Tag Archives: procurement technology

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

Are You Ready For The Procurement Rebels And Revolutionaries In Your Team?

We know Gen Z don’t fit into the traditional workplace – but how can procurement organisations embrace these revolutionaries to benefit from their rebellious nature and leverage their innovative approaches? 

As a procurement manager with very rigid, process driven procurement software in place, how do you plan to manage the potential chaos that will come from the millennials in your current workforce and the Generation Z’s about to enter it?

Firstly, let’s address three ways of dealing with this issue. Do you ignore them, do you suppress them, or do you take time to investigate what these natural rebels and revolutionaries can offer?

Both groups are born entrepreneurs; they mesh work and play together, they’re smart beyond their years and they have a clear picture of what they want from a career.

Technology has been a major influencer in the develop of a new type of professional. It has provided access to vast amounts of information and has become the great equalizer, playing a major role in their disruptive nature at home and at work.

In my experience, I’ve found that both millennials and Z’s are self-starters – they work smarter and harder than you may think and have disproved time and again the “lazy” stereotype. They’re not averse to working outside normal business hours and use their daily commutes or downtime to get work done because they want to complete it promptly.

The tech catalyst

So, we know that millennials and Z’s don’t fit traditional workplace rules, so how can organisations benefit from their rebellious nature?

Technology is the catalyst of this rebellion. It meshes the world of work and play into a single environment; one where users expect the ‘Amazon’ type experience they get at home on Sunday to be mirrored in how they use technology at work on Monday. ­­

What do you say to the team member that walks into your office to tell you that your existing procurement software is drowning the team? They then show you an app they downloaded over weekend that allowed them to create RFQs, connect and chat with suppliers, make decisions and save a ton of their time and your money.

Revolutionaries are born from discontent. They’re frustrated at the status quo, and those who lead them are searching for a better way. It can be a challenging process, but these young rebels – or, to use a modern term: these entrepreneurs – are simply seeking more effective and flexible ways to work.

A new approach

So how would you react to the above scenario? It starts by changing how you approach the thinking behind the solution. This means recognising that innovation is no longer a top-down exercise that remains in the exclusive domain of senior management teams or corporate retreats.

Real innovation today is being driven from the ground up by those rebels within our teams that simply want a better work experience and are not afraid to try new technology or methods to get better outcomes.

It wasn’t that long ago when ‘agile’ was a term used only in software and development teams. I now see sales teams working with scrums and management teams having daily stand ups – it’s just one example of the new way of thinking and doing that is helping business work faster in today’s instant world.

Does this mean that it’s time to let the revolution rise and allow the rebels to take over the organization? Well, not entirely – it’s about getting the balance right.

It’s time for procurement leaders to stop lamenting about being seen as the roadblocks within their organisations and to look to your millennials and Z’s as a talent pool rich with ideas, innovation and passion.

They will challenge, they will make mistakes, but it is time to move beyond the current boundaries you’ve set, and remember – you were a rebel once, too!

About the author

Alan Paul is a thought leader and CEO of sourceit, a technology company that has led the market in the development of simple and easy-to-use sourcing applications for indirect categories.

Sourceit offers three different products for buyers:

  • RFQ – time saving request for quote software for all indirect categories,
  • Market – a specialized procurement and job management application for marketing services, and
  • Catalog – an inventory management and on-demand product/services ordering application.

Visit the website: sourceithq.com

Blockchain: Are You Bothered?

There are so many misconceptions around blockchain and its potential impact. Will the fundamental concept of blockchain really have a significant impact on procurement, finance and supply chain?

Last month’s Procurious London Roundtable was sponsored by Basware

Blockchain is the coolest technology of the moment and the hype surrounding it only appears to be growing year upon year. Whilst the concept was first used for Bitcoin, the digital currency, its potential is far wider, and many industries are actively investigating the possibilities of using blockchain-based solutions.

But despite organisations around the world jumping on the Blockchain bandwagon and advocating for its enormous potential, do the majority of professionals understand precisely what it is, what it can do and the extent to which it will impact our businesses?

At last month’s Procurious roundtable, Paul Clayton, Head of New Service Development, Basware put us through our paces with an overview of blockchain technology and his insights as to why procurement pros need to be cautious not to overestimate it’s bearing on the function.

What is blockchain?

A blockchain is simply a digitised, decentralised and cryptographically secured ledger of transactions.

“The biggest misconception” Paul begins, “is that there is only one blockchain. There are actually many blockchains in use today throughout many different industries.”

“Blockchain is actually only a concept, whose origins go back to academic work in the early 90s, rather than a thing. The concept was first publicly used to allow the crypto-currency Bitcoin to be traded virtually, anonymously, and without the need for a centralised bank.”

“Blockchain technology says where something has been transferred to and retains a trace of the transfer. Conceptually a blockchain acts like is a single ledger, a source of the truth if you like. In reality, it is physically distributed where there are actually multiple ledgers, known as nodes, that all work together to come to consensus on where something has been transferred to, which is then shared between them.”

An obvious advantage of this technology, is that it’s very difficult for you to break the integrity of the ledger. “There are multiple copies of the same ledger and so if someone hacks one it becomes immediately obvious that it is different.”

The flaws at the heart of blockchains

Whilst a blockchain itself is safe, an application using it remains hackable – Security researchers and hackers have proved it’s possible to hack someone’s Bitcoin wallet and empty it of crypto-cash. Mt. Gox infamously lost 7 per cent of all Bitcoins in circulation in 2014, which were worth, at the time, approximately $473 million. It also appears to be an uphill battle trying to prosecute someone for taking a Bitcoin

It’s can be too transparent – With public blockchains, once a transaction and its associated data have been placed onto a blockchain, anyone and everyone who has access to it can view everything, whether you like it or not

It’s not the most elegant solution – The very nature of the deliberately distributed ledger with multiple copies (nodes), means that you have multiple nodes undertaking exactly the same piece of work ie working out where something has been transferred to. From a pure computing power point of view, for certain applications, this is a highly inefficient way of doing things.

The blockchain for Bitcoin for example, has already had to be re-designed to increase its scalability as the number of Bitcoins in circulation and the growth in the associated transactions meant that the ledger became too unwieldy and it was taking too long for it to update.

You can still lose things!

Even if you know where something went, you can still then lose it. Who could forget the unfortunate James Howells, who mistakenly threw out a hard drive containing 7,500 Bitcoins, now estimated to be worth $7.5 million

 

Blockchain for business

There are some who would argue that these problems have been addressed and eliminated for blockchain for business. Paul is not one of them!

“The distributed nature of ledgers means blockchain is good at maintaining the integrity of who owns something but what it cannot do is determine whether the person who put something into a system owned it in the first place.”

This means, when making a transaction via a blockchain, the recipient needs to be able to trust the supposed owner of the thing that is being exchanged. “You are, essentially, reliant on the veracity of the source of what goes in to the blockchain.”

For example:

Does the “owner” actually own the rights to the house they are trying to sell you?

If you’re exchanging metals, does the “owner” have documents to prove they have the rights to the gold?

It might be good at preventing a fraudulent transfer of an asset but blockchain is “next to useless at establishing if a person owned something in the first place”

“As a ledger system it is extremely inefficient, almost clumsy in the way it works. In certain circumstances, where there are a high volume of transactions it uses so much computing power it’s almost not worth it.”

“And it’s for these reasons that, whilst it will have applications in many areas from supply chain through to electronic voting, blockchain won’t change the world!”

Where is the value for procurement?

“Is there value in blockchain tech? Yes. Does the value match the hype right now? Not even close!”

“From a procurement point of view the biggest area of impact right now is most likely to be in supply chain applications. There are obvious applications for the transfer of title and bill of lading. Of particular interest in this space right now are supply chains that can be subject to fraud such as pharmaceuticals and food

Going beyond that the application of so called “smart contracts” to a blockchain can help automate certain business processes. Smart contracts, are pieces of computer code attached to a blockchain that automatically execute an action once a set of agreed criteria have been met. For, example, a smart contract could be used to automatically pay a supplier once the buyer has received their goods without the need for invoice processing and payment.

” In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet its just an interesting concept with some obvious benefits and flaws.”

Last month’s Procurious London Roundtable was sponsored by Basware

You will be Assimilated: The Collective Intelligence of Procurement

For those who remember “The Borg” from Star Trek, you’ll remember the notion of a dispassionate alien mind-being that would suck up your individual mind to subsume into the collective intelligence.  Resistance is futile. 

Crazy stuff, right?  Or maybe not.

Flash forward to today.  For most people, your every move is being tracked by your smartphone, social media apps, web browsing, and credit card transactions.  Ever wonder why Google and Amazon are basically giving away their helpful devices and AI assistants?  You are being watched.  You are the product (not the customer).  You are the raw materials of a collective intelligence being built upon your individual experiences and desires.  In other words, the proverbial machine is watching and learning from you (in order to sell to you, er, rather, to “better meet your needs”).

But, this is all consumer stuff, right?  B2B is different, right?

Sort of – but it’s not THAT different.  And with all the regulatory pressures coming on consumer data privacy, as compared to much of the privacy that you sign away your rights to when you enter an employment contract, the tables may actually turn here. If you’re using a popular cloud-based Procurement system, you are also being watched (many providers analyse your system behaviour to figure out how you navigate the system and how to help you… yes, the chatbots are coming). If you use a procurement “business network” or eMarketplace (e.g., Amazon Business), your suppliers are signing away some of their intellectual property – whether they know it or not.  And smart companies are trying to gain a market intelligence advantage through digital business strategies in the supply chain. There’s a reason why GE created Predix; why Flex funded Elementum; why DHL sells supply chain risk technology; and so on.  Adoption creates insight and intelligence… and advantage.

All this isn’t necessarily bad for you though.  It serves up price benchmarking, risk intelligence and improved system usability.  It also signals how the world is moving away from “empty apps” that push documents around in workflows and move towards systems that are building intelligence to make your apps “smarter”.  This intelligence is typically built using machine learning fed by large data sets that help improve repetitive tasks like spend classification. Of course, AI is a bigger topic, and there are 23 distinct areas in AI for procurement and supply chain that we’re following that I can’t cover in a single blog post!  For example, contract management is a great example where AI is already having an impact and this will be very disruptive in the Legal services (e.g., Legal BPO) area.

Still, building your collective intelligence for your firm doesn’t necessarily require AI.  You can avail yourself to some good old-fashioned knowledge management built up from the various collectives that are all around you:

  • The internal corporate collective. Learn from consulting companies and build presentation storyboards of your procurement projects that created change and value – and use them to win over skeptical stakeholders.
  • Your supplier collective. Your current supply suppliers, previous suppliers, “almost suppliers” (who bid on your business), and potential suppliers via crowdsourcing are a wealth of knowledge – if you know how to tap them through supplier innovation programs and proper supplier management processes.
  • Your customer collective. This includes not just internal stakeholders, but external customers as well.  For example, Lenovo uses its social customer mining tools to identify key customer/demand information that can be passed upstream to suppliers.  On the flip side, many similar intelligence tools are being deployed on the supply side with varying results (that’s a whole topic for another day).
  • The installed base collective. Your procurement app providers, consulting providers, and managed service providers are likely working hard to extract and productize your individual intelligence into a re-saleable collective intelligence. Choose a provider that is working on building collective intelligence into its overall platform strategy.
  • Your peer/community collective. There are lots of communities out there right now where you can learn from your peers – and many of them are free. You’re learning right now by reading this on Procurious, so you’re already well on your way!

We even practice what we preach at Spend Matters when we tap into this collective intelligence of procurement technology users by capturing end user satisfaction (think Net Promoter Score on steroids) and using it as an entire axis of our “SolutionMap” vendor scoring model/methodology.  And, yes, there’s a freemium version (it has eight procurement technology areas mapped out based on five different buyer personas from which you can select)!

The bottom line is that although we all start with a certain amount of individual intelligence, it’s the collective supply market of intelligence that is all around us if we can learn how to tap it, build it, and wisely bring the right intelligence back to our individual selves (and we’ll even be able to augment that individual intelligence into our own personal bots and ‘digital twins’).  And since procurement should be enabling stakeholders to also tap that collective intelligence of supply, it couldn’t be a more important competency to build right now.

So, go bravely into that supply market and assimilate yourself into the collective intelligence of procurement and be smarter and better from that experience.  It’s really what life is all about, isn’t it?

This article was contributed by guest author Pierre Mitchell, Chief Research Officer and Managing Director at Azul Partners.

Is Independence The Next Procurement Disruptor?

In workplaces that have less structure and much greater independence, where we can bring our own technology to work and use it to innovate, what does the future hold for procurement?

Disruption has become something of a buzzword lately. With brands like Uber, Airbnb, Airly and Tesla making headlines in Silicon Valley it’s very easy to get swept up in the momentum; where is technology taking us and how can it lead us to better outcomes?

Is technology fear making you freeze?

After speaking at a Young Innovators conference in Denver Colorado recently, I met with delegates afterwards to discuss their technology challenges.

Our conversation revealed that whilst technology was viewed as a great enabler and business simplifier, they were fearful of the cost and effort required for implementation – so fearful, that many had resisted changing existing legacy technology even when they knew it was bad for business.

It reminded me of Kodak, a story so powerful in reminding us how an inability of a company to act due to fear of change, risk aversion and desire to protect the status quo killed a global business.

When it comes to legacy software, perception might be that it’s better the devil you know. But we have reached a new era of the digitally connected individual, one who values instant access to information. The digitisation and connections of our personal environment is leading to the same changes within the workplace, allowing buyers to become more productive and engaged in the buying process.

Procurement teams have successfully become more integrated into businesses through a combination of people and technology and have delivered strong savings and operational improvements, but where are the future incremental improvements going to come from?

Reinventing the rules with the cloud

It’s becoming very clear that cloud-based applications are and have re-invented all the rules.

Cloud based applications are driving a fundamental shift that will transform many aspects of procurement and strategic sourcing.

Procurement teams are beginning to understand the benefits new technologies can bring to an organisation, even when it means that buyers are working with, and bringing software and applications of their own choice into the workplace.

Traditionally we have focused only on the team, today we are witnessing the rise of the individual within a team. A future where procurement individuals are connected to the organisations approved suppliers but continue to use their own technology to improve those interactions and connections. This is allowing them to find and deliver incremental improvements businesses are demanding.

The trend is right in front of us, our work environments have transitioned from structured workplaces to become open and community based; the same is occurring with our technology decisions. We still come to the office each day but work in an environment that has less structure, more innovation, flexibility and freedom.

Bring your technology to work day

Today you can bring your own technology into the office, use it to drive innovation, supplier connections and collaboration and then connect to the business mainframe to download and upload data.

The future will see more individuals challenging existing processes and demanding better connected applications that are just as fluid and flexible in business as they experience in their personal lives.

Our future procurement leaders will look for solutions that simplify key processes, are easy to implement and use and gather the key data that can be utilised to improve decision making.

Finally, I recently came across the following quote from a CPO in an Accenture article, “it’s gotten to the point now where technology is evolving faster than my mind is conceptually able to digest it”.

Welcome to the world of you, the procurement individual!

Alan is a thought lead and CEO of sourceit, a technology company that has led the market in the development of simple and easy to use sourcing applications for a wide of direct and indirect categories.

Sourceit offers three different products for buyers:

  • RFQ – request for quote software for products and services
  • Market – a specialized procurement and job management application for marketing services, and
  • Catalog – an inventory management and on-demand product/services ordering application.

Negotiation Skills? Going Once, Going Twice…Gone!

Does the rise of eAuctions mean the professions’ hard-won negotiation skills are now irrelevant? 

On Procurious, we’re keeping a close eye on the rise of procurement-related technology and what it means for roles and skill-sets across the profession. One such technology – the eAuction – has proven itself to be a highly efficient way of conducting a sourcing event and driving prices down. But does the advent of eAuctions mean that procurement professionals’ negotiation skills are no longer required?

This was one of the topics discussed at a Negotiation Roundtable organised by CABL (Conti Advanced Business Learning) and facilitated by its Founder, Giuseppe Conti.

Keep your options open

Thierry Blomet, Kemira’s Senior VP of Global Sourcing, told the roundtable that in his experience, the contract cannot always be awarded immediately after the eAuction. “We had an eAuction where it became clear that there were so many moving parts and questions that could not be answered during the event itself. We realised there’d be the need for additional discussion, so we used the outcome of the eAuction to narrow the bidders down to a small group of preferred suppliers, and continued the conversation from there.”

In other words, if you want to keep your options open, it’s important to communicate to suppliers that you may make the decision not to award at the conclusion of the eAuction. Instead, you may move the leading suppliers to a next-step status.

The nature of the eAuction itself presets your ability to negotiate during the event. There’s a bewildering array of eAuction formats – Dutch, Japanese, Brazilian, English to name a few – so it’s important to do your research. Blomet comments, “If you try to condense the event to 30 minutes, for example, you leave very little room to negotiate. A longer event leaves more room for something to happen and for you to react accordingly.”

Play fair

Francesco Lucchetta, Director of Strategic Supply at Pentair, says the ability to play with the visibility of quotes – so participants in the same eAuction can see each other’s bids – can be very helpful in encouraging competition. He warns, though, that the contract should have been established and its terms accepted by the bidders well before the eAuction takes place. “Make sure your suppliers have accepted your contractual terms, so no more discussions need to happen once the award is in place.”

Blomet notes that there are a lot of ethical aspects that need to be clearly communicated and understood before an eAuction. “You need to be able to define any red lines, and make sure participating suppliers understand. During the eAuction, ethical breaches could include inviting a fake vendor, or having a hidden way of scoring. It’s a matter of credibility.”

Tamara Taubert, Procter and Gamble’s Global Capability Purchasing Leader, comments that purchasing teams always need to behave in ways that are consistent with their values, and this includes running an eAuction. “Think about how you will behave as a company during the event. If the information about the event became public in 5, 10 or 20 years from now, would you be comfortable with that? You need to guarantee fair and ethical treatment of all participants.”

In fact, unethical behaviour by some corporations using eAuctions means that many suppliers are uncomfortable with the concept. Blomet notes that some large corporations have established that they do not participate in reverse auctions as a rule. “There have been a lot of issues in the past caused by poor communication, poor management, unethical behaviour, or suppliers simply being uncomfortable with the technology.”

This suggests there’s work to be done to improve the reputation of ethically-driven eAuctions.

Interested in attending a CABL Negotiation workshop? Click here  to find out more. The founder, Giuseppe Conti, has over 20 years of Procurement experience with leading multinationals and over 10 years of negotiation teaching experience at leading Business Schools (including Oxford, HEC Paris, IMD and ESADE).