Tag Archives: procurement technology

4 Reasons Why Your Organisation Isn’t Embracing Cognitive

In the battle for capital, how does procurement ensure its cognitive projects come out on top?

At last month’s London CPO roundtable; Amit Sharma, Global Procurement Practice Leader for Cognitive Process Services (CPS) –IBM led our attendees in a discussion on how procurement leaders can ensure their cognitive projects come out on top.

There is so much potential in cognitive technology to transform the role of procurement. It will allow professionals to do dynamic forecasting, telling you when to raise acquisition and awards contracts to a particular supplier based on a triage.

“For procurement, maintaining our relevance to the organisation beyond cost savings is imperative” said Amit.  “[Procurement pros] need to embed the latest in technology as best practise into the business as it will free up our time and help us to move from transactional to strategic management.”

“The logic is unquestionable.  We know the sophistication of AI is going to come. It’s a question of when, not if.”

But when it comes to making the leap to cognitive, which can do a world of good for analytical and predictive analysis, organisations are still hesitant.

Procurement needs to make the business case for how cognitive can add long-term value and, as Amit reminded us, “If you’re not convinced, you can’t convince someone else”

Throughout our discussion, four key reasons for an organisation’s reluctance to embrace cognitive tech became apparent.

1. Remaining skepticism at the value of cognitive

As Amit explained, cognitive technology like Watson can help procurement professionals to analyse reams of data. It would, for example, allow users to plot the price at which they are being charged for something by suppliers and analyse how the index has moved in past [x] years. Five years ago this process would have been extremely time consuming but with the index data, the system can quickly tell you exactly where you’ve been overcharged.

So it all sounds great. But in reality, business leaders are often skeptical about the actual cost savings brought about by this kind of analysis.

Do you genuinely make better decisions in the long term by having so much data at your fingertips? Or can you have just as much success through effective negotiations with your suppliers?

Amit’s response to this “If you’re not doing spend compliance – you don’t know if you’re compliant. If you’re not analysing this data, you don’t know the potential cost savings.”

“I spoke to a CPO who thought their processes were good. [But it was discovered that] there was a 40 per cent unit price difference across the company in the same category, simply because the left hand doesn’t know what the right hand is doing!”

2.  Spend within organisations is fragmented

One key problem for procurement, when it comes to implementing cognitive technology, is that the CPO doesn’t always have the authority to drive transformation. Perhaps they are reporting to a CFO who doesn’t see value in cognitive tech or the spend might simply be too fragmented across the business. When it depends on lots of other people, procurement are unable to drive change effectively.

As one of our roundtable attendees pointed out “there are organisations I know who can’t justify the need to implement Ariba to their CFO- let alone cognitive technology!”

3. Trouble looking at the bigger picture

Several of our roundtable attendees cited short-termism as a key reason for their organisation’s lack of cognitive adoption. “The mistake we make is that we look at opps in a tactical way and not at the bigger picture,” said one CPO.

“For example, we know that there will be headcount reduction in the coming years and we will benefit hugely from cognitive tech, but articulating that at a hollistic level to the CFO and explaining it as a 5-year journey is the challenge”

4. Confusion about AI

Remarkably, one of the biggest challenges remaining around  the uptake of cognitive technology is a universal lack of understanding of what it actually is and the distinctions between different terms.

“You can start talking to a group about AI and within a few minutes people are talking about blockchain, as if the two are interchangeable,” said one of our attendees. “People need to have a clearer understanding of the buzzwords ; AI, blockchain cognitive etc.”

Of course, there are people who know a little and people who know a lot. And that’s a challenge in itself.

Read more here on the insightful discussions had at our London CPO roundtable. 

6 Things To Consider Before You Buy Any Procurement Technology

Thinking of investing in some of the latest procurement technology? If you haven’t consulted market trends, got a third opinion and done all of your research, you might want to pull on the reins!

Buying procurement technology these days is a complicated business.

With ever more niche vendors entering the market and established providers offering increasingly sophisticated solutions, differentiating on face value alone can be as clear as mud. However, given that your decision will have an enterprise-wide impact, it’s crucial that you assess your options and make the most informed decision possible.

1. Separating Fact from Fiction

Of course, you will have the product marketing collateral from each provider such as datasheets and solution overviews.

However, you need to be aware of how much is marketing ‘fluff’ and how much is an accurate reflection of the solution’s capabilities.

To do this, you can turn to customer case studies and testimonials to understand what their experience of implementing and using the solution has been like. But remember, even that source of information comes with its own challenges and shortcomings. If the case study focuses on the customer’s functional use of the product, it may not offer you an accurate view of customer service levels or product performance, which are of course key considerations in making your decision.

This is where third party research and validation comes into play.

2. Look at market trends

Where do you go and how do you choose your sources of information?

The entire technology market is well served with analysts reporting trends, competencies and guidance on the good, the bad and the ugly of the industry. In searching for technology vendors that meet your requirements, this certainly helps sort the “wheat from the chaff”.

That said, the technology market is quite unique in that it experiences a rapid advance in product capabilities. With competition driving innovation, product sets evolve quickly and when you’re looking at R&D in technology sphere, one year is a long time. This means that its essential to ensure that the information you’re using, and basing your decision upon is up-to-date and reflective of the latest capabilities within the market.

3. Consult The Magic Quadrant

One of the world’s largest, most respected analyst organisations for technology research is Gartner. Each year or so, they produce the Magic Quadrant which is a culmination of research in a specific market, giving individuals a broad view of the relative positions of the market’s competitors. The Gartner Magic Quadrant research provides a graphical competitive positioning of four types of technology providers in fast-growing markets; Leaders, Visionaries, Niche Players and Challengers.

They produce this research for a range of technology sectors, including procurement sourcing applications, and it is a well-trusted source of information for assessing your options when you go to market.

Access the Latest Gartner Magic Quadrant for Strategic Sourcing Application Suites.

4. Make sure you’re using up-to-date analysis

Given the considerations around the pace of advancements in the eProcurement sector,  it is all the more important to ensure that you’re using the most current information available. In addition, because of the time between each report release, you’ll find that vendors that have been in a Leaders quadrant can fall from grace into lower quadrants/waves.

This is because to remain in the Leader segment is dependent on a vendor’s investment in product functionality and features, as well as their business vision to meet the needs and demands of the procurement marketplace. Customer satisfaction and referencing is also taken into consideration for the research, meaning a strong Leader position is indicative of a satisfied customer base.

5. Get a third (Party) opinion

There are a number of consulting and analyst organisations who conduct independent research of the technology space in order to provide a clearer, qualitative segmentation of the marketplace. By supplementing the information supplied by providers with this third party research, you can validate performance and delivery to build a more objective view of the market place. To get you started, here is a short list of publishers that you can turn to for information:

  • Spend Matters Network
    This leading network of procurement websites is a great source of current procurement insight. Their commentary and reporting examines the latest news, techniques, “secret” tools of the trade, technology, and its impact. Most of the content is free to access, but there is a Spend Matters Pro membership that will give you access to exclusive research and content.
  • Procurement Leaders Network
    Procurement Leaders™ is a global membership network, serving senior procurement and supply chain executives from major worldwide corporations, providing independent procurement intelligence, professional development and peer-to-peer networking. It has a broad range of research into various sectors, but you do need to be a member to access most of the content.
  • Supply Management
    Supply Management is the official publication of the Chartered Institute of Procurement & Supply and features the latest news, view and analysis for procurement and supply chain professionals worldwide. The website provides daily news and opinion and exclusive content, in addition to access to more than 15,000 articles.

6. Do your research

As the marketplace for procurement software and technology continues to grow, it can become a confusing place for those looking to choose a solution; you’ve niche providers who offer specific pieces of software and more established leaders offering integrated full-suite solutions. Each promises to deliver the most effective, powerful solution but how much of that is bluster and how much is grounded in truth? By all means utilise the product marketing information that a vendor provides, but scrutinise it too. Is what they say true?

Ensuring you conduct thorough third-party research and refer to existing customer testimonials is key to finding the answer to that question and key to you selecting the best solution for your organisation.

This article was written by Dan Quinn, SVP Jaggaer MENA.


Join JAGGAER In Munich next month for REV 2018 – two action-packed days, filled with the latest in eProcurement innovations, trends, and strategies designed to help you accelerate your spend management digital transformation.

Hear how your peers are leveraging highly engineered technology to deliver strategic procurement value to their organisations.

Spaces are limited so secure your place today and check out the incredible speaker line-up.

3 Ways To Take The Pain Out of Contract Management

Managing supplier contracts is one of the most fundamental and, arguably, simple tasks undertaken by procurement teams. But for many it’s also a major source of anxiety. So why does procurement find it so difficult to successfully manage supplier contracts?

 

Given the ever-improving technology landscape and growing popularity of cloud-based SaaS solutions, one would assume that effective contract management is now commonplace among procurement professionals. Almost a hygiene factor, surely? Not in our experience.

The key challenge is maintaining contract repositories with rigour and to the high standards required. But even where organisations have well-embedded enterprise resource planning systems, this alone does not guarantee that contracts are being successfully managed.

This is rarely about a lack of willingness to improve the process – in fact, most teams are hugely concerned about it, with the majority actively looking for better ways to manage contracts.

Why so hard?

Supplier contracts provide a detailed overview of the pipeline of current and upcoming projects within an organisation. Without this line of sight, the procurement function is likely to be on the backfoot when projects end and contracts terminate. This is of particular concern in areas such as telecoms and software, where significant penalties are charged when contracts automatically roll over.`

Much of the problem lies with how contracts are filed, stored and updated – often in multiple systems or, even worse, in individual desk drawers across many different departments depending on who ‘owns’ them. As a result, procurement can potentially have zero visibility over many contracts, creating significant risks if suppliers are not being managed effectively throughout the contract lifecycle.

Given that up to 70% of spend is repeated year on year, failing to have visibility over contract expirations and extensions in sufficient time to fully leverage all the strategic sourcing levers available means vital savings opportunities are likely to slide under the radar.

Easy as 1, 2, 3

A well-maintained and up-to-date contract repository can provide a complete overview of all contracts in operation – from those in a supplier cluster, e.g. a central supplier contract with several sub-contracts to those that function company-wide.

The key is integrating contract management into everyday processes so that it becomes part of what procurement teams do rather than an afterthought. Three quick steps to achieving this are to:

  1. Make your team accountable – Include contract KPIs in your procurement team’s objectives. All buyers and category managers should be responsible for ensuring that they hold signed supplier contracts for the categories they work on. It should be their responsibility to gather them from other departments, even though they are not the ‘owners’, and to upload them into a contract management solution.
  2. Capitalise on the results – Procurement leaders should routinely review their teams’ compliance with keeping contract management solutions up to date and actively use the output to drive better category planning and organise quarterly workloads.
  3. Choose the right technology solution – Using a standalone contract management solution is helpful, but on its own it can get neglected very quickly. Select an integrated procurement technology solution that links contract management with other modules such as spend analytics and supplier performance management. An integrated solution that connects different modules together provides more insightful output that can inform better decision-making, e.g. linking spend analytics with contract management allows procurement teams to track supplier contract compliance and ‘spend under management’ – key indicators to how well procurement is doing within the wider organisation.

The way forward

Embedding contract management best practices into the procurement function and then incentivising the team to keep the repository up to date is crucial. Centralising information storage and assigning responsibility for maintaining it takes the guesswork out of who manages which contract within a large business – vitally important when managing multiple contracts.

Once this is in place the procurement function can then use the combined data to define company-wide procurement initiatives spanning numerous projects, managing risks and spend in a way that would not have been possible before. Now that’s not so hard is it?

Download The Source for our latest insights in procurement and supply chain management.

“Hey, Procurement…” The Rise of Chatbots in Supply Management

Procurement tech guru Bertrand Maltaverne explores the benefits, limitations and pitfalls of chatbots in procurement – with some animated examples!

“Hey, Siri,…”

“Alexa,…”

“OK Google,..”

Digital assistants are ubiquitous. We talk to them (Siri, Alexa, Cortana, etc.). We chat with them (Twitter, Facebook Messenger, Skype, WeChat, etc.). They are in our phones, in our computers, and even in our homes. Now they are also making their way into our offices!

Procurement professionals need to start taking notice, because chatbots present a valuable and unique opportunity to provide better services and experiences for internal customers and suppliers. They can also support and assist procurement professionals with their daily activities, becoming virtual colleagues or consultants.

Of course, as with any new piece of technology, it is important not to succumb to the hype and to be aware of the technology’s limitations and constraints before deploying bots everywhere.

Value = Outcomes AND Experiences

The term “Conversational Commerce” was coined by Chris Messina in 2015. In his article, he focused on how messaging apps bring the point of sale to you. He first introduced the idea of assistants that people could interact with to buy things from a company. This is precisely what Amazon did and has popularized with Echo (the hardware) and Alexa (the AI-based assistant that “lives” inside Echo).

The idea of voice or text-based interactions with a bot can be extended to much more than B2C and to “buying things”. The value proposition of such technology is to digitise interactions and conversations while also making technology more accessible.

Here are some of the benefits:

  • Gains in efficiency and effectiveness because of tailored and context-aware interactions. Chatbots remember everything, they know where you are, and can tap into data from all your other applications.
  • Less time and effort needed to learn how to use Procurement technology: conversations replace graphical user interfaces (everybody knows how to type or speak; no need to use explicit and codified instructions).
  • Interoperability and accessibility: users chat in the application or channel they prefer (SMS, Instant Messaging, Skype, Facebook Messenger, Alexa, Twitter, etc.). All bots leverage one common robust back-end system that processes and interprets natural language.

All in all, chatbots contribute to the creation of omni-channel and replicable but unique user experiences for stakeholders, suppliers, and for the Procurement teams themselves. Improving experiences is one of the pillars of the digital transformation of Procurement. In addition to delivering business benefits (savings, risk reduction, innovation, growth, etc.), it contributes to making procurement a supplier/customer/function of choice.

“Every time [customers] interact with a product, a service, a person, or an automated system, they judge how well the interaction helped them achieve their goals, how much effort they had to invest in the interaction, and how much they enjoyed the interaction.” Outside In: The Power of Putting Customers at the Center of Your Business by Harley Manning, Josh Bernoff, and Kerry Bodine

Use Case 1: Guided Buying (Chatbot as an Admin.)

This is a use case that is very close to B2C: a Procurement assistant is deployed to handle demands from the rest of the organisation in order to replace or “augment” traditional eProcurement solutions. Requesters interact with a bot that proposes solutions based on:

  • the needs identified during the conversation,
  • the Procurement strategy (preferred suppliers, preferred items, contracts in place),
  • other factors (purchasing history, real-time availability of products, context, etc.).

The approval process also happens via chat. If available, the chatbot adds the approver to the conversation, creating a group chat. Or, the Procurement Assistant opens a new one-to-one conversation with the relevant approver. Approvers can then ask the chatbot how much of the budget is left and then immediately approve/decline the request without leaving the chat. The same can happen for other process steps (order confirmations, goods receipts,etc.). The assistant initiates discussions to ensure the process is compliant and efficient.

Use Case 2: Operational Support (Chatbot As a Colleague/Consultant)

Chatbots can also be invaluable assistants in operational support. The most straightforward and immediate application: query management. A chatbot can become the single point of contact for internal and external queries about purchase orders, invoices, and much more. Several companies are already successfully using such capabilities in their Procurement portals to provide quick answers to a vast amount of queries, which leaves their teams with time to focus on  more complex requests and value-adding tasks.

It can even go further as the following scenario demonstrates:

Now, let’s compare what happened above with a scenario in the context of siloed organisations and where such technology wasn’t used. The purchaser would probably have learned about the earthquake on his way to work while checking the news on his smartphone. He would only have been able to assess the situation and prepare contingency plans once he arrived at work, losing valuable time. In may organisations this would take hours or even days because access to information is spread across multiple systems. This would result in a very different reaction time compared to the example above, where the cognitive agent reacted almost immediately after the event and prepared recommendations during the night.

Pitfalls and limitations

Relying on conversations instead of graphical  user interfaces has many benefits, especially for the mobile worker or casual user. However, there are limitations and challenges.

Voice-based conversations are the most natural ones and are also the most challenging from a technological perspective, especially in a B2B context. This is due, in part, to the international nature of business. For example, names of people or companies are not familiar words that a chatbot can quickly recognise, and to make things worse, they are often not in the same language as the one used to converse with the bot.

In addition to technical challenges like these that will likely be solved someday, there is a more human challenge: the conversational paradox. It explains why chatbots are still not widely used.  The paradox is that something very natural (a conversation) is done with another unusual counterpart (a machine), which turns the experience into a very unnatural one. So, when asking a chatbot something, the first questions people are confronted with are:

  • what instructions can “it” understand?
  • what words should I use to make sure I will be understood?

This represents  both a significant barrier to usage and a risk for adoption. It is therefore important to design and deploy chatbots with that in mind and:

  • not to use them as the only communication channel (it should be one among many others),
  • not to oversell the technology as being human-like (it inflates expectations and is a guarantee for failure),
  • to provide cues and guidance (like the menus/lists in the examples above)
  • to have a smooth and almost transparent hand-over to a real person if the machine fails to understand a user.

Conclusion

“By 2020, 30% of web browsing sessions will be done without a screen.” –Gartner

Conversational user interfaces are still a novelty, especially in B2B. However, they will become more widely used as technology makes further progress and people get more used to it. So, for Procurement, now is the time to investigate their potential as an additional way to provide a streamlined and personalized user experience both inside and outside of the function.

In addition to  delivering the right outcomes, experiences are also a crucial component of the value that the rest of the organisation gets from Procurement. Customer satisfaction is at stake.

The implementation of chatbots, like any other technology, has to be pragmatic, defined by clear use cases, and should not be viewed as a solution in itself. Chatbots will not solve all of an organisation’s problems, , but they can be used as a means to an end!

Time to learn how to say: “Hey, Procurement…”

Digital Transformation Skill Gap Shock

Only six per cent  of CPOs possess the strategic leadership trait of being able to lead digital and analytical transformation in their organisation. What’s going on with the skill gap?

It seems that everyone’s talking about digital transformation. Every procurement team globally lies somewhere on the maturity curve that begins at one end with 1990s-style manual processes, to world-beating teams who are embracing tech enablers such as predictive analytics and cognitive technology. Procurement publications (including this one) are writing article after article about the wave of exciting new technology coming down the Industry 4.0 pipeline, while the profession’s biggest conferences always have digital transformation experts high on the agenda.

Key findings in Deloitte’s 2018 Global Chief Procurement Officer Survey, however, suggest that digital transformation isn’t as high as priority for CPOs as we might think. When just over 500 procurement leaders across 39 countries were asked to identify the most common leadership traits in procurement, they listed:

  • acting as a role model – 23 per cent
  • collaborating internally and externally to deliver value – 20 per cent
  • delivering results – 14 per cent

Yet, as the report points out, strategic leadership traits are not widely evident:

  • positive disruption – 5 per cent
  • leading digital and analytical transformation – 6 per cent
  • innovation – 8 per cent

Similarly, modern technology usage is low, with only one-third of those surveyed using technologies such as predictive analytics and collaboration networks. Only one-third of procurement leaders believe that their digital procurement strategy will enable them to deliver on their objectives and value, even though analytics was nominated as the single factor that will have the most impact on procurement in the next two years.

The authors call out these disappointing results twice in the report:

“Progress and adoption has been slow over the past year and the survey findings show that procurement leaders remain hesitant about investigating new digital tools and technologies such as artificial intelligence, robotics and blockchain.”

“Despite recognising digital technologies, their impact and imminent uses, few organisations appear to be progressing at the rate that their c-suite executives consider necessary for achieving overall goals. Indeed, in the majority of areas, the level of impact has declined and the forecast application of new technologies is low … The level and speed of digitalisation across procurement functions is lower than expected and needed.”

So, what’s going on? The answer might be found within the report itself, across the following three areas:

  1. CPOs don’t know where to begin

The main barriers to the effective application of digital technology identified in the report include a lack of data integration (46 per cent), quality of data (45 per cent) and a limited understand of data technology (27 per cent). This suggests that one of the reasons for the disappointing adoption of technology is that CPOs are still coming to terms with the overwhelming task of getting their house (their data) in order before they can effectively roll out a tech enabler such as cognitive procurement.

  1. CPOs are losing faith in their digital strategy

Deloitte found that only 4 per cent of procurement leaders believe that procurement has a big influence in delivering their organisation’s overall digital strategy. Only 6 per cent believe their digital strategy will help them to fully deliver on their objectives and improve enterprise value, while only 18 per cent have a digital procurement strategy supported by a complete business case. The trend in the report appears to be that procurement leaders are struggling to understand the impact of digital technology. One of the stand-out pieces of commentary in the report contains the following:

“Applying digital technologies to the procurement function will enable strategic sourcing to become more predictive, transactional procurement to become more automated, supplier management to become more proactive, and procurement operations to become more intelligent.”

 3. CPOs are not investing in digital capability

Remember last year’s report? The main callout in 2017 was that 60 per cent of CPOs didn’t believe their teams had sufficient capabilities to deliver on their procurement strategy. This figure has improved slightly and now sits at 51 per cent, yet digital skills still remain a red flag. The report found that nearly three-quarters of those surveyed said that their procurement teams possess little or no capability to maximise the use of current and future digital technologies, but only 16 per cent of procurement leaders are focusing on enhancing the digital skills of their teams. Overall, 72 per cent of CPOs are spending less than 2 per cent of their operating budgets on training and development programs for their teams.

Download the full report here: https://www2.deloitte.com/uk/en/pages/operations/articles/cpo-survey.html


In other news this week:

 

Procurious celebrates International Women’s Day – Get Involved!

  • Women account for just 20-35 per cent of procurement association memberships, represent just 30 per cent of procurement conference attendees and 20 per cent of speakers, and earn up to 31 per cent less than their male counterparts
  • To address this disparity, we founded Bravo, a Procurious group that celebrates and promotes the contributions of women in procurement last year
  • Ahead of International Women’s Day on 8th March 2018 Procurious are running a new campaign, “A Wise Woman Once Told Me…”.  We want procurement pros across the globe to take part and  finish that sentence.  Write the best advice you’ve been given by a woman, be it a colleague, mentor, friend or family member and share your advice on both Twitter (Tagging @Procurious_ and #Bravoprocurement) and in the Bravo group on Procurious 
  • We’ll be amplifying all of your great advice to the global procurement community and, to encourage more procurement pros to join Bravo Movement, we’ll donate £1 to Action Aid for every person that joins Bravo before 10th March 2018

Contact Laura Ross via [email protected] to request your  “A Wise Woman Once Told Me…” digital kit.

 

KFC Supply Chain Cock-Up Continues

  • KFC has yet to reopen all of its UK stores after nearly 700 of the the fast food chain’s 900 stores were shut down after the company ran out of chicken last week.
  • Speculation about what went wrong has focused on DHL, which had taken over the contract only one week previously. DHL has one centralised warehouse in contrast to the previous contractor, Bidvest, which operated from six.
  • The hashtag has been trending on Twitter, while KFC’s marketing team has been praised for its handling of the crisis.

Read more: http://www.wired.co.uk/article/kfc-chicken-crisis-shortage-supply-chain-logistics-experts

 

Trump announces steel and aluminium tariffs

  • President Trump has announced a 25 per cent tariff on imported steel and a 10 per cent tariff on imported aluminium.
  • The tariffs are designed to punish China for what the White House has described as unfair trade practices, while reducing blue-collar job losses and wage stagnation.
  • U.S. steel production has fallen from 100 million to 82 million metric tonnes over the past decade, with imports increasing in consequence.

Read more: Reuters

How To Conduct A Cognitive Symphony

If cognitive technology is not normally your forte, let us be of assistance. In one week we’ll have you conducting a cognitive symphony! 

There are many factors that require careful consideration to bring about effective, scalable and sustainable analytics and cognitive solutions.

Intelligence is the conversion and enrichment of data into meaningful business insights.

It’s akin to conducting a group of musicians – it might be easy to get a pleasant sound from a solo instrument but, if expertly managed, you can avoid falling flat and accomplish a symphony from the entire orchestra!

Conducting a Cognitive Symphony

From the 26th February let Procurious and IBM guide you through the five steps required to conduct a dazzling cognitive symphony as we present a new five-part podcast series. 

Day One: Building Your Orchestra

Procurement process and acquisition of data need to evolve to meet data needs. How should procurement teams embark on their knowledge journey to Cognitive and analytics transformation?

Day Two: Orchestrating Your Melody

It is not sufficient to know that you are buying software or how you are buying software; you need to know what software you are buying. So how do you implement an effective taxonomy strategy?

Day Three: The Rehearsal Room

Automation is a buzzword of the moment and fast becoming a business necessity. How can procurement professionals achieve a happy balance and effectively implement transaction automation.

Day Four: Getting the brass on Board

How procurement leaders works with their teams to remove barriers will ultimately have a huge influence on the rate and pace of adoption of cognitive and analytics solutions.

Day Five: The Conductor

In a fast-paced and ever-changing environment, some instability and churn is inevitable, which is why all these data instruments need a decent conductor and a single data strategy.

Podcast Speakers

Marco Romano Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM

Marco applies more than 15 years of experience as a procurement practitioner and project manager to understand complex environments that separate the noise from real issues and determine near-term and strategic solutions in realising business value. He leads a team that has saved IBM Procurement a significant amount in third-party costs and efficiencies through analytics data solutions and innovative sourcing strategies over the past three years. His team is also developing commercial analytics and cognitive procurement offerings leveraging data and technology for IBM clients’ competitive advantage.

Anna Madarasz Analytics & Cognitive Lead IBM

Anna has 14 years of procurement experience, out of which 12 is in project leadership. She is a master at change management, and loves working in a complex, cross-functional environment. She is an expert at procurement taxonomy in support of increasing companies’ negotiation power. Anna is a certified Lean Six Sigma Black Belt.

Peter Hrabovski Analytics and Automation Lead, IBM Global Procurement

Peter is the leader of the Analytics and Automation organisation at IBM Global Procurement. He has a masters degree in economics, in the field of business and administration. He has more than 5 years of experience in managing the data analytics and robotics process automation teams in IBM procurement globally. Being a technology and data enthusiast his focus is on applying the latest technologies in solutions being developed. This enables procurement in delivering exceptional value to IBM and its clients.

How does the podcast series work?

This series will run for five days with a daily podcast released from 26th February.  Each morning, we will deliver the new podcast straight to your email inbox.

If you’re a little late signing up to the series, don’t panic! We’ll still be sure to send you all five podcasts so you can listen at your leisure.

How do I access the podcast series?

Simply register for the series via this link and you’re good to go!

From the 26th February we’ll deliver a podcast straight to your doorstep.*

*straight to your email inbox!

Are the podcasts available to everyone?

Anyone and everyone is welcome to sign up and it’s totally, 100 per cent free to do so- simply sign up here and we’ll handle the rest.

From 26th February, Procurious present a new five-part podcast series – Conducting a Cognitive Symphony – sponsored by IBM. Sign up here (it’s free!) to access the series. 

Procurement Process vs. Chat-Bots

What are chat-bots? What can they do? Are they soon to replace all procurement functions?!

Software Robots (called Bots/Bot) are dramatically disrupting procurement processes involving human interface. They will have a high appeal on the transactional and digital side of procurement processes and will gain growth in the coming years with cognitive and machine learning tools.

The strategic interfaces in procurement planning, strategy, performance management and relationship building will continue to be human-centric (people oriented) but will increasingly rely on the Bots to support them with structured knowledge readily available.

What are “Chat-Bots” and how do they differ from RPA Bots?

A Bot is a software program designed to perform a task which would be done by a human being.

Like any software, these Bots can be programmed to perform almost anything where the workflow can be programmed and information digitalized with the added advantage of the advents in Artificial Intelligence which improves the human-machine interface.

The key difference between a Bot and any standard software is that the Bot generally has the capability of working across a couple of system environments.

With recent advancements in human language translation capabilities (like IBM Watson, Microsoft’s LUIS and equivalent) a lot of software are now capable of interacting with human beings in a seamless “human-like” manner and these Bots are referred to as “chat-bots” (chatting bots).

They usually handle the human front-end interfaces and then interact with the back-end systems to accomplish the task. They are distinctly different from the RPA Bots which are primarily back-end (non-human facing) software that will perform the task based on the system-generated routine as opposed to the chat-bots which are triggered by human interaction.

The chat-bots can then be further classified into

  1. Information chat-bots Provision of information based on the human input. “Speak or Enter flight number” and the chat-bot will provide the flight information. (However, it won’t be able to book the ticket for you!)
  2. Interactive/Smart Chat-bots Ability to perform certain tasks based on customer input. These type of chat-bots can book tickets for you or even resolve defined issues based on rules “explain your problem in a few words and I will try to help you”
  3. Machine Learning chat-bots Self-learning chat-bots which learn from previous interactions and adjust their interactions as time goes on. These chat-bots are still evolving and are going to disrupt the legacy notion of “dumb bots”

Which areas of Procurement are more “Bot-able”?

In a typical Source-to-Pay process the following areas of Source-to-Pay processes are more likely to be linked to Bots with a clear carve-out of the processes which will continue to be human-centric.

What are the Benefits of Bots in Procurement?

The Procurement Bots add a significant value to the business on the following fronts:

  1. Improved Reliability Bots help improve the reliability of the process by taking away the human fallibility and the results are far more reliable.
  2. Reduced Cost-to-Serve Taking away the human tasks also helps reduce of the cost of the transactions especially if done on a large scale for highly repetitive tasks.
  3. Reduction in Cognitive Bias Humans handling any repetitive tasks are always prone to cognitive bias and resulting errors. Bots eliminate the cognitive bias from the workflow (Although they limited by the cognitive bias built into the program itself).
  4. Reduction in cycle time Since Bots work 24×7 and in real time bots have demonstrated a 20%-95% reduction in cycle time associated with tasks/processes.
  5. Resource allocation Resources can be diverted to more strategic aspects of procurement. When the Bots can take away the repetitive tasks away and help assist the procurement professionals they are now more devoted to handling the more strategic/value adding aspects of procurement.

What are the risks of Bots in Procurement?

While the Bots bring about a great deal of value to the organisations they have risks that need to be considered during evaluation and implementation:

  1. Snow-balling of errors created due to Bots The chances of errors created by Bots is heavily reliant on the business rules captured in the software. If not watched closely these un-intended errors can balloon very easily since there is no human being watching these errors.
  2. Loss of Organisation Capability on process knowledge As organizations implement Bots the organizational knowledge on how these processes work erodes and when escalations happen there are very few people who have an end-to-end view of these processes.
  3. Local customisations may not be picked up in Bots While Bots also help standardise the processes by removing the human bias element they also run a double-edged sword of missing out on certain local requirements that might not have been built into the program thus resulting in manual interventions or an inefficient process.
  4. Lack of Human Interface impacts perception/relationships While the Bots are becoming smarter in terms of aping the human interface they are not perfect and they often run into situations where the user gets frustrated at not being able to get across.

How will Bots Transform Procurement function?

Bots will revolutionise how the procurement function is perceived currently through its ability to work/analyse across systems at the speed of thought.

What are the other factors to be considered in the Procurement Bot transformation journey?

Besides the obvious elements of the business case the following considerations need to be factored in during Bot Implementations:

  1. Long term alignment with System architecture design

Even though the Bot implementations are extremely light implementations lasting a few days to a few months – it is imperative that the long-term alignment with system strategy be considered before embarking upon these initiatives

2. Human Org Capability considerations

Consider both existing and future org capability to implement and maintain the Bots. They will require different skill sets and both are equally important to the success of the value from the Bot.

3. Characteristics of the process and the Bot-ability

Strong considerations should be given to the alternatives available. Bot is not a panacea for any process issue and should be treated accordingly.

The Logic of This “New Reality” is that people collaborating with ‘bots’, within a current Procurement Department that possesses effective work-flow processes can be integrated with ‘bot’ utilization.

The myth that Bots will replace Procurement function is a little overstated.  Procurement function will continue to be a human-centric (people oriented) organisation

Taking The Heat Out Of The Resolution Room

If you can’t take the heat get out of the resolution room! Or invite Watson! 

We’ve all been there. Something’s gone terribly wrong with a major customer delivery. Emails are flying around and there are rumours from HQ that “heads are going to roll”.  Everyone concerned has been summoned to “THE meeting” in order to resolve the supply chain issue.

We know what happens next; fists slamming, red faces, an embarrassing lack of data and a lot of verbal ping, pong. Eventually, a resolution is found.

But what happens when Watson is in the resolution room? Could this take the heat out of your supply chain disputes?

 What is a Resolution Room?

A Resolution Room provides the organisation the ability to collaborate quickly to resolve supply disruptions. Users can discuss and resolve issues with other colleagues, business partners, or their suppliers. What distinguishes Resolution Rooms from all other collaboration platforms is Watson.

What does it mean to have Watson in the resolution room?

The big benefit of Watson being in the resolution room is that it recommends experts, provides insight from all data and actionable advice based on learned best practices.  Over time, it leverages Watson’s capability to develop a body of knowledge by learning how issues were best addressed in the past.  This enables greater speed and accuracy in responding to future events.

“Watson provides the opportunity to deliver business value and insights from all of these data insights – structured and unstructured, data from weather patterns, news, D&B and supplier IQ,” explains Joanne Wright, Chief Supply Chain Officer, IBM.

“It does this with speed and accuracy. No more are we saying ‘OK…let’s get the data and meet again tomorrow’ because Watson takes my team’s input and incorporates that into the next iteration as we go.”

Watson In The Resolution Room: A Case Study

IBM Watson is always a room participant, so you can draw on Watson’s expertise using natural language to ask a question, for example: @Watson what is the status of order ABC123?

Imagine the following scenario; A Late Shipment alert in the Ops Center reveals that orders of your most popular drone are in jeopardy because the shortage of the entire supply of a critical part, a lithium battery, has been delayed. You create a Resolution Room to manage the incident collectively.

Watson is in the room.

Whilst your team discusses how best to manage the problem you have the ease of asking Watson questions such as:

  • Which customer has the most sales dollars that will be late?
  • What are the financial impacts of any late orders?
  • Have we experienced this problem before? Who are the experts who have worked on these similar issues in the past?
  • Are there any alternate suppliers for part number 46001?
  • Why is there a shortage of lithium batteries?

Watson can provide answers to questions such as these based on the data available in the data model and in other Resolution Rooms. Learning over time, it becomes smarter and able to provide better insights about your supply chain.

Click here to try a Resolution Room demo. 

Got a big idea you want to push through a big company or simply want to learn more about Watson and the Resolution Room?

Sign up for next week’s procurement webinar, How IBM Built the Cognitive Supply Chain of the Future. hosted by Tania Seary and featuring IBM’s Chief Supply Chain Officer Joanne Wright. 

Data. Tech. Talent. Giving Procurement The Edge

Today’s challenging business environment is marked by social and economic uncertainty, weakness and volatility in emerging markets, and increasing geopolitical risk. How can  procurement teams ensure they have the edge?

Dramatic changes in the role of the procurement function over recent years have meant a remit that exceeds traditional operational responsibilities, often having a critical impact on shaping business models. The challenge is to continue adding value – addressing new opportunities and risks, and becoming a strategic business function – without increasing overall cost.

CPOs need to think differently about three key assets – data, technology and people – and how to bring them together to deliver for their stakeholders.

Data deluge

Today’s procurement teams face a deluge of data from internal and external sources, and in the digital age, new data streams are emerging every day. Many companies have yet to overcome the problems of poor quality data, held on disjointed legacy systems. Historical spend data is often uncategorised and needs significant cleansing before it can form the basis of a forward-facing outlook.

So, while procurement teams can access an immense amount of information, it’s a challenge to deliver valuable, actionable insights. Used wisely and effectively data can deliver robust insights to underpin every decision and tackle today’s challenges head on. Mismanage it, and it can swamp internal teams and lead to indecision and paralysis.

Tackling technology

Technology is frequently seen as being the answer. We heard an enormous amount about digitalisation, and the promises of AI and ML in 2017, yet few organisations are ready to adopt these new digital technologies. Many procurement operation teams recognise they have yet to make the most of existing technology, and tackling the problems that come with legacy systems, so their focus is on getting the basics right.

The first task is to understand which technologies are applicable to organisational challenges and maturity, and this assessment is important to create a digital roadmap for the future. Technology is only an enabler – not the complete solution – and needs to be fine-tuned to match individual business contexts.

People power

In theory, putting data and tech together creates intelligence, but all too often the process fails to produce relevant insights. It is the third asset – people – which can have a major impact on the potential to generate valuable business information.

There are plenty of talented individuals in existing procurement teams, yet many CPO’s believe their teams lack the skills required to turn strategy into results. They recognise that unless they have greater visibility and insight, it’s difficult to make the right decisions. For category and contract managers, the largest skill gap is in analytics, where teams struggle to use levers including external market intelligence, supplier portfolio optimisation and actionable spend analysis to best effect.

As procurement’s influence in the organisation grows, innovative technology gets introduced, and new data streams become available, roles of procurement professionals also evolve. This necessitates continuous review and addition of new skills and capabilities which may not exist in the current team.

Helping hand

We have launched a white paper looking at what solutions can be used to overcome the data challenge, decode technology, and plan how the skills gap can be resolved, to help procurement teams become more active influencers and respected decision makers in 2018.

2017 Rewind- The Impact Of Blockchain On Procurement

As part of our 2017 Procurious rewind, we’re taking a look at the top blogs of the year. Blockchain was one of the hottest topics on the site this year. It’s time to brush up on your knowledge and understanding right here, right now! 

Blockchain technology will not only impact procurement and procurement professionals but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement and procurement professionals in perspective picture yourself twenty years ago trying to explain how the Internet is going to change things. Where would you even begin?

Like the Internet the Blockchain is a network. In the case of Blockchain comprised of decentralized “ ledgers”, many are referring to it as Internet 2 or more commonly the Internet of Value or Internet of Trust.

The benefits

The most important thing to understand is that Blockchain addresses many of the most critical problems we’ve encountered doing business on the internet.

1)  Security: Practically speaking the Blockchain is unhackable.

2)  Transactions are verified by network participants (consensus), eliminating the need for third-party intermediaries’ (banks) costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains banks alone have estimated these processes are costing them more than $20 billion annually.

3)  Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards could significantly add to their bottom line.

4)  Once transactions are verified they are secure and immutable. (unchangeable)

5)  The immutability of the Blockchain means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where provable chain of custody is critical.

6)  Payments can be made directly from buying entity to selling entity “ledgers” by-passing intermediaries (banks, brokerage, clearing houses, title companies, etc.)

7)  Payments can be automatically triggered based on the codified terms of “ Smart Contracts” stored in transaction blocks.

8)  Blockchain capabilities will change, if not eliminate the role of accounts payable and accounts receivable departments.

9)  Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity exists for products and services such as energy or digital rights where backend settlement costs currently constrain those markets.

10) It is also estimated that 25 per cent of the global population does not participate in the global economy because they have no bank accounts and/or credit cards. Without these tools they cannot participate in the Internet economy. The primary reason they do not have these economic tools is because they cannot prove their identities. Immutability of the Blockchain can enable these people.

What do I need to understand?

The capabilities I’ve outlined just scratch the surface on how Blockchain impact all of us. Aside from the aforementioned, as a procurement professional are several important things to understand.

1)  Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact these technologies will become infinitely more practical and secure because of Blockchain.

2)  Do not think of Blockchain and BitCoin, FinTech or Crypto Currencies as synonymous. They are not.

3)  Do not think that it will take 20 years to mature and be mainstream. The estimate is 5-7 years for full maturity.

4)  Do not assess progress by the US/Euro FinTech Community. While they were the first to recognise Blockchain’s inherent value and arguably have the most to gain by adopting it, they also have the biggest hurdles to overcome and could very well be last to cross the finish line.

5)  Don’t make the mistake of waiting to become knowledgeable about Blockchain; it is the most highly disruptive technology we’ve seen since the Internet and it won’t wait until you are ready for it.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn