Tag Archives: procurement technology

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? 

Anton_Ivanov/Shutterstock.com

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.

Anton Brand/Shutterstock.com

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

Cognitive Technology – One Giant Leap for Procurement?

Technology has helped to define the human race, from the invention of the car to the moon landings. Cognitive technology is one small step on the journey into the future.

kyslynskahal /Shutterstock.com

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

In 1961, US President John F. Kennedy said, “We chose to go to the moon.” People marvelled at the ambition of pushing the boundaries of human capabilities. After all, the technology to do this didn’t exist at the time.

Kennedy never lived to see his prediction come true, and watch as humans took that giant leap forward. Now, in the 21st Century, we come to the next advancement – cognitive technology.

It’s easy to compare the cognitive technology journey to the space programme and moon landing journeys of last century. For IBM, developing and deploying Watson is like the moonshot in the 1960s where IBM technology helped NASA make the lunar landings possible..

Cognitive technology is merely in its infancy in terms of where it can go. This journey will mostly likely take 50 years or more to be fully realised. And at the moment, we’re just in Year 1.

Millennials Will Help Take This Step

Procurement is starting its own cognitive technology journey and Millennials have the chance to be there at the outset. They will see cognitive technology evolving and developing throughout their whole career.

But first they need to know how to get on board and enjoy the journey.

At the same time, procurement professionals, and the wider workforce, are wondering what cognitive technology means for them. What’s left for procurement when cognitive systems like IBM’s Watson is the smartest guy in the room?

Without adapting and preparing adequately, procurement could easily be marginalised. But if CPOs lead from the front, identify the activities that only procurement can do, then procurement’s road will be much less rocky.

Now is not the time to be overwhelmed by cognitive technology, but to be educated. And to do this, we need to understand the key skills procurement professionals need to focus on to start preparing for the cognitive technology revolution.

Barry Ward, Procurement Brand Manager, Global Business Services at IBM, talks about five key skills below.

1. Watson Awareness

First things first, procurement professionals need to be aware of cognitive technology, and Watson, and what it can do for them.

The reality is that technology can change a job in four ways – eliminate, automate, empower, create. Far from being fearful for their jobs, procurement needs to embrace the change, and use it to enable the profession.

Traditional procurement processes such as cost optimisation, spend management and contracts can be empowered by Watson. Things that used to take days will now be done in a matter of minutes.

Watson can enhance these processes by analysing vast quantities of data, helping to improve the decision-making process. Through this, financial benefits can also be realised in this outcome focused structure.

Ward advises that professionals start with the categories that they manage, and understand how AI can be introduced (IBM refer to AI as Augmented Intelligence, using technology to enhance human knowledge and capability). Then it’s a case of learning as you go, and sharing knowledge with others to work collaboratively and to fully exploit the capabilities that the technology can bring

2. Relationships 

Cognitive technology may make computers super-intelligent, but it doesn’t mean consciousness or awareness. There will always be a need for the human touch in management of stakeholders.

In fact, as technology helps free up time for procurement to focus on strategic tasks, building relationships will become more critical than ever. For example, good supplier relationships will help procurement be more agile, ensuring they stay ahead of stakeholder needs.

Data can only take procurement so far. The rest is down to procurement doing the relationship work we always have done. Only now we’ll have more time to do it, and more information to help enhance the relationship.

3. Negotiation

As with relationship management, traditional procurement skills such as negotiation will also still be key. Watson can give recommendations for how to proceed, but ultimately it can’t make decisions for you. And you’ll always have the ability to correct it too.

However, Watson can help with providing data to enhance the negotiation itself. The system can give details on the person you are negotiating with, and help cut down the preparation time.

For example, if you were negotiating with Barry Ward, and you had done so in the past, Watson would be able to tell you what these previous experiences were like. Like what Barry does in certain circumstances, for example.

There’s less dancing around, you can get straight to the point, all of which saves you time. Plus, you’ll probably get a better deal out of it too!

4. Understand your organisation’s cognitive technology journey 

Find out what your CIO or CTO is doing, and what their plans are for the organisation in terms of cognitive technology. You can ask what the digital transformation will look like, and then think about how to prepare, or even influence, it.

Professionals can assess their own category, and establish what cognitive solutions are available in the market place. The key is learning how cognitive technology might specifically benefit your area.

For example, if you are travelling and your plans change, cognitive technology can assist. All you do is put the details into your phone, and the technology will assess the change, look at your airline and hotel preferences, and then present a plan, complete with cost, for your approval. All without lifting a finger. In truth, these systems are probably a couple of years away yet, but they will fundamentally change the way some categories are managed.

5.  Be Data Savvy

Finally, professionals need to be savvy in terms of knowing what cognitive technology can do for them in terms of data. As we have said, Watson is capable of handling structured and unstructured data, photos, contracts, documents, and even audio files.

The system can make sense of the data, and provide solutions based on combinations of data you’ve never even thought of. The quality of decision-making is improved, and previously unattainable insights are freely available.

We are only just discovering the possibilities that technological advances will bring but it is clear that digital transformation will open up huge opportunities for us all. This will be an exciting time to be in Procurement !

Barry will be  explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement at  Big Ideas 2017. Register as a digital delegate.  

A Whole New World: The Cognitive Computing Era

The age of cognitive tech is coming, whether procurement likes it or not! How can we be ready for the changes coming our way? 

Syda Productions/Shutterstock.com

Register your attendance for our free webinar, Man & Machine, which takes place on 8th February 2017. 

A New Era Of Computing

 We’ve entered into a new era of computing: “the cognitive computing era”, which follows the eras of programmable and tabulating systems and represents a massive jump forward that will transform how enterprises operate.

This new era is defined as such because there is a fundamental difference in how these systems are built and how they interact with humans. Traditional programmable systems are fed data, knowledge, and information, and they carry out and return results of processing that is pre-programmed. In this case, humans are doing most of the directing.

Cognitive technology is different; it accelerates, enhances and scales human expertise to solve more complex problems by understanding language and interacting more naturally with humans. It can reason to find patterns and form hypotheses, making considered arguments and scenarios planning. And this is exactly what Watson is about.

Watson is a cognitive technology that can think like a human and is available as SaaS products and a set of open APIs (Applications Programming Interface) such as natural language classifier, speech to text, text to speech, visual recognition, etc.

What Does Watson Mean For Procurement?

This disruptive technology, by creating a new digital ecosystem, is pushing Procurement to create a new business model, moving away from objectives centered on cost take out and taking a new customer centric and revenue growth approach. CPOs must employ the right strategy, structure, skillset and cognitive technology if they want to be in a strong position to demonstrate their relevance and value to the organization.

Procurement organizations and their leaders need to embrace the reality and potential for Artificial Intelligence (AI) and cognitive procurement as readily as they would accept other technologies and developments. AI will bring changes and challenges but it will also bring amazing opportunities for the profession.

As we apply AI to certain procurement tasks and processes, we will begin developing internal capability and expertise.

Applying Cognitive Tech To Procurement

Cognitive technology has already proven to be particularly helpful at helping procurement with a number of specific tasks and programs. These include:

  • Quickly sorting through very large amounts of structured or unstructured data. This is especially useful for benchmarking and supplier analysis
  • Providing very detailed supplier assessments of a single supplier, a group of suppliers or the whole supply base
  • Providing in-depth risk assessments, identify hidden risks, and calculate rate risks
  • Supporting and validating decision-making during supplier selection

More generically, cognitive computing will undeniably be a key ingredient to innovation, helping to find new ways of operating, providing new insights, uncovering new opportunities and last but not least it will elevate procurement professionals to the well-deserved advisor role by extending their capabilities and growing their experience.

How Can Procurement Prepare For The Changes That Are Coming? 

The question that so many procurement organisations are asking is how can they make cognitive tech a reality and where to start?

Adopting and integrating cognitive solutions into an organization is a journey and not a destination.

Firstly, CPOs need to be clear about what matters the most. In order to grow their company’s business and best benefit from the technology, they must set realistic expectations and develop long-term plans with incremental milestones

Secondly, transformation doesn’t happen by itself. It requires the vision and support from the top. As an example, Bob Murphy, IBM’s CPO, is the biggest driver of change in terms of transforming his organization. He saw the potential in cognitive technology and the prospects for Procurement and became an evangelist within the team; encouraging, sponsoring and demanding we embrace this opportunity.

Thirdly, leveraging big data is a key area to take advantage of, especially in data management. This ensures that organisations have the right structure and strategy. At IBM, we have appointed a Procurement Data Officer and also hired data scientists within the procurement team as we understood that procurement needed to take a more active role in extracting and analyzing data to demonstrate its value especially by leveraging the data we are managing and generating. (i.e data in RFP answers, ….)

The Race Is On – Can Procurement Shape Up In Time?

With cognitive technology, procurement teams will be equipped with the tools to navigate the procurement process quickly, easily and more compliantly. This will allow more time for procurement teams to focus on strategic supplier activities after contract signature, such as performance management or supplier collaboration and innovation programs. But is the function ready for this shift?

Embedding such advanced technology requires some serious changes in skills and competencies within our teams. Procurement leaders will have to search for procurement professionals not only focusing on their core competencies, such as category expertise, negotiation skills or market knowledge, but it will be more and more important to hire people with the “right” soft skills. The function must onboard and retain people with excellent relationship management and analytical skills and with a high aptitude to work with advanced technology and financial acumen.

The procurement landscape will have to reshape to a more business leading capability that has to operate in a much more virtual and networked environment where emerging roles of data scientists, business relationship managers and innovation scouts, to mention a few, will be increasingly required.

In short, beyond just being capable of creating visible savings, the role of the procurement organisation will have to shift its focus beyond cost reduction efforts, and move towards a trusted advisor role; accurate, fast and efficient.

There’s no doubt about it, late adopters of the digital transformation or organisations failing to take into consideration the growing exigencies such as speed, value for money, collaboration will be soon perceived as road blockers rather than enablers.

Join Procurious’ free webinar, hosted by Tania Seary with Manoj Saxena, Pascal d’Arc and Nathalie Fekete to make sure you’re ahead of the cognitive technology game. 

 

 

The Coming Backlash Against Artificial Intelligence and How to Handle It

How can organisations use AI’s potential to augment, not abolish jobs?

This article first appeared on Manoj Saxena’s LinkedIn profile. 

Artificial Intelligence (AI) is rapidly moving from a mesmeric technology to a powerful teammate and a foundation for enterprise and consumer decision making.

However, AI is a young field full of amazing potential. It’s mystery and lack of understanding is also allowing for hype to grow unchecked. Unrealistic claims by advertising agencies of large technology companies of an “AI nirvana” and portrayals by Hollywood movie producers of an “AI apocalypse” are creating a hype machine that is unparalleled in recent history. The reality is somewhere in between these two extreme scenarios.

Every transformative tool that people have created – from the steam engine to the microprocessor – augment human capabilities and enable people to dream bigger and do more. It also creates massive job dislocation and AI will be no different. Except this time around it will impact not just the blue collar jobs but also white collar jobs such as this Japanese Insurance company replacing insurance workers with AI. 

Lost within all of this hype and fear is perhaps the greatest benefit I see as an entrepreneur, a senior technology company executive, and an investor – the potential for AI to do good for business and for society.

Done right, AI has a massive potential to make our business and our society much more efficient in terms of how we use our scarce natural resources and make a living. Research from Accenture estimates that artificial intelligence could double annual economic growth rates of many developed countries by 2035, transforming work, and foster a new relationship between humans and machines.

Machine intelligence, which is a sub-set of AI, will power and create efficient, real-time adaptive businesses. A “Cognitive Business” that makes sense of all available data and rapidly transforms how it engages it customers at the edge and deploys self-learning, self-assuring business processes at the core.

It will greatly help businesses that are drowning today in Big Data analytics and machine learning science projects but are starving for actionable insights and agility. Despite significant investments in customer big data, business intelligence, machine learning, and cognitive computing, these businesses are struggling with three problems:

  1. Too much data and too little insight
  2. Poor linkage between insights discovery and business action
  3. Scarce learnings from actions taken

Going forward these businesses will deploy AI powered cognitive cloud platforms to augment every user experience and business process. These Augmented Intelligence platforms will pair humans and machines so they can achieve something new and exponentially valuable together: intelligent user engagement and business processes that get smarter and more useful with time.

By emulating human cognitive abilities in software such as memory and sequencing, perception, anticipation, problem solving, and decision making, Augmented Intelligence Platforms will help make sense from messy, disparate first and third party data. They will then use the hidden meaning within all data to engage a human being by providing the right advice, at the right time, with the right evidence across any contact point.

These new class of technologies will create a new range of “new collar jobs” to design, model, build, test and manage these systems – much like the Internet and the world wide web created a new class of jobs in the late 1990s.

Keen to learn more about cognitive technology and the impact it will have on procurement? Join our FREE Webinar, Man & Machine, on the 8th February.