Tag Archives: procurement technology

Facebook AI Research Team Shuts Down Negotiating Robots

Facebook has shut down two robots after they abruptly stopped using English and invented their own language while conducting a negotiation exercise.

There have been a flurry of reports over the past week about Facebook’s decision to shut down two chatbots – named Bob and Alice – after they developed a coded language that was incomprehensible to humans.

The initial experiment involved a simple conversation between one human and one chatbot where they negotiated the sharing out of some items – books, hats and balls. This conversation was conducted in English, along the lines of “give me one ball, and I’ll give you the hats”.

So far, so good. But when the human was removed from the conversation and two chatbots were directed at each other, the way they communicated immediately became difficult for humans to understand.

Bob: i can i i everything else . . . . . . . . . . . . .

Alice: balls have zero to me to me to me to me to me to me to me to me to me

Bob: you i everything else . . . . . . . . . . . .

Alice: balls have a ball to me to me to me to me to me to me to me

Bob: i i can i i i everything else . . . . . . . . . . . .

Alice: balls have a ball to me to me to me to me to me to

Bob: i . . . . . . . . . . . . . . . . . . .

Some media commentators have labelled the development “sinister”, with frequent references to Terminator, Skynet and – of course – Frankenstein appearing in related coverage. But Facebook researcher Dhruv Batra told Fastco that there was simply no guidance set for the robots to stick to the English language. “Agents will drift off understandable language and invent codewords for themselves.” Essentially, the bots found a more efficient way of communicating with each other.

Setting parameters

The topic of negotiation and AI came under discussion at a recent Negotiation Roundtable organised by CABL (Conti Advanced Business Learning). The attendees agreed that if a robot is going to run a negotiation, it requires very clear guidance around the parameters and objectives.

Another concern about AI being involved in commercial negotiation is that at present, they are unable to understand emotional intelligence. Thierry Blomet, Senior VP of Global Sourcing at Kemira, says that “Until we completely remove the emotional aspect, AI cannot run negotiations. Body language and emotional reactions are intangible, and are most unlikely to be modelled by programmers.” In the case of Facebook’s Alice and Bob, the human factor was removed.

Blomet points out that AI can play a valuable role in complex scenario modelling, which would be “much more complex than even the smartest procurement brain could manage. Whatever might happen in the negotiation would be included in that model, with the answers already pre-empted.”

Laurence Pérot, Head of Global Supply Chain Procurement at Logitech, agrees. “Big Data and AI will lead to much more efficient scenario modelling, particularly with supply chain, logistics and transportation bids.”

Orestes Peristeris, Supply Chain Expert at Yale, comments that ultimately, it’s about quantification and sophistication of statistics. “Do you have the data in the same place and in one system? What can be quantified and what cannot be quantified objectively? There are some things that can be used, some things we know will happen with some certainty, and some things that can’t be quantified. Finally, we’ll always need humans to take the outcomes of Big Data and apply it to the business context.”

As for the future of procurement negotiation, perhaps one day we’ll see buyers and suppliers lining up their chatbots against each other and letting them negotiate in rapid, complex code.

May the best bot win.

In other procurement news this week:

Hackett research reveals dramatic savings from digital transformation

  • New research from The Hackett Group has shown that the potential cost take-out opportunity through digital transformation is up to 24%, through the implementation of robotic process automation, advanced analytics, cloud-based applications and other approaches.
  • The research has also revealed that world-class procurement organisation now operate at 22% lower labour costs, have 29% fewer staff, and generate more than twice the ROI of typical organisations, with over $10 in savings for every $1 of procurement operating costs.
  • The Hackett Group’s Christopher Sawchuck commented that procurement technology has reached an inflection point: “World-class organisations can continue to reduce costs by embracing digital technology, and typical procurement organisations can leverage the same technology to catch up faster at less cost.”

Download the research here: http://www.thehackettgroup.com/research/2017/wcpapr17/SalesForce-World-Class-Advantage-17Q2-PR.html

Collaborative Robots to Boost Warehouse Productivity

  • In a shift away from the apparent race to replace humans with robotic workers, firms are designing robots to work alongside people in warehouses and boost productivity.
  • “Collaborative” robots can have a variety of uses, including leading human workers to the exact location of a product, or carrying goods from one part of the warehouse to another. DHL, Bonobos and Zara are known to be experimenting with the technology.
  • The robots – costing tens of thousands of dollars – are relatively cheap when compared with the vast amount of conveyor belts and automation systems included in a typical warehouse.

Read more: The Wall Street Journal

Interested in attending a CABL Negotiation workshop? Visit http://www.cabl.ch/ 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).

Blockchain Is Real. It’s Here Now And It’s Coming To Transform the World

Why are organisations so keen to bury their heads in the sand and pretend blockchain isn’t happening – it all starts with a severe case of NIH syndrome…

There are certain market analysts who would have you believe that the benefits of Blockchain technology are “Hype” and the real benefits are still 10-20 years away. There are several reasons for this:

Ignorance

Although many believe such firms to be thorough and knowledgeable about every leading edge technology, they are not. This is evident in a lack of participation in key consortiums and conferences and a lack of good research leading them to a parochial view of Blockchain’s Global impact which they put in print.

NIHS (Not Invented Here Syndrome)

“Coin the Term and Own the Market” has always been the mantra of some these firms.  “If we don’t say it is so – then it ain’t so.” There has been at least one attempt to rename the Blockchain market “Metacoin”- “Meta” meaning “about or referring to itself.” This shows a clear misunderstanding of the market.

It’s not “about the Coin”…

…whether Bitcoin, Ether, Zcash, or any others. Again, this is a very narrow view of what Blockchain is all about. What are most important are the underlying capabilities of Blockchain technology that enable those cryptocurrencies, but also enable many other unrelated and far reaching benefits.

Blockchain is not synonymous with Fintech or Bitcoin

Currently, Financial institutions arguably stand to gain the most by adopting Blockchain technology and stand to lose the most if they don’t. The major global financial institutions, especially those in the U.S. also face the biggest challenges in getting their objectives achieved.

Blockchain technology can resolve many inefficiencies inherent in the trade settlement process that cost them and customers time and estimated $20 billion per year. There are three major prohibitive factors in achieving this:

1.   Existing Technology infrastructure

Understandably financial institutions don’t want to start over redesigning their systems from the ground up so they are trying to select bits and pieces of Blockchain and integrate it with existing technology. History has shown this approach has never worked very well and could take years to accomplish if they are ever successful. This is one area where market or analyst skepticism is derived from. On this they are correct.

2.   Current Legislation

Mandating human intervention and oversight in settlement processes that Blockchain can negate the need for has hamstrung efforts even more than the technology issues.

3.   Ownership & Control of the processes and technology

Financial institutions want to own and control these processes via “private Blockchains” so they can make the rules and control the economy. “Public Blockchains” are like the Internet and are not controlled by anyone. We know how well “private internets” worked – remember “intranets”?

Ironically the public gave that “trusted intermediary” role to financial institutions years ago and they have abused it time after time. It was the Global Financial Crisis of 2007-2008 which motivated Satoshi Nakamoto to invent Blockchain to enable technology to do what we could not blindly trust banks to do for us. In spite of Dodd-Frank oversight legislation, the recent Wells Fargo debacle has shown that not much has changed.

With all of these challenges for Financial Institutions to adopt Blockchain technology, one might say, “Ok, now I understand why Blockchain is more hype than reality – lots of discussions, lots of promise, and a handful of promising but limited test-scenarios. Lots of investment, but not much to show.” Yes. One could clearly have that view if :

1.   You didn’t look beyond the Financial Industry,

2.   You thought Blockchain was the same as Bitcoin,

3.   You didn’t look beyond the borders of the United States, and

4.   If you ignored or were unaware of the implications of Blockchain security, record immutability, Smart Contracts, micro-units, micro-payments, and digital identification already implemented and working in many other countries in hundreds of applications across every industry sector.

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.

7 Ways IoT Is Already Changing the World

From connected healthcare to retail and water management, the IoT will revolutionise the way we live. It’s already having some pretty major impacts…

This article was written by Gauri Bapat.

The wave of connectivity had extended beyond phones, laptops, and tablets and is permeating into our daily lives. With an explosion of connected devices in the market and a healthy adoption rate, we can safely assume that we are taking confident strides into the ‘connected life’ made possible by the IoT.

A report by Gartner suggests that by the year 2020, the number of connected devices across technologies will touch 2.6 billion. As we move towards an increasingly automated world, this technology will be used to improve the productivity and quality of life and industries alike. The IoT is poised to grow from a technological phenomenon to one with a more global and social impact…and the cogs are already turning in that direction. Things that we once saw only in sci-fi movies and Steven Spielberg specials are a reality today.

Let’s take a look at how the IoT is already changing the world we live in.

Manufacturing

IoT in manufacturing is ushering in the fourth Industrial revolution (Industry 4.0) that aims to make manufacturing smarter. Smart manufacturing involves the use of sensors that are retrofitted on existing manufacturing equipment to improve efficiency and performance. Siemens ‘ PLC manufacturing plant in Amberg, Germany, has implemented the principles of Industry 4.0 and has completely automated the production of their automation systems. Post this implementation, they witnessed a 99.99885 per cent “perfect” production quality rate. Now that’s impressive!

Airlines

The airline industry has seen massive adoption of the IoT in order to increase operational efficiency and drive the age of ‘connected aviation’. Virgin Atlantic has every single component of its Boeing 787 attached to a wireless airplane network. These incredibly connected airplanes use IoT data to evaluate everything right from the airplane’s performance to issue identification.

So, if a Virgin Atlantic jet reveals low-performance mid-flight, this information is related to the ground staff real-time. Thus, when the flight lands, the airport engineers are ready to solve the problem. Other airlines such as KLM, Qantas, Lufthansa, and Delta are also using IoT to improve aircraft performance, discover new business insights, and maintain greater efficiency.

Airports such as Miami airport, London City airport, Helsinki Airport, amongst otherS, use IoT to track passengers, prevent bottlenecks and queues, offer personalised services to the customers, track assets and also deliver location-based services to the travellers.

Water Management

One of the areas where IoT has made a tangible difference is in water management. Proper use and management of water have been a problem that many cities across the globe have been battling. IoT has been put to work in cities such as California and Bangalore in India to not only identify the cause of water shortage but also to identify avenues as to how water management can be optimised. The Bangalore Water Supply and Sewage Board (BWSSB) employed an IoT monitor to manage the complex water distribution system by creating an operational dashboard using IoT. They realised that almost 45 per cent of the water supplied by BWSSB is unaccounted. San Francisco employed smart meters to measure water consumption and notify their customers when their water consumption exceeds the specified limit or if, for example, the water is left running continuously for 24 hours.

Retail

The retail industry has witnessed a huge adoption of IoT. IoT implementation in retail has been done to not only improve the supply chain or to create more engaging and tailored marketing campaigns, but also to make shopping a more interesting experience. Retailer Rebecca Minkoff created the ‘connected store’ using RIFD tags on each piece of clothing and used smart mirrors in the dressing rooms. The customers could try on the product, and also take a look at other looks, available colors and sizes without even leaving the dressing room!

Target has been using beacons across 50 stores to provide personalised offers and present their customers with hyperlocal content to make shopping more exciting for their shoppers. Ralph Lauren’s Polo Tech apparel, which is a smart workout shirt, monitors vital activities of the user on a real-time basis and enables ongoing health monitoring.

Connected Energy

2016 saw us looking towards connected energy solutions to help us save energy. IoT products such as Google Nest, ecobee3 thermostat, the heating system Hive by British Gas have seen huge adoption to track and measure energy consumption. 46 per cent of technology enthusiasts in Germany and 42 per cent in the US already own a connected energy solution and save almost 72 per cent on their monthly utility bills – that amounts to a USD $80 reduction in the monthly bill.

Lighting Control

Moving beyond the smart lights of a connected smart home, smart lighting control can generate huge financial savings by controlling street lights. Mayflower CMS successfully employed IoT to control and monitor an excess of 180,000 street lights, bollards and signs in the UK and Ireland with its largest installation in Hampshire that has over 90,000 nodes. The Hampshire City Council has been able to reduce energy consumption by 21GW/hr per annum which is a reduction of 40 per cent and has successfully reduced carbon emissions by approximately 4000 tons per year.

Connected Healthcare

The global IoT healthcare market is expected to touch USD 160 billion by 2020. The last few years healthcare has witnessed wellness sensors to surgical robots to improve efficiencies and better patient outcomes. Ingestible sensors help measure if patients are taking their pills on time and helps medical practitioners manage their patients remotely. Barton Health, a 62-bed health system in rural Lake Tahoe, California, is one of the first users of the ingestible sensor by Proteus Discover, a Digital Medicine to help patients suffering from diseases of the central nervous center such as schizophrenia and place the patient in the driver’s seat regarding their health management with the help of technology.

“When wireless is perfectly applied, the whole earth will be converted to a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of the distance.”– Nikolai Tesla

This famous statement by Nikolai Tesla predicts the invention of the smartphone at a time when the mere thought of such an advanced device was nothing but unimaginable. Take a closer look at the statement and you can see that Tesla foresaw the impact of the Internet of Things (IoT)… a world that becomes so connected that it becomes one ‘huge brain’.

What Tesla spoke of decades ago, we are experiencing today

Gauri Bapat is Director, Strategic Business at Inteliment. This article was orginially published on LinkedIn.

The New Age Of Procurement Technology

Procurement technology went full sail and you eagerly jumped on board. But now 90 per cent of all technology is about to become obsolete. Are you prepared for the new age? 

As the vice president of Basware’s Purchase-to-pay solution it goes without saying that I’m involved in a lot of procurement technology selection decisions. And over the years, I’ve noticed a recurring pattern in the process, across numerous organisations. It tends to play out a little bit like this:

A CPO of a large organisation is at the end of their tether thanks to a messy purchase-to pay process. It’s the age-old story with AP and procurement operating independently, maverick spend with unapproved suppliers, late payments and paper absolutely everywhere.

The easiest, and seemingly smartest, solution to the problem is the implementation of a new purchase-to-pay system, which said CPO requires, being extra savvy, to be a Software-as-a-Service solution. The CPO knows they can get a decent ROI on whichever supplier they choose.

So what’s the problem?

Unfortunately, our CPO is only looking 5 inches in front of their face! It’s no exaggeration to say 90 per cent of today’s procurement technologies will be obsolete in the coming years. And so procurement needs to start looking much further ahead!

Remember Siebel? We can’t either…

You’d be pretty hard pushed to find an organisation that uses Siebel nowadays. You might even struggle to find someone who knows what it is!

Siebel was the cream of the Customer Relationship Management (CRM) crop in the late 90’s and early 2000’s. It was the absolute best at its time.  Hundreds of millions of dollars were spent on licensing and implementing Siebel, with the promise of visibility, efficiency, and improved customer satisfaction.

Fast forward a mere ten years and…nobody uses it.  It turned on a dime thanks to Software-as-a-Service and, more specifically, Salesforce. An enormous technology shift took place, and suddenly Siebel and everything like it was utterly obsolete. More than a few CMO’s were fired as a result.

What can we expect from the next tech shift?

What can we expect from the next technology shift? We hear about  AI, machine learning and cognitive computing all the time and there’s a lot of concern amongst procurement professionals that it’s going to displace our workforce.

But it’s coming to procurement whether we like it or not. There’s a glaringly obvious application of AI for procurement professionals.

One word: data.

When today’s CPOs try to objectively evaluate the functionality of potential new solutions, they’re often bypassing  a crucial aspect (opting to solely measure tactical functionality); the game-changing competitive advantage their organisation can achieve through the power of the data.  There are two major considerations to be made here.

  1. Is the system architected for centralised data capture?

    The system should be able to capture your data, the data of all organisations using the solution  and, ideally, be able to connect with other solutions.  The more the system is designed for centralised data capture, the better chance you have of being able to take advantage of the latest  data-driven tech changes.

    My advice is that you eliminate anything that focuses solely on you and your data.  If it’s not central, you can be sure you’ll get stuck behind and end up like one of the organisations using Siebel.   But, of course, design alone is not enough.

  2. Does the system actually capture that data?

To capture all of this data, there are three parties that matter: suppliers, requisitioners, and AP. This is where tons of business cases fall apart.

  • Suppliers: To capture data you have to get all your suppliers on the system. Not just your big sophisticated suppliers, every single one! You have to get them connected, or you will fail, if not today then most definitely in the imminent future
  • Requisitioners: Who are the worst employees when it comes to using a procurement system? It’s fair to say that it’s often the sales and exec teams;  the people driving revenue for the company. These groups are only going to use a new procurement system if it’s the easiest and fastest way for them to get their jobs done, which means it has to fit in seamlessly with how they work.   If you don’t give them a system that they want to use, you won’t have them, and again you won’t be capturing the data from their transactions.
  • AP:  This is probably the most important part but so often an afterthought when looked at from a Procurement perspective. Consider how many hundreds of thousands or millions of invoice transactions are processed within your company. Now multiply that by the thousands of other companies out there and you’ll get a sense of how quickly that data can scale. Most P2P systems can’t process all of those different kinds of invoices. And that’s where we end up in Siebel world, yet again!

By committing to finding and using a system that captures all of this data, and does so not just for your organisation, but in a truly centralised platform, procurement will soon be able to achieve the following:

  • Fraud detection
  • Machines that know when you need something. Doesn’t it seem miraculous when Amazon knows what you need and presents it to you when you login?  Let me tell you that it’s not. It’s data
  • Dynamic discounting marketplaces
  • Exceptions handled without any human intervention, based on patterns of prior behavior in the data. This might not be behavior that humans can readily identify, but machines can with ease by crunching all of that data

Procurement would do well to remember that, In today’s world, the big value is in the data, not in tactical functionality.

Eric Wilson is the head of Basware’s Purchase-to-Pay business for the Americas and APAC. 

The Rise of the Procurement Robots

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

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

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

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

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

The Pharaoh’s Supply Chain

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

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

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

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

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

In More Recent History

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

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

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

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

People Can Do Stuff

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

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

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

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

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

Five Ways Procurement Will Impact Business

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

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

Transforming Procurement

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

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

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

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

Christopher Thiede is a staff writer at Jaggaer

What’s The Catch-22 In Procurement Technology?

From here to eternity: what does the future of procurement technology  look like? Download Wax Digital’s Procurement 2020 report here

Procurement technology has undergone a long road of change that has consequently altered procurement functions, processes and the very nature of the business itself. But while we spend much of the time understanding how technology is governing what we do today, it’s how technology is shaping the procurement role in the future that should be our focus.

There is a widespread belief that procurement ‘intelligence’ could significantly change the goalposts for the profession, and go beyond informing and processing data, to predicting, learning and deciding.

Procurement technology’s Catch 22

With analytics and intelligence comes a dilemma. Do you outline the questions you need to answer before you perform analysis, or use the data to work out the answers to ‘what you didn’t know, you didn’t know’? It’s a catch 22 scenario.

Thanks to big data and artificial intelligence (AI), this dilemma is becoming easier to manage. A procurement system using intelligence exhibited by machines can learn from users’ mouse clicks, purchases, and line of information to make its own choices, rather than requiring approval from users.

That doesn’t necessarily mean that procurement skills and knowledge will become any less sought-after. But those in demand are likely to change, perhaps even for the better, if cognitive technologies allow experts to think, consult and use their human skills more wisely.

Our panel’s three key intelligence priorities were:

  1. Anticipating supply and demand decisions

    The power of big data enables procurement systems to foresee the needs of the business, such as anticipating demand based on historical spending or seasonal demands. And the data that systems are based on will only expand as new internal and external dimensions are added to the mix, such as social media and newsfeeds, assessing demand more accurately. Intelligent systems may then begin to question human decisions, such as the validity and need for supplier orders and assessing the risk and ongoing performance of suppliers. Supercomputer IBM Watson’s ability to answer questions shows AI’s and sophisticated analytical software’s ability to surpass a human’s ability to answer high-functioning questions, and to work as an instructor to human processes.

  1. Uber-personalisation

    From marketing to IT, departments across the organisation use purchasing systems, meaning that there are different roles and backgrounds to accommodate. Through machine learning, procurement could lead the way in uber-personalisation, in which its systems are integrated with others such as ERP and CRM to determine and define each users’ preferences and needs.

  1. Intelligent supply relationships

With the introduction of AI comes a potential new landscape of supplier management, as eTendering, eSourcing and contract management have the potential to become more automated. This could see systems monitoring supplier behaviours and performance based on buyer feedback, or keeping a close check on adherence to contract terms; and possibly even interpreting eAuction behaviours and leading negotiations to make sourcing decisions on the procurement professional’s behalf. 

Even with vast use of intelligence, the procurement department will still require human involvement. While intelligence can be used to purchase everyday office products such as paper, strategic projects like building a new office will require procurement’s involvement in business planning and meetings, meaning that procurement professionals should strengthen their strategic skills in this area to ensure that they’re indispensable. But a new type of ‘colleague’, which is highly efficient and has extreme attention to detail, could well be on the way. Combining intelligence with vital people skills is how you can make procurement a strong and effective force in the business.

Learn more in Wax Digital’s Procurement 2020 report, a set of future gazing in-depth interviews with global senior procurement professionals and experts.  Integration of procurement technology in the wider business was the first topic. 

No More Guessing Games! Time To Use Innovative Data Leveraging

There’s no longer a need for guessing games when it comes to  driving value! Innovative data leveraging is possible in any environment and can help to lead organisations towards an analytics enabled procurement.  

Join BravoSolution’s webinar, Innovative Data Leveraging for Procurement Analysis, which takes place on 28th March.

Many purchasing executives are looking to drive procurement transformation but this is reliant on three major factors:

  1. Level of stakeholder engagement
  2. Ability to align with the overall business strategy
  3. Use of advanced tools and technologies

My research suggests there exists a noticeable gap between procurement executives’ explicit intentions of driving value for the business, and documented results in these three areas.

These gaps can be attributed to a lack of critical data and analytical insight that can support a truly meaningful conversation with the business about spend, supply base, and supplier performance.

Annual budgeting becomes a guessing game, with little input solicited or provided by procurement. It might be due to a lack of data. Or, it could be procurement’s inability to take the lead in order to anticipate and gather the data required. This disconnect is causing significant challenges for businesses.tech

BravoSolution is running a  webinar on the 28th of March, Innovative Data Leveraging for Procurement Analysis.  I will be  discussing a common process that every executive we met with cited as critical for engaging stakeholders and building analytical insight. We call it “innovative data leveraging” (IDL).

Innovative Data Leveraging (IDL)

Innovative data leveraging is a fact-based, data-driven approach to driving change and influencing stakeholders to create procurement value for the business.

The IDL process was described in different contexts, but the common thread was that cross-functional engagement was powered by stakeholder influence through analysis and presentation of data. Of course, leveraging analytics is difficult without some prior investment in procurement systems such as transactional spend analytics, contract management, and supplier performance measurement. However, our analysis also showed that innovative data leveraging is possible in any procurement environment.

The process starts with procurement executives conducting working sessions with business stakeholders to develop a deep understanding of their business strategy, the challenges they face in executing this strategy, and the role that procurement can play in helping to shape and support this strategy. Successful procurement leaders are the ones who can effectively articulate the questions that need to be answered and pursue the data requirements to provide analysis, insight and advice in order to address stakeholders’ business concerns.

Several additional insights emphasize the importance of innovative data leveraging.

  1. IDL was found to be important during any stage of procurement transformation maturity.
  1. The development of IDL capabilities depends on successful initial business engagements, especially when reliable procurement systems and data are lacking.
  1. Advanced analytics in the form of predictive capability is the most highly evolved form of IDL.

What are the benefits of IDL?

At the earliest stages, preliminary insights on spend may provide opportunities for deeper involvement in functional sourcing initiatives, creating a platform for further engagement and integration. In emerging stages, organisations can drive significant insights into total cost of ownership and working capital improvements that go above and beyond simple price leveraging capabilities. In advanced stages, predictive analytics (using both structured and unstructured data) that produce insights into revenue forecasts, supplier risks, emerging market opportunities, and other value drivers begin to emerge.

The innovative data leveraging approach can help organisations at all maturity levels to build a solid path towards an analytics-enabled procurement, in their pursuit of value and excellence. This does more than bridge the gap between procurement’s goals and the overall business strategy.

When you start by leveraging data analytics, no matter what stage your organisation is in, you can build a foundation for innovative capabilities for procurement excellence, like predictive analytics and cognitive computing.

You’ll  learn more about all of these issues in BravoSolution’s  upcoming webinar!

Sign up to join BravoSolution’s webinar, Innovative Data Leveraging for Procurement Analysis, on 28th March

How To Convince Hostile Stakeholders To Adopt New Technology

Simona Pop’s Big Idea provides a recipe for convincing even the most unwilling departmental heads to embrace new technology.

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

Deciding to adopt a new technology has historically been a pain in the ass. An expensive, dull, prolonged pain nobody wants to deal with. The problem I have is that those adjectives belong to OLD tech. Putting nimble new technology in the same pile with 90s software is like mixing vodka with milk. It may have worked for the Mad Men of the 50s but it is an unnatural association. (I watched Mad Men until the 5th series then lost interest, by the way.)

Here’s the gist of it: people need to be comfortable with the cost and potential risk of adopting new technology. How do you make them comfortable? By providing “proof of concept” and calculating these costs and potential risks. One simple guideline is the 10X rule: if you can expect a return of 10 times your investment, then it’s worth it.

However, with technology – especially if it spans across different departments – you must take into account that your gains will come from any of several improvements, or a combination of improvements:

  • Cost reduction
  • Efficiency improvement
  • Fraud prevention
  • Admin processing speed
  • Mobilising the workforce
  • Product/service enhancement
  • Competitive environment

Your gains will be the sum total of all factors. If adopting a new technology provides an improvement in one factor but it’s at the expense of another factor, it may not be worth adopting. This tends to limit everything to a financial view though. A far better formula includes non-financial factors, some of which will outweigh the financial ones. You need to also remember that some investments in new technology can require at least a year to show their true value.

Managing risk should also be incorporated into your analysis, but remember that you take a risk whether you adopt a new technology or not. The advantages a new technology provides may not be obvious – until a competitor adopts that technology and makes your competitive disadvantage clear. In that case, adopting a new technology reactively will put you on the back foot. Playing catch-up is never a good business move!

Risk Reduction Recipe

Let’s call it – new tech is the unknown. The unknown is typically scary to humans. And since I am all about the H2H in business, working to remove that fear is key to successful tech adoption.

One sure way to reduce the risk is to go for a taster: a proof-of-concept implementation. Starting small & early allows you to identify problems early when they are far easier and less expensive to correct. It also makes it easy to start over if the proverbial hits the fan.

When rolling out new technology across multiple departments, you’re guaranteed to encounter a mixed bag of responses. From enthusiastic stakeholders who “get it” straight away, to nervous – and sometimes downright hostile – departmental heads who are terrified of change, you’re going to have to manage them all.

Here’s the secret – rather than trying to beat hostile stakeholders into submission with the force of your arguments, ask the willing departments to do the job for you. Carry out a proof of concept with your supporters so you have the evidence required to overcome any objection, and go back to the risk-averse stakeholders with your advocates at your side.

Also keep in mind that both organisational and process changes will be needed when bringing in tech. Procedural changes are very common. The reason why you are looking at that tech is typically to improve current processes you have found lacking. You must be aware that tech is here to improve NOT replicate. Trying to fit clunky processes on efficient technology is not only frustrating but a complete waste of time and resource. Changes to previous processes will need to happen and you will have to expect some resistance to those changes. Again, human nature.

The mark of good technology for me is its accessibility and great user experience across the board (from top to bottom, from left to right). Because you are effecting change (and that’s difficult enough), the very last thing you need is that change to come in the form of clunky, pain in the ass – MS-DOS looking software.

In my quest to empower people through tech, one problem I come across a lot is: “How much resource do I need from our side because we really cannot spare anyone?” This question is proof of a bad reflex left over from dealing with old tech. The type of tech that takes a year just to implement, another year to train for and another to realise it’s not right for you anyway even though it is costing you serious cash. The type of tech that is SO unlike what you know and love in your personal life, it might as well be alien. A vintage alien at that.

Clear communication will help overcome the organisational and process challenges. When people get that you are in fact trying to empower them to work better and easier, they will want to be part of that higher drive.

As Richard Branson says: “Screw it, let’s do it!” Move quickly, find out what works and what doesn’t. Stalling, procrastinating of burying your head in the sand are NOT ways to avoid a pain in the ass.

This article was first published on InstaSupply.

Stay tuned for more Big Ideas from Simona Pop as we lead up to the Big Ideas Summit 2017!

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

7 Warehouse Management Tips to Improve Inventory Control

In every business, there is one silent player that can absolutely make or break your operation — the warehouse. 

Warehouses  form the nucleus of numerous businesses and it is imperative that they are managed efficiently. However, its size and structure can become overwhelming if not managed properly. You can manage it efficiently by implementing a warehouse management system, with which you can control the movement and storage of the materials within the warehouse. Additionally, you can incorporate tasks like transportation management, accounting systems, light manufacturing, etc.

Managing inventory effectively and maximizing warehouse productivity rank on top of the priority list of almost all the warehouse managers. If you are one of them, these 7 warehouse management tips will help you in improving inventory control and achieving effective warehouse management.

  1. Plan An Efficient Layout

The warehouse layout must be carefully planned out in order to maximize storage space. You must arrange the space in a manner that allows you to move smoothly and with ease while carrying goods around the warehouse. You must keep enough space to maneuver the forklifts and weight carrying machines around without any hindrances. Mark the bins and place them in a planned manner to avoid confusion and stocking of goods at inappropriate places. The right layout will also help in minimizing safety hazards.

  1. Stock Inventory As Per Need

You must arrange your inventory based on how and when you use/need it. You shouldn’t hoard inventory unnecessarily throughout the year unless there is a regular demand. Keep the stock levels at 1.5 times the average for avoiding blocking of working capital. With optimised inventory holding, you can effectively reduce the cost of storage. You can study historical trends as a part of your warehouse management process to forecast the inventory need.

  1. Apply Cross Docking to Maximize Space

The objective of cross docking is to reduce the shelf storage time of stocks in the warehouse. It helps in transporting warehouse delivered goods quickly to the outbound carriers that can take the stocks to distribution centres. You have to ensure that the warehouse layout supports cross docking.

  1. Implement Strict Standards for Safety

Don’t make your warehouse an unsafe place for your employees. If your staff isn’t trained properly, you will have numerous accidents and high injury rates. Ensure that only the well-trained and experienced employees operate heavy duty equipment such as forklifts. Mark the safety protocols in the warehouse, such as indicating a safe distance from danger zones.

  1. Incorporate Efficient Weighing Systems

Make efficient weight scales, such as truck scales, an integral part of your warehouse as it helps in optimising all the weighing processes. You can improve the accuracy of the billing and shipping tremendously, thus increasing the revenue. The overall workflow productivity is also enhanced.

  1. Use Technology to Enhance Inventory Management

Technology is a good friend to have in the warehouse. New robotics technology has become the most sought after technology in many companies. You can partner up with warehouse management systems and create customized software and smart robots that can help in managing the movement, storage and sorting of warehouse inventory. Automated vehicles come a close second. By incorporating self-driving technology in the warehouses, you can reassign human labor to more critical jobs and enhance safety and efficiency.

3D printing technology allows on-demand production of various components for manufacturing at the location itself. It can effectively eliminate the need for any transportation, thus reducing the cost and lead times significantly. Innovation of newer, lighter and stronger materials like nanotubes and graphene is also exciting news for warehouse and logistics management. You need less energy to transport lighter materials and equipment. To make it even better, self-repairing finishes and self-assembling materials are already in developmental testing!

  1. Improve Demand Planning

Demand planning is a crucial part of forecasting inventory purchases, stock requirements and customer buying trends. This helps in optimizing inventory levels and meeting the demands of the customers at the same time. When the demand planning is effective, you can track the sales trend history, product activity during specific seasons of the year, trends of various manufacturers and different rules of warehouse storage and business.

Don’t let the complexities of a warehouse wear you down. With careful and efficient planning, you can achieve your goals and manage every single warehouse with high efficiency.

Kevin Hill heads up the marketing efforts and provides technical expertise to the sales and service teams at Quality Scales Unlimited in Byron, California.

Are You A Procurement Starter Or A Finisher?

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

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

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

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

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

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

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

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

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

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

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

How valuable have mentors been in your career?

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

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

How did you first become interested in procurement?

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

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

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

How will cognitive technology impact procurement professionals?

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

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

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