Tag Archives: technological disruption

What Can Yoda Teach Us About The Kraljic Matrix?

The Kraljic Matrix revolutionised Procurement in 1983. Now the world looks very different. Is it time for an upgrade?

By Yuri Turkov/ Shutterstock

The year was 1983. This was the year that the Internet was created. Bill Gates unleashed Microsoft World on the market. Star Wars Return of the Jedi was playing in the cinema. I was nine. And a director at McKinsey in Dusseldorf wrote an article that would change Procurement forever. The author was Dr. Peter Kraljic. The article, published in the Harvard Business Review, stated: “Purchasing Must Become Supply Management“.

A Procurement Transformation

Kraljic recognized that the world was changing fast. He saw that if Procurement continued business as usual, it would expose itself to competitive pressure. If it was to survive, it would have to move into strategic supply management. This was the dawn of the Kraljic matrix. It would have a transformative effect on Procurement. The philosophy (that remains valid today) is that not all spend, all suppliers, all customers & are the same. So, Procurement needs to build tailored and differentiated strategies, notably taking into account profit impact and supply risk.

Fast forward to 2019. A lot has changed. The Cold War is history, and the Internet dominates the globe. The iPhone in my pocket has way more computing power than my first computer, a Commodore 64, also from 1983. Since Kraljic published his famous article, world trade has quadrupled and globalization has exploded. Procurement is operating in a much faster, bolder world than it was in 1983. It faces new challenges like Corporate Social Responsibility and ethical supply chains. In short, our current environment today is more “VUCA” (Volatile, Uncertain, Complex, and Ambiguous) than it ever was.

The Next Evolution Of The Kraljic Matrix

“Since the early 1980s, pioneering individuals and companies such as Peter Kraljic, Michael Porter, and A.T. Kearney have pushed procurement professionals to think more strategically about the art and science of strategic sourcing. […] But times have changed. Today’s environment is more dynamic and is filled with greater uncertainty. The tried and true tools and tactics adopted over the last 30 years as the “gold standard” are not as effective as they once were.” Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement by Bonnie Keith, Kate Vitasek, Karl Manrodt, and Jeanne Kling

In some ways, the Kraljic matrix still works well. The segmentation at the heart of it remains valid. But the world is so complicated now, the matrix becomes more like a Kraljic Rubik’s cube. There are many more dimensions and parameters to take into account than there were back then.

Procurement now needs to win the Holy Grail of strategic supply management: value. Take Total Value of Ownership (TVO), for instance. Before, sustainability and risk were considered as nice-to-have, but not necessary. The TVO model places non-price information firmly within calculation of cost. This is a concept of sourcing in which the buyer has all the cards in their hand. But more than that, TVO enables the buyer to create bonus-penalty systems. In effect, it is a calculation of value that enables Procurement to identify how they can increase value after the award has been made.

Evolve Or Stay In The 80s

“My colleagues developed [the matrix] further and experimented with a nine-box version that allowed more flexibility. But always it must be adapted to the characteristics of the company where it is being used.” Dr. Peter Kraljic

The evolution of strategic supply management is challenging. Seeing the Kraljic Matrix as a Rubik’s cube is one thing. Solving the cube is something else entirely. Collecting the enormous amount of information and data that you need for this is almost impossible on your own. However, the change that makes the world so complicated also gives us the tools we need to keep pace: technology. Procurement must have a digital transformation strategy.

Also, and beyond tools like Purchasing Portfolio Analysis matrixes (that needs to evolve to be subtler), it is critical for Procurement organizations to look beyond the technical aspects of the profession. Procurement activities encompass more “soft” activities that require interpersonal skills. It is all about relationships and, even if tools help in defining the right type of relationship to build in a specific context, they fall short in delivering the “human” dimension. Also, that same dimension should be integrated in the tools and models we use.

The “experience” of working with procurement (for suppliers and for stakeholders) is as essential. Procurement delivers a service in a human-to-human context and becoming the supplier/customer of choice requires more than just tools. Digital transformation is not just about tools!

Therefore, just like Yoda “burns” the Jedi Books in “The Last Jedi” to teach Luke a last lesson by symbolizing the need to be able to move forward while being mindful and even respectful of the past, it may be the time for Procurement professional to “burn” the matrix.


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Transparency In Supply Chains And Blockchain: What Is The Most Common Trap?

Becoming aware of blockchain’s weak spots is an important first step towards taking full advantage of what the technology really has to offer.


By Billion Photos / Shutterstock

Is Blockchain coming of age in 2019?

Judging by the first half of 2019, it seems that the blockchain hype is finally deflating and there is an overall consensus that it will not save the world (at least not this year…). The growing trend towards pragmatism, which is now beginning to temper people’s expectations, is the best thing that could happen to blockchain. . .  A more down-to-earth approach is welcome because, like any technology, blockchain is not perfect, nor the solution to all problems. It is important to be realistic about its potential and limitations.

In particular, blockchain has limitations that threaten to jeopardise many recent high-profile initiatives to increase traceability and visibility in the supply chain. Despite seeming like the ideal technology to address growing concerns about these aspects, most (if not all) blockchain implementations have an Achilles’ heel: the initial digitisation of data to bridge between the physical and the digital world.

Becoming aware of these weak spots is an important first step towards taking full advantage of what blockchain really has to offer. Blockchain’s real value proposition

There are many potential and valuable use cases for blockchain, especially in Procurement and Supply Chain Mgmt.  

“If you talk to supply chain experts, their three primary areas of pain are visibility, process optimisation, and demand management. Blockchain provides a system of trusted records that addresses all three.” Brigid McDermott, vice president, Blockchain Business Development & Ecosystem, at IBM (source Blockchain and Supply Chain Finance: the missing link!, Finextra)

The most valuable characteristic of blockchain is that it serves as a backbone for “convergence”:

  • For better insights and actionable intelligence: Blockchain is the missing link in Big Data initiatives and the convergence of the Internet of Things (IoT), Artificial Intelligence (AI), and blockchain represents a breakthrough.
  • From an integration perspective: Blockchain-based supply chains allow three different supply chains (physical/informational/financial) to converge into a single digital one.

Blockchain has the potential to converge the two main ecosystems involved in trade finance — the financial ecosystem, which includes banks and suppliers, and the supply chain ecosystem. At the same time, the technology can provide a unified platform for multiple stakeholders, potentially avoiding difficulties that slow down operations” Béatrice Collot, Head of Global Trade and Receivable Finance at HSBC quoted in Blockchain’s Main Strengths Are Transparency and Instantaneity on Cointelegraph

While these features will certainly contribute to improved supply chain transparency, there is still a critical challenge that needs to be addressed: the digitisation of data at the beginning of the process. This crucial step constitutes a fundamental weakness of many current digital supply chains.

Blockchain’s Achilles’ Heel: Mind the Gap!

Traceability and transparency along the supply chain, from raw materials to final products, is a growing concern for organisations. New regulations from governments & institutions, customer expectations, and company’s self-interest in issues like sustainability, incident management, and efficiency, have created the need for an infrastructure to track, trace, and store data in the supply chain.

At first glance, blockchain may seems like the ideal solution. It creates a permanent record of all transactions at all levels of the supply chain, guaranteeing full traceability and establishing trust. So, many companies started to provide blockchain-based means of collecting information in their supply chain with the goal of making it accessible to customers as irrefutable proof about the origin of products and components.

A typical story goes like this: “Thanks to our application, you can take a picture of the QR-code on your product and view the entire supply chain of all components/elements that contributed to the final product you have in your hands.”  

This sounds great in theory, but there is an important caveat:

 “At the interface between the offline world and its digital representation, the usefulness of the technology still critically depends on trusted intermediaries to effectively bridge the “last mile” between a digital record and a physical individual, business, device, or event. […] And if humans […] manipulate the data when it is entered, in a system where records are believed ex-post as having integrity, this can have serious negative consequences.” What Blockchain Can’t Do, Harvard Business Review

The use of blockchain technology gives people a false sense of security because it relies on cryptography and various mechanisms to ensure that information stored on it can be trusted (identity, immutable record, etc.). But, as illustrated above, the digitization step when the information is recorded (a block added) is not protected by this same “guarantee.”. So, it is not because blockchain technology supports and enables a better transparency that it should be blindly trusted by customers or by procurement or supply chain pros.

The solution?

It is undeniable that blockchain is a form of digital trust. Much of the hype surrounding it has been driven by a broader trend in society: the erosion of trust in people and institutions. Blockchain is playing a major role in shifting that trust to technology and software. This explains, in part, why compliance and transparency are the use cases that are priorities for procurement and supply chain pros.

However, it is important to remember that blockchain’s reputation as “trustworthy” can be misleading, especially in the case of supply chain transparency. Manual operations are still part of the initial process of digitizing the data. Therefore, trusting data stored in the blockchain also means trusting that initial step that relies on human activities.

For this reason, building trust in business partners will continue to be a vital part of the procurement function’s role in the future. Introducing digital initiatives will not entirely remove the human element of the job, and Procurement practitioners will need to continue working on establishing trust and nurturing it with suppliers and stakeholders.

Also, from a technology perspective, there are already initiatives to close the gap between physical and digital as much as possible. Interestingly, they focus on physical objects (crypto-hardware) and not just on software. These objects are the child of RFID, connected devices, and blockchain, with the intent to create a convergence between the Internet of Things and the Internet of Value (blockchain) to create the Value Internet of Things (VIoT).

In addition to the human and technological answers that will both contribute to creating a truly integrated supply chain (physical + informational + financial), a third component will remain essential: critical thinking.

Trust and verify!

AI and Procurement: Boldly Going Where No Team Has Gone Before?

The battle of “human vs. machine” is raging in Hollywood and, increasingly, in the workplace. What does the future hold for AI?

By Willrow Hood / Shutterstock

2001: a space odyssey… Terminator… The Matrix…

If you were to believe some of the sci-fi blockbusters, you’d think our future as humans is pretty bleak. They all offer a dystopian view of the future where, if the machines don’t kill us, they enslave us.

The battle of “human vs. machine” also seems to be raging outside of Hollywood, and we humans seems to be losing more and more ground to machines each year. Some of this ground has been lost in the world of gaming. Over the past decade, machines have been beating us at increasingly complex games more and more often. Looking back at these “wins” for the machines, we can see some key stages in the evolution of Artificial Intelligence (AI):

•    Deep Blue won against Kasparov at chess in 1997. It was rather dumb but powerful. With brute-force & human-created logic, Deep Blue was able to test and evaluate every possible sequence of moves at every turn and choose the best one.

•    Watson defeated Jeopardy champion, Ken Jennings, in 2011 and was smarter than Deep Blue. It had to understand natural language and find the relevant knowledge from various sources like encyclopedias, dictionaries, thesauri, newswire articles and literary works.

•    Google’s Alpha Go won against Go’s world champion Less Sedol in 2016. To achieve this result, it had to learn from humans from thousands of past games. This is because, unlike chess, which has a limited number of moves, Go is one of the most complex board games in the world, with more possible moves than the number of atoms in the universe. The second generation of Alpha Go learned by itself by playing against itself millions of times to discover what works and what does not.

•    Libratus beat four expert players of Texas Hold ‘Em poker. It also learned by itself and was able to understand behavior because poker is a game of luck, deception, and bluffing!

While very impressive, these victories also show that machines are still dumb when compared to everything that people can do. Machines excel at one thing and have the intelligence of a two-year-old or less for everything else.

What we can learn from sci-fi movies and the battles being waged on the gaming front, is that AI has many faces:

Today, despite all the hype and buzz, computers are still only at the narrow intelligence level. But even at this level, the potential applications of AI are endless.

As far as Procurement is concerned, the same applies: machines are far from being able to replace Procurement teams. Instead, new technologies have another purpose: augment people to achieve better outcomes.  This is a definite shift from the last waves of technologies, which were mostly focused on automation and staff reduction.

Machines in procurement get a promotion: from admins to colleagues and consultants

AI, in short, is all about learning from data to develop new insights and using this new knowledge to make better decisions. It is also about continuous learning and improvement. AI is a master of the “Kaizen” philosophy! This makes it a precious ally for Procurement and AI should therefore be considered as a team member within the broader Procurement ecosystem. Experience shows that “people + machines” get better results than people alone or machines alone.

Of course, in Procurement and in general, it is undeniable and unavoidable that AI will impact the future of work and the future of jobs. Work will continue to exist, despite potentially significant job displacements. While some jobs may disappear, new ones will come to take their place, and most will be transformed by the imperative of cooperation with smarter machines. Procurement jobs will also be impacted and future procurement professionals will require a new set of skills. For example, data analysis and modeling will become a core competency next to more traditional business and relationship management skills. This is because the “data analyst” component in activities will grow due to the collaboration with AI in order to:

•    Train AI and ensure that data is relevant, complete, and unbiased

•    Monitor outputs (recommendations, actions, insights, etc.) of the AI system to ensure relevance, quality, take more contextual / soft aspects into account, and safeguard against AI shortcomings.

Space: the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.

To conclude on a more positive and optimistic note than where this article started, I have taken inspiration from another sci-fi classic.  I believe that the future lies in a new type of cooperation between humans and machine.

The duo Dr. Spock and Captain Kirk illustrates, to some extent, how such cooperation is possible and can offer the best of both worlds. By combining Captain Kirk’s instinct and emotional intelligence with Spock’s logic and reasoning skills, they were able to successfully tackle any challenge they encountered.

New developments like explainable AI (XAI) and “caring AI” will make machines of the future even more human and will allow them to take an even more active role in our personal and professional lives. AI will continue to augment us, not replace (or kill or enslave) us.

So, Procurement people, live long and prosper!

Food, Glorious Factory Food! – Challenging the Tech Status Quo

If procurement continues to accept the technological status quo as some kind of given, we’ll continue to be fed the same poor diet. Paul Blake explains why it’s time to challenge the hard-and-fast rules we’ve adopted for so long without question. 

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

Have you ever wondered why food made in factories is so awful?

Please don’t assume this is going to be a rant about organic carrots and the danger of the shop-bought cake. Let me reassure you that it’s on the contrary.

There’s nothing quite like a home-cooked meal 

Modern living and demands on personal time mean that conveniently available, ready-to-eat food is a fact of everyday life. Everything from jam to lasagne is made in factories, often with minimal human interaction. This can be a very good thing in many ways.

So, if we accept that industrially manufactured food is a thing, one question still remains. Why is it just not as good as the homemade or handmade equivalent? Again, we should allow for the dependency on precisely whose hands are involved. But, all things being equal, a dish made by a competent cook, from scratch will out-score a factory-made one.

At first glance, it might seem obvious. Factory products resource lower cost raw ingredients, preservatives and flavourings for longer shelf-life. No wonder your canned chilli ain’t a patch on your own efforts. This is basic profit-driven economics. And, it’s true, you get what you pay for.

But there is another, more subtle reason, that factory food doesn’t quite hit the mark. A reason that is in no way immediately apparent. And it has to do with our relationship with technology.

Robots that POUR!

For a dish to be easily manufactured in a factory, in large quantities, on a production line, it is crucial that the components, from raw ingredients to part finished elements, are able to be pumped.

How do you get the meat sauce for your lasagne from its cooking vat to the line where it’s assembled? The sauce, the pasta and the béchamel must be sent through a pipe, and often for a considerable distance. The pumping of certain traditional ingredients, such as butter, is impossible. As such, the food industry has had to identify, develop and sometimes engineer alternatives.

The infrastructure, the routing process has had such limitations that it has defined the very nature of the outcomes that are possible. But, as the presenters of the great BBC technology show of the 70s and 80s, Tomorrow’s World, used to say “that is, until now!”

The food factory of the future will be populated, not by machines that pump – but by robots that POUR. And with that simple change, a whole new world of possibilities opens up.

By analysing how a chef systematically puts a dish together, and replicating that, with industrial upscaling, into a robotic process – and eradicating the notion that the conventional wisdom of “pumpability” was some kind of hard-and-fast rule. This new paradigm in food production could forgo the need for chemically-altered shortening agents. You know those ones that taste terrible (requiring added salt as a mask), have dubious health impacts but which, can  at least,  be pumped along a pipe.

Limitations in procurement

In business, and without doubt in the procurement business, we have precisely that same relationship with the technology available to us. We’ve been limited in the quality of the results we can produce because of how the tools and technologies we use are built.

Until recently, the software used in procurement has restricted the procurement professional to working in ways determined by how the software was written, and not by what is best for the outcome. This means procurement has become attenuated to these limitations and now accepts them as hard-and-fast rules.

A good example of this is the notion of “best of breed”.  This uses the most sophisticated software tool available for each step in the source to pay process. We’re indoctrinated to see lists of features and functions as the sole measure of suitability of software.

Dividing up the entire spend management process from strategy planning to invoice payment into a set of silos, and then equipping each step with the best tool for that task might at first seem to be a sound approach.  But this is only if you look at the steps in isolation. That’s just the same as looking at each ingredient in your recipe and only considering whether you can pump it around your factory.

How can tech make procurement processes more palatable?

In procurement, the separation of sourcing from contract into entirely different systems does nothing to promote positive outcomes and the isolated software components actively compound the difficulty of realizing savings and value.

However, technologies are emerging that are permitting us to look at the entire source to pay process as a single business requirement.  This allows us to consider how the various “ingredients” interact and work with each other to create the optimum result.

In the future, we will no longer be restricted to working the way the software dictates. Whilst a good part of the process may be run automatically, we will get to determine the ideal set of inputs and outputs to suit us.

The emergence of AI founded on big data, mobile, always-on connectivity and, crucially, the unification of strategic procurement and day-to-day purchasing into a single operational environment are changing the effectiveness of the procurement operation.

Challenging the status quo

By accepting the technological status quo as some kind of given, we will only continue to be fed the same poor diet.

Returning to the analogy, we don’t have to reject the notion of manufactured food entirely. Not if we can see that technology can actually make it better, possibly even better than we can do ourselves. There’s a thought!

The same applies completely to the idea of the automated supply chain. It needn’t (and won’t) be the death of Procurement. The smart use of new technology will actually give our industry new lease of life. As long as we stop adhering to the outdated technology rule book.

There is another way. The time is now.

Paul Blake is Senior Manager, Technology Product Marketing at GEP Worldwide. He’ll be speaking at the 2017 Big Ideas Summit next week. Join the conversation and register as a digital delegate here.

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

Resistance Is Futile, Disruption Is Coming!

Massive changes are coming to procurement pros, whether they like it or not! Is it high time we started embracing, instead of resisting, them?

Mark Stevenson is one man who understands the key trends heading our way. An expert on global trends and innovation, he will be setting the scene with our opening keynote at the Big Ideas Summit 2017 in London.  We caught up with Mark ahead of the event to get to know him a little better!

Tell us a bit about yourself?

I’m an entrepreneur, an author, an occasional comedy writer, a musician, and, as some people like to define me, a futurologist, but I’m not at all keen on that particular term.

What don’t you like about the term Futurologist?

I think it’s a fairly dodgy profession overall if I’m honest. There are no qualifications required and it’s often associated with prediction and, of course, you can’t really predict the future, you can only make it. Also people who identify themselves as future-experts are as apt to be shaped by the culture in which they are embedded or dogged by their own prejudices and wish-lists as the rest of us, and tend to predict accordingly. For instance many futurologists are overly tech focused. My work is more about the questions the future asks us about the interplay of technology, economics, society and politics. My job is to help people and organisations to ask the right questions about the future and then convince them to answer those questions in a way that makes the world more sustainable, humane, compassionate and just.

 What are the key challenges procurement and supply chains face in the next decade?

Supply chain issues are hugely important at the moment and supply chain professionals are having a lot of questions asked of them.

The first challenge to overcome is achieving greater supply chain transparency. Plenty of procurement professionals, particularly in larger organisations, have no clue where they are actually buying from. When the Rana Plaza building in Bangladesh collapsed in 2013 killing over 1,000 factory workers, many high-street brands were called out and, it materialised, ignorant of their involvement. Tragedies like this have forced high street companies to better audit their supply chains but there’s still a long way to go.

Secondly, organisations need to make their supply chains more sustainable by adopting science-based targets – addressing agricultural sustainability and reducing carbon emissions to give a couple of examples.

You’ve often advocated science-based targets in the past. Could you explain the concept in more detail? How could procurement apply these targets?

Science-based targets are a really simple idea and a very good way to think about sustainability. When it comes to dealing with environmental sustainability companies tend to say ‘this is what we can do, this is what we’re aiming for’ but, in reality, it doesn’t mean a whole lot when a multinational organisation vows to reduce its carbon emissions by 10% by the year 2034! That’s a recipe for planetary disaster.

Instead, organisations must figure out what they have to do based on scientific facts. The Science Based Targets campaign (a partnership between

Carbon Disclosuse Project, UN Global Compact, World Resources Institute and WWF) helps companies determine how much they must cut emissions to prevent the worst impacts of climate change. Coca- Cola, Walmart and HP signed up to this and if they can do it, anyone can.

And, by saving the world you’re also saving your business. Companies who take this stuff seriously will out-perform because they’ll become more efficient and they’ll attract the most forward-thinking, young talent who want to work for companies of which they are unashamed.

In your experience, how open are organisations to new technology trends?

Not very! Organisations tend to be comfortable operating as they always have done.

Upton Sinclair put it well: ‘It is difficult to get a man to understand something when his salary depends on his not understanding it.’ Take Blockchain, it could take away the untrustworthy parts of banking: bankers, who will naturally resist this particular technology!

Another example is driverless tech- it doesn’t take an expert to predict that the 3.5 million US truck drivers would be wary of such an advancement – and rightly so. So we have to find a transition plan for them – which culture resists. But it’s a business responsibility to prepare for the changes and approaching transitions, you have a duty of care to your employees and not being future-literate is a dereliction of that duty. Remember, Blockbuster, the DVD rental company went bust the same week that Netflix released House of Cards.

If you had one key message for our delegates at Big Ideas, what would it be?

Wherever you work and wherever you end up in the next 15-20 years, remember that it’s going to be a very turbulent time. Massive disruption lies ahead and the bad news is that our current institutions and businesses are unfit for purpose. Ask yourself: what’s my best effort for myself, my family and for society (and remember they’re all related). If you don’t, you can prepare to be very irrelevant and very unhappy!

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

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. 

Procurement’s Future – Growing Not Killing the Golden Geese

Rumours of procurement’s imminent demise persist. But would organisations be killing their golden geese by getting rid of the function?

The traditional 12 days of Christmas might not start until the 26th of December. But this festive season, we’ll be bringing you the 12 days of procurement Christmas in the run up to the big day. Catch up with the story so far on the Procurious Blog.

“On the sixth day of Christmas, my true love gave to me…six geese-a-laying.”

Mark Twain is reported to have once said, “The reports of my death have been greatly exaggerated.”

We like to think of the procurement function, and it’s fantastic professionals, as the golden geese of an organisation. We bring savings and value, build our influence, and increasingly drive strategy, but still find ourselves defending our position. And for some experts, the end of procurement in its current guise is still on the horizon.

But are we looking at this from the wrong angle? Nothing remains the same forever, so what are the strategies procurement can use to maintain its hard fought position?

Is the End Really Nigh?

It’s been a little over a year since PepsiCo took the decision to scrap its marketing procurement function. The move took many people by surprise, and left procurement commentators wondering if other major players would follow suit.

At the time, few people thought there would be a snowball effect for procurement. And, so far, they have been proven correct. So, let’s put the doom and gloom behind us, and focus on what procurement might look like in the future.

It would be incredibly naïve of us to think that procurement will continue to exist in its current form. However, what this does mean is that we have a fantastic opportunity to develop in line with strategy and disruption.

We’ve had differing views on what this might look like for procurement in the future. At the Big Ideas Summit this year, Anna del Mar, outlined how procurement could be integrated into the business.

This would not only help break down organisational silos, but actively encourage best practice procurement across the board. A collaborative attitude is going to help mould procurement success, and at the same time, make communicating our value much easier.

Tech & Disruption – Grow the Golden Geese

This all brings us back to a hot topic across all business right now – disruption. You might be tired of reading about it, but getting ahead of the disruptive wave is what we must aim for.

The disruptive landscape is changing, and even the famous disruptors (Airbnb, Uber, etc.) need to stay on their toes. Technology is forcing organisations to re-evaluate how they do business. But at the same time, it’s giving them the opportunity to change and make processes more efficient and effective.

Cognitive computing, such as IBM Watson, Big Data, the Cloud, AI and Blockchain. All these disruptive technologies stand to make massive impacts in procurement and supply chain. Processes can be automated, and taken over by robots. Technology will change the way we interact with suppliers, stakeholders and the public.

But even as the robots take over (not really), there will always be a role for people in procurement. Just as there will always be a role for procurement in the organisation. For procurement, it’s finding that sweet spot between cost and value that allows it to grow. For the professionals, it’s about having the key skills to allow them to grow with the change (but we’ll come to that in a few days!).

So let’s not get the procurement obituary prepared just yet. There’s plenty of time left in procurement’s hourglass if we’re doing the right thing. It’s all a matter of showing why it’s turkeys, and not geese, on the chopping block for next year! 

Is procurement taking heed of its impact on the wider community? We certainly don’t want to feel like we’re swimming against a tide of public opinion. Find out what we mean tomorrow.  

The Power of the Hackathon: Putting Theory into Practice

The concept of a hackathon is nothing new. But more and more organisations are realising the benefits found in these events.

Many people associate the concept of a hackathon with the emergence of the digital age. However, it may come as a surprise to you, but the term ‘hackathon‘ was first coined in 1999. They started out as highly collaborative events, aimed at pooling computing resources for testing ahead of Beta launches.

However, in recent years, the hackathon has been hijacked by organisations who have recognised the benefits of these events. Now, everything from technological innovation to Blockchain have been the subject of a hackathon.

And there are more coming that you might be able to get involved with too!

This Hackathon is Spotless

This week, integrated facilities service provider, Spotless Group, are hosting a hackathon in conjunction with global start-up accelerator network Startupbootcamp. The two-day event, held at the iconic MCG in Melbourne, Australia, will focus on the Internet of Things (IoT) and DataTech.

Spotless recently highlighted innovation as a key priority for its business. The organisation is hoping that the event will help provide solutions to real problems, enhancing its overall customer service.

Julian Fogarty, Spotless’ General Manager of Brand, Innovation, and Technology, said, “By investing in external strategic programs, partnerships and events, Spotless is demonstrating to customers and shareholders its commitment to pioneering industry-leading services.”

The partnership with Startupbootcamp will ultimately help with a key issue found with hackathons – turning innovation into reality. The organisation connects corporates with start-ups and entrepreneurs, and helps put the ideas generated at a hackathon into practice.

The winners at the event will receive up to $10,000 and six months in Startupbootcamp’s start-up workplace. These teams will also receive advice from mentors and fellow hackers as they work on their ideas.

Digital Cities

It’s not just organisations that are organising hackathons to drive innovative ideas. The city of Sacramento, California, recently hosted a Startup Weekend to generate new business ideas for the city.

Teams were created on the first day, then ideas were generated over the course of the weekend, with business pitches on the Sunday evening. From there, the three winning ideas went to pitch to investors at a venture capitalist event in the city, with the hope of securing funding to go forward.

Another place looking to hackathons to generate innovation is Delta State, Nigeria. The event is aiming to generate new solutions in line with the UN’s ‘Sustainable Development Goals’, with a particular focus on critical needs and solutions for African countries.

The hackathon is being supported by Google, who is not only hosting, but providing some of their own developers to help kick-start the process. It’s expected that around 3,000 people will attend the event in December, either as participants or in the audience.

Hackathons and the Blockchain

One term that has been coined recently is ‘The Hackonomy’. The concept is derived from the Blockchain, and has much in common with bitcoin. To drive a more official side of hackathons, and to provide reward for innovation, a crypto-currency, HackerGold, has been developed.

The currency will allow “frictionless” access to a marketplace of developer talent pools and code libraries for start-up companies. By opening up this market, it should also enable previously unconnected ‘hackers’ to connect and work together.

Blockchain Lab, a blockchain technology pioneer, is set to be the first organisation to accept HackerGold. It will use the currency to pay for services, such as auditing on smart contracts, and code development.

There’s plenty more to come from this space in the shape of a 5 week hackathon, ether.camp, currently being held in London. It’s the first hackathon to be held entirely using Blockchain, and looks set to create a new generation of start-ups using this digital technology. We’ll be interested to see the outcomes when the event finishes on December 22nd.

Have you used a hackathon in your organisation? Or have you been involved with one? Was it a success? Let us know below.

While we try to get our heads around a whole new set of terminology, we’ve sourced your top headlines for this week…

Apple’s Rumoured Expansion into Digital Glasses

  • Apple is rumoured to be considering an expansion into the production of smart glasses.
  • Apple Inc. is reported to have spoken with potential suppliers about the wearable technology, and ordered small quantities of near-eye displays from one supplier for testing.
  • CEO Tim Cook is a known enthusiastic for augmented reality (AR), particularly after the success of Pokémon Go earlier this year.
  • The Apple glasses would be the company’s first product targeted at the AR market.

Read more on Bloomberg

Solar-power Shingles Cheaper Than Roof Tiles

  • Tesla and SpaceX Founder Elon Musk has unveiled a new product – a roof consisting entirely of solar-power generating shingles.
  • The tiles are comparable to high-performing solar panels in terms of power generation.
  • The roof costs less to manufacture and install than a traditional roof, on top of the predicted electricity savings.
  • The anticipated cost savings are due to lower shipping costs, as the tempered-glass tiles are only a fifth of the weight of traditional roofing materials and are less susceptible to breakage in transit. 

Read more on Bloomberg

Procurement Fraud Worsens in Australian Public Sector

  • A recent investigation has found that public sector fraud in the Australian state of New South Wales (NSW) cost the government up to $10 million between July 2012 and June 2015.
  • Procurement and contract management fraud caused the heaviest losses, with each case costing an average of $225,000 and, in one case, $1.7 million.
  • Scams involved invoices for work never done, inflating invoices, or invoicing for non-existent work done by non-existent companies.
  • Incidents also included falsified timesheets and records created for goods and services that had never been delivered.

Read more on Government News

VW to Cut 30,000 Jobs from VW Brand

  • Car-maker Volkswagen has announced it will cut approximately 30,000 jobs at its VW brand over the next five years.
  • 23,000 of the jobs set to be cut will be in Germany, the company’s biggest unit.
  • VW said the decision was aimed at improving profitability in addition to funding a shift towards producing electric and self-driving vehicles.
  • However, it added that it will create around 9,000 new jobs by increasing investments in electric car technology.

Read more at International Business Times

How 9 Technologies Will Drive Global Supply Chain Disruption

Cloud corporations, supertrends, and potentially procurement without lawyers and auditors. Are you keeping up with technologies driving global disruption?

Last week, Procurious attended the ProcureCon Europe conference in Berlin. You can read about our experiences, keynote highlights, and more on our Blog.

One keynote caught our attention enough that we felt it needed delved into in more detail. Professor Leslie Wilcocks, Professor of Technology Work and Globalisation at LSE, spoke about how procurement needed to prepare itself for digital disruption.

If you are a regular reader of the Procurious Blog, then you will be aware that we have a keen interest in future technologies. From drones and last mile logistics, to blockchain, we’re aiming to keep up to date with the impact on global supply chains.

So with this in mind, we revisit what was a fascinating keynote.

Prepare for Disruption!

Professor Wilcocks kicked off with the following statement: “Technology will disrupt pretty much everything between now and 2025.” This isn’t just the world of business, though that will see a massive change. But it’s also everything we do, see, touch, and encounter in our daily lives.

According to the GEP Procurement Outlook 2016, there are 5 so-called “supertrends” we need to be on the look out for. These are:

  1. Heightened impact of geo-politics
  2. Shift of economic power to the USA and emerging economies
  3. Continued decline in global commodity prices
  4. Increased impact of climate change
  5. Push to Digital

It’s safe to say that all five have been highly visible during this year. We’ll be keeping an eye out for 2017’s “supertrends” with great interest!

However, it’s the fifth trend that Professor Wilcocks focused most on. He believes that much of the interconnectedness and innovation being seen in procurement comes from the application of technology.

As we have frequently stated, procurement cannot afford to ignore technology. If it does, it cannot deliver true value to organisations, and faces redundancy, or obsolescence, in a fast-changing world.

Rise of “The Cloud Corporation”

Happily, the assembled procurement professionals were given a list of technologies to watch over the next 4-5 years. These fell into an easy to remember acronym, SMAC/BRAID.

  • Social Media
  • Mobile Technology
  • Analytics (Big Data)
  • Cloud Service
  • Blockchain
  • Robotics
  • Automation
  • Internet of Things
  • Digitisation or Digital Fabrication

These technologies all link together to help the emergence of digital businesses. Or as Professor Wilcocks put it, “The Cloud Corporation.” They also provide a number of opportunities and challenges for businesses. They need to be more agile, and manage on a ‘micromultinational‘ level, but it also opens up the potential for major process innovation.

However, Wilcocks did give one caveat on technology and innovation. No-one knows how to fully maximise the potential of technology. The only way to do this is by learning by making mistakes, something less agile organisations have proven themselves to be less good at in the past.

Transforming the Supply Chain

So how does all this fit together with disruption to the global supply chain? For the most part, the disruption has already started, and, as a result, organisations are playing catch up. However there are some tactics that can be used.

  • Organisational – realigning organisations strategy for supply chains on a functional, geographical or regional level.
  • Technological – ensuring supply chains are integrated to work best through better connectivity.
  • People – traditional pyramid structures aren’t optimised for the digital era. Human talent in the digital supply chain should be organised as a diamond, providing a more streamlined hierarchy, and better training opportunities at the lowest levels.

Switching the focus to the benefits of automation showed how the technologies could impact productivity. Traditionally, organisations have used five methods to transform their supply chains:

  1. Centralise
  2. Standardise
  3. Optimise
  4. Relocate to Low Cost Region
  5. Technology Enablement

However, there is a sixth that can, and is already, increasing productivity in supply chains – automation. It’s estimated that by automating, an extra 3-4 per cent can be added, on top of the efficiencies found in the other measures, by automating processes.

Final Word on Blockchain

There was one final word on blockchain before the end of the keynote. The disruption being caused by blockchain is, in itself, a protector for organisations from being disrupted. And organisations can leverage the technology to aid transparency, governance, and authentication.

Blockchain can also help with the evolution of “smart contracts”. These contracts can have rules set for automatically storing data, and executing commands.

Could it help to disrupt the disruptors? Probably, yes. Operating the technology at its most effective level could remove the need for banks, lawyers, credit cards, and even auditors, in the procurement process.

Whatever the challenges that exist, surely that’s something to aim for. Isn’t it?