We feel your cognitive pain!

Graham Wright, IBM Vice President, Global Procurement and Cognitive Procurement Services, fully understand procurement’s pain points and challenges when it comes to implementing cognitive technology and digitising the function:

  1. Outing the analog!–  Many procurement teams are still working in a reactive and transactional world without digitised processes to automate transactions.
  2. Powering the marketplaces!– From Graham’s experience, he sees very little in the way of supplier catalogs and automation driven from those catalogs. “In a digital world we should be leveraging marketplaces – ensuring   we make content available to all of the users so they can find what they need, click on it, and drop it in their shopping basket easily.
  3. Predicting demand – Current practice is to look at the spend information from historical data in order to make decisions. Nowadays, there are ways to anticipate and predict demand so procurement can look forward, instead of back.
  4. High value contribution – Lack of digitisation and lack of insight means that key personnel in strategic sourcing and category management are not able to focus on stakeholder management, interaction with the user, and negotiations with the supplier

4 cognitive tools you can use…NOW! 

But in spite of these challenges, and whether you like it or not, cognitive technology is coming to change the world.

Not everyone will be ready to jump into the cognitive capabilities. But it’s not an all-or-nothing proposition; you can plug in cognitive at any step. Many of these tools are proven and in use through IBM Procurement today and are being prepared for a broader market. Graham took us through four of these cognitive tools.

  1. Supply Chain Risk Insightscognitive solution fetches unstructured data from social media and creates alerts ahead of time for category managers who can take preventive action to reduce or eliminate impact from such challenges. Effective demand forecasting and proactive risk management is critical to a responsive and cost effective supply chain.
  2. SupplierIQcombines data gleaned through unstructured sources (e.g. social media, news feeds, competitor websites, corporate social platforms, blogs and forums etc.) and contrasts that with other data sources to generate insights that were earlier not accessible. A category manager could actually stumble upon a new supplier for a category that was not being considered; or actually drop an existing supplier because of the potential risk an existing supplier by connecting performance with market information.
  3. PricingIQ can save category managers millions of dollars by tracking contract prices in contrast with dynamic market prices rather than sticking to contract prices that are struck for a number of years. This tool allows IBM Procurement Services category managers an additional 3 – 10 per cent in savings in key spend categories over and beyond what’s already been saved. Pricing IQ was awarded Most Innovative Use of Technology by CIPS in 2017.
  4. Cognitive Buying Assistant(CBA) drives user adoption and spend under management and ease of use. IBM are designing superior user experience by applying cognitive tools on a mobile app that can recommend most relevant items to buy based on user profile, usage patterns as well as sentiment analysis gleamed out of feedback from other users. Ordering something in your professional capacity will soon be as easy as ordering products in your personal life. This is a critical driver of user adoption since a better buying experience will lead to better compliance and better savings for the user and business.

Your path to cognitive 

Everyone’s roadmap will be different and every procurement organisation comes into this maturity scale at different points. Where some larger procurement teams are already embracing technologies like Blockchain and Dynamic Marketplaces, others are not quite there.

If you’re of the latter group, start by asking yourself how you can get more out of the data you’re sitting on. How can you gain better insights and advanced analytics from all the spend and transactional data that flows through procurement?

Lastly, consider whether you have the right talent to help you along on your journey.

With more robust data and insights, the more you will free up your people to do what they are meant to do!

Live From The Big Ideas Summit

Want to hear more from IBM’s Graham Wright? On 28th September, Procurious is bringing The Big Ideas Summit to Chicago.  Register now  (It’s FREE!) as a digital delegate to gain access to all of the day’s action and LIVE video from our speakers and attendees. 

 

The Digitisation Of Procurement Is The Gift That Keeps On Giving!

Want to enhance the customer experience but struggling to find the time? IBM’s, Lucas Manganaro, explains why the digitisation of procurement is the gift that keeps on giving!

Register now  as a digital delegate for The Big Ideas Summit Chicago!

If the job of a procurement department is to provide a service to the enterprise, then shouldn’t procurement folks be investing the majority of our time focusing on the experience of our business stakeholders and our supplier partners?

I think we should, but all too often what I see is the majority of procurement work hours being dedicated to spreadsheets focused on little more than unit prices, discount levels, rate cards and blocked invoices.

C’mon folks. We can do better than that!

Who has the time to be “customer-focussed”?

I’m not suggesting we ‘go nuts’ and forget about delivering bottom line savings to the corporation. I do, however, think that we will get more frequent opportunities to save, and more partnership on ways to save while driving mutual benefit, if we focus a bit more of our attention on our customers and suppliers and the experience they have when they choose to partner with us.

But who has the time?!

Certainly very few of us find ourselves burdened with surplus free time. We can’t add hours to the day but we can subtract time draining tasks that crowd out the good stuff.

Procurement practitioners require access to vast amounts of information to effectively manage spend. The data is often spread across a myriad disparate sources and often times the process of gathering and reviewing that information leaves little time for focusing on the experience of suppliers and stakeholders.

These include supply contracts, purchase order data, PCard and T&E card spend, invoice data, supplier performance data, supplier financial solvency data, catalogs, supplier mergers / divestitures / bankruptcies / name changes, internal part numbers, supplier part numbers, volume discounts, insurance certificate renewals etc. etc.

If you’re like me, you were probably some combination of bored, frustrated, and defeated by the end of that list and that list could have easily filled the rest of a page.

Why is digitisation so important?

There’s a lot of ‘stuff’ to consider. This is why digitisation is so very important for procurement. Getting the data off paper and into formats where it is visible and reachable is extremely important. This makes it much easier to collect, validate, coordinate, enrich and connect that data so that ‘whole pictures’ of the procurement process can start to come into focus. There is an abundance of amazing tools available to help streamline and automate procurement processes and the capabilities are growing by leaps.

Digitising the data and process is one of the most important keys to unlocking the value that these capabilities will deliver, and procurement organisations that get this foundational element right will have a substantial head start on delivering real value to their organisations.

Ask yourself a few basic questions on supplier information, sourcing process, or supply market dynamics. If you find that the answers to the questions require multiple system searches or spreadsheets it’s probably time to start a conversation about taking your procurement function fully digital. The investments you make in getting this right will pay you back with (among many other things) more time to spend building lasting relationships and great experiences for your stakeholders and suppliers. And those experiences will keep them coming back.

On 28th September, Procurious is bringing The Big Ideas Summit to Chicago.  Register now  (It’s FREE!) as a digital delegate to gain access to all of the day’s action and LIVE video from our speakers and attendees. 

Do You Have The Right Skills To Deliver Tomorrow’s Procurement Strategy?

Why are our procurement teams falling so short when it comes to delivering on strategy? Changing mind-sets and attracting fresh talent will help start the party!
Register now  as a digital delegate for The Big Ideas Summit Chicago!
 

Shockingly, 60 per cent of CPOs believe their teams do not have the skills to deliver their procurement strategy, according to Deloitte’s “Global Chief Procurement Officer Survey 2017.”

Why are procurement teams falling so short?

Originally, procurement was heavily based on process management, negotiation and basic spend analysis. But the procurement function is evolving, and professionals have to adapt to a new environment . There are new and growing expectations that require alternate skills for a more advanced job profile.

Procurement professionals are expected to be much more analytical, with the ability to perform data mining. They also must learn to manipulate and understand financial data and indicators, such as P&L and balance sheets. That’s not to mention that they should be proficient with the latest technologies.

Yet, one of the most important skills to develop is customer centricity. In today’s customer-centric world, this becomes crucial.

In my opinion, understanding internal customers,  being able to communicate in their language, knowing what they want or helping them to understand what they need, is the most difficult skill to learn and develop because it often goes against the conventional and traditional training that many procurement professionals have received.

It’s time to stop hiding behind the processes and get to know the internal customers! Given the back-office environment we are coming from, there is still a lot to do to change the mind-set and the behaviour of those involved. Procurement professionals need to develop their consultative skills and become less process focused, since excessive process significantly impedes speed and agility.

Keeping It Fresh

Another challenge for procurement involves attracting and retaining fresh talent in our industry. This situation needs to be addressed now to prevent a significant skills gap within the next couple of years. While we still have to continue to build traditional procurement skills. We also need to recognise that these skills must evolve as analytic and cognitive solutions provide more refined data and insight. The challenge is less about finding someone who is an expert negotiator and more about recruiting someone who understands data and logic.

At IBM, we are currently hiring maths and statistics majors because they can understand trends and probabilities. Although many procurement skills can be taught,  it’s hard to train someone to find trends in complex data.

Taking IBM’s example, our strategy to recruit and retain talent is reflected in how we communicate our procurement roles. “Our Procurement strategy is about collaborating with customers to ensure they have best in-class solutions, with access to the most advanced technology available on mobile devices. We partner with our suppliers to be as innovative and creative as possible.”

Presented like this, a job in procurement sounds pretty exciting!

The party ain’t over yet!

And the party isn’t over once we’ve found the right skills and talent, we also need to keep that skilled staff within the procurement function! If we help employees build on their competencies as well as add new ones, and if they can see that their contribution to the company’s mission clearly makes a difference, it will help us to keep those employees in procurement.

Ultimately, modernising the procurement profession and making procurement a “cool” place to work will help retain a talented, skilled and motivated workforce.

On 28th September, Procurious is bringing The Big Ideas Summit to Chicago.  Register now  (It’s FREE!) as a digital delegate to gain access to all of the day’s action. 

IBM & SAP Ariba Join Forces To Transform Procurement

Procurement today needs to be about insights and intelligence. Will a new SAP Ariba and IBM collaboration be the function’s force for good?

Last week, tech giants IBM and SAP Ariba made the announcement that they would be joining forces to transform the future of procurement.

Together, the two will launch a hub for delivering cognitive procurement solutions to redefine the source-to-settle process. Additionally, the companies will launch a Cognitive Procurement hub to further the development of intelligent procurement solutions and services.

SAP Leonardo, IBM Watson and SAP Ariba will be used  to pool together intelligence from procurement data and predictive insights from unstructured information.

Procurement, according to IBM, is about to get smarter, faster and more efficient.

“Today marks a major milestone for procurement,” said Alex Atzberger, President, SAP Ariba. “With the deep horizontal integration capabilities native within SAP Ariba’s mature platform and the innovative capabilities of SAP Leonardo and IBM Watson delivered by the industry’s most experienced and trusted providers, companies can realise an even more intelligent source-to-settle process for managing all categories of spend that creates value across the entire business.”

What does the future hold for IBM & SAP Ariba?

IBM Watson represents a new era in computing called cognitive computing, where systems understand the world in a way more similar to humans: through senses, learning, and experience. Watson solutions are currently being built, used and deployed in more than 45 countries and across 20 different industries.

On the SAP Ariba Network, buyers and suppliers from more than 2.5 million companies and 190 countries can discover new opportunities, collaborate on transactions and grow their relationships.

By partnering, SAP Ariba and IBM will use their data insights to increase procurement efficiency and intelligence, as well as improving spend visibility.

“We’ve built a cognitive procurement platform trained specifically to understand procurement transactions and unstructured data such as weather, non-standard part numbers in contracts and complex pricing structures,” said Jesus Mantas, General Manager, Cognitive Process Transformation, IBM Global Business Services. “By combining the power of IBM Watson on the IBM Cloud with SAP Ariba, we are leaping existing procurement benchmarks and delivering unprecedented value to our joint clients.”

Watch below to hear Jesus Mantas and Alex Atzberger discuss the partnership in more detail:

What’s the media saying?

IBM Emptoris customers are sure to be questioning what this announcement means for them.  Part of the deal includes IBM gradually retiring Emptoris products over a multiyear timeline and encouraging its customers to migrate to SAP Ariba.

As Jason Busch points out on Spend Matters “it is clear that the partnership provides significant time for current IBM Emptoris customers to fully evaluate all of their options, including the potential to transition to SAP Ariba or to select other providers.”

An IBM spokesperson, speaking to The Register,  commented that “we are encouraging Emptoris clients to transition to SAP Ariba. We will work closely with them providing support and transition services. Clients can continue to use Emptoris.”

Duncan Jones, Vice President, Principal Analyst at Forrester Research questioned the details of the announcement.  He wrote, “the press release does not say when the collaboration will deliver anything that customers can actually implement.  SAP has a long history of premature announcements and releases, so I’ll wait to see actual software being used by real customers before I get excited about this initiative.”

What do you think about SAP Ariba and IBMs’ partnership?  Is it something to be excited about or are you, like Duncan Jones, a little skeptical? Let us know in the comments below. 

In other procurement news this week…

The Future Belongs to AI

  • 19-year-old world champion Ke Jie upon commented that the “future belongs to AI” after losing a game of ‘Go’ to Google’s AlphaGo robot
  • Go is an incredibly complex Chinese board game whose conquering by computers is seen as kind of a holy grail, and was not expected to be possible for another decade
  • The AlphaGo robot “learned” by speeding through the equivalent of playing 80 years straight to develop its technique and strategy
  • A robot that can learn from experience to handle new situations can tackle any problem a human could

Read more at The Hustle 

Slavery Referrals On The Up

  • Kroll’s analysis of National Crime Agency data found there were 1,575 referrals for labour exploitation in 2016
  • 70 per cent of these (1,107) were adults and 30 per cent (468) were minors
  • Kroll said the increased numbers cast a spotlight on an issue that is of increasing concern to businesses, particularly in sectors such as retail and manufacturing
  • Under the Modern Slavery Act 2015 businesses with an annual turnover of £36m or more must make public the steps they are taking to ensure modern slavery is not taking place in their business or supply chain

Read more on Supply Management 

Amazon to Open First Store in New York

  • Last week Amazon officially opened its first brick-and-mortar store in New York City – its seventh in the US
  • The physical location uses millions of Amazon customer ratings and reviews as its guide to providing customers with a unique shopping experience
  • The shop houses 3000 books organised into categories that you wouldn’t find at your typical bookstore such as  “Books with More Than 10,000 Reviews on Amazon.com”
  • Amazon Books is planning to open five more locations soon, including stores in New Jersey and another in New York City.

Read more on UK Business Insider