Tag Archives: technology

Still Trying To Understand Blockchain? Here’s The One Thing You Really Need To Know

Blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay.

By Dean Drobot/ Shutterstock

I’ve had a blog on blockchain on my mind for a while. As far as business buzzwords and hype, it has to be right up there with the best of them. Everyone is talking about it, or asking about it. Questions can be quite generic ranging from what exactly is it, what does it do and do I need to care about? And then then are the questions of scepticism and challenge including; is it even real, and does it even do anything? Amongst all of that, is the one we have all heard, or perhaps been the one we have actually asked; that’s got something to do with bitcoin, doesn’t it?

Ah, bitcoin.  We’ve all heard about it now and many who have followed the heady rise have had the dream of making millions from the cryptocurrency. Hitting dizzying heights of USD$19,000+ in 2017, we were all wondering why we had not invested in 2016 when it was hovering around the USD$600 mark. Thankfully, we were able to quickly congratulate ourselves for not being susceptible to the whims of the market when it fell to USD$3,000 earlier this year. And if you’ve been watching it over the last few months? Well it’s back at USD$10,000+, so you may be either celebrating or experiencing another round of FOMO.

So, what has all this got to do with blockchain? For many, the two are essentially the same, or the mention of one prompts an association with the other. If you only feel like you need to know one thing about blockchain, it should be that it is not bitcoin. Is it connected to bitcoin?  Yes, in so far that the technology that underpins bitcoin is what we call blockchain. But blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay. Here are a few other considerations that may be helpful once you make the disassociation from bitcoin:

Understand the maturity level

The demand and potential for blockchain application saw Venture Capital firms invest more then $1 billion in blockchain start ups as early as 2017. McKinsey classifies blockchain as being in the Pioneering stage of technology development. While there are a plethora of use cases that have been identified by organisations and also by governments, many are at ideation stage. Others have progressed to proof of concept stage. As with anything that is new, there has not been enough time to implement at scale and observe the impact across a whole industry or organisation. That is a question of time and opportunity more than likelihood or value, and there is no doubt that as the technology matures and more experimentation takes place, the more we will learn. The prediction from many industry leaders is that it will become as ubiquitous as the internet. Until then, it is important to manage expectations around what it can and will do. 

Know what to use it for

As with many emerging technologies, the temptation to pioneer and innovate has led many organisations to force a solution of blockchain into a problem or opportunity that it may not be right for. We need blockchain or blockchain will solve this is a refrain that has been heard in many a meeting across industries and geographies. And it could be exactly right. But the important thing to remember is that the principle of value and outcome applies to all new technology, even one as cool as blockchain. Work out what problem you are trying to solve; if it involves many parties, transparency, and trust, it may be exactly what you need. The financial sector has been leading the way with blockchain in KYC (Know Your Customer) initiatives to improve detection of fraud and integrity of financial transactions. In addition to the commercial benefits of mitigating monetary losses, banks and other financial institutions are also expecting to realise efficiencies from process savings. With savings of between 20-30 per cent estimated, it is an experiment worth undertaking.

It will change industries and practices

Blockchain provides a level of transparency, validation and security that has been needed, but has not been able to be achieved previously. Why are these important?  Questions of origin and ownership have become increasingly important as we become more digital savvy. In some processes, it has always been a critical dependency with onerous and time consuming operational activity to execute it. Property is a great example of this. Do you have a right to sell this property, will I be the legal owner if I proceed with the transaction?  In other cases, it may be a factor in a decision making process. As a consumer, how do I really know where this food item has come from? Is it really organic, or is it simply a marketing strategy? Luxury brands like Louis Vuitton and Dior are leveraging blockchain as part of an offensive strategy to deal with counterfeit goods. Initially applying to new items, the eventual intent is to be able to authenticate the item through the resale process and therefore manage it throughout its lifetime.

So, is blockchain more then bitcoin? Absolutely. And while it is still in its very early stages, keep watching. As a technology, there is no doubt that it in its infancy but this should only temper expectations and not prevent experimentation.

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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!

5 Steps To Providing Procurement As A Service 

The core activity of Procurement 4.0 will be to deliver <<as a service>> in the same way that cloud technology has evolved…

By Black Salmon/ Shutterstock

At Ivalua Now The Art of Procurement earlier this month, Emmanuel Erba, Group Chief Procurement Officer – Executive Vice President -Capgemini discussed what the journey leading us to Procurement 4.0 could look like.

In an unprecedented period of technological disruptions, we simply cannot escape them. Emanuel advised that procurement professionals choose to see this as a realm of opportunity and question how to deliver all the promises of digital transformation to our clients.

The procurement environment is changing and this must be embraced or the profession will sink like a stone, he warned.

Unpredendented disruptions

  1. Cloud : Cloud is now the primary way of delivering and consuming IT – it’s the new normal. No one can imagine running a business without cloud computing
  2. Cybersecurity:  Last year, 689 million people globally were victims of cybercrime. By 2020 60 per cent of businesses will suffer major service failures. In today’s world, no CEO goes to bed certain that tomorrow their company will not to be impacted by a cyber threat. Cybersecurity needs to be integrated within our systems
  3. Business Platforms: These are a core feature of our current landscape. Business platforms have enabled getting the client closer to the supplier
  4. Industry 4.0
  5. AI and automation: This will strongly disrupt data gathering and processing. Repetitive and mundane tasks will be automated

What would your CEO say if you asked them what their priorities are? It’s likely that the way you manage costs is not high in the agenda. It’s important to understand what top management wants and what your clients expect and then work out how your procurement team can address these needs.

Emmanuel believes that the core activity of procurement 4.0 will be to deliver <<as a service>> in the same way that cloud technology has evolved.

Five forces driving the market towards <<as a service>>

  1. Time to scale – The speed at which the biggest brands are growing is ever-increasing. For organisations including Youtube, Amazon and Android the time taken to go from 0-80 per cent WW market share is only five years
  2. Disintermediate– Direct access to the resource to capture value – for example Uber, AirBnB and Apple
  3. Go to market – GTM via most powerful marketplaces powered by AI, automation, analytics. For example, digital ads sold Teslas with $70 million in advertising investments
  4. Revenue share – All of these factor are funded by 20-30 per cent revenue share model and leverage of client assets
  5. Investment power – Free cash flow generated enables immense CAPEX ability and acquisitions

5 steps to providing procurement <<as a service>>

For procurement, the 4.0 wave should

  1. Integrate disruptions – let’s not ignore disruptions, Emmanuel argues, they are much more powerful than us!
  2. Gear its people to embrace – Globalise!
  3. Position its role as aggregator of services, either internal or external, and map them to the business outcomes of the organisation
  4. Adopt the platforms that will increase the speed of execution, the automation and the data insights
  5. Think not only bottom line impact but being a Growth Enabler

In the <<as a service>> world, you don’t need to integrate everything vertically, but rather focus on your key differentiators and aggregate other services in the most effective way thinking in terms of meaningful outcomes.

Procurement as a service can address sizable needs both in direct and indirect spend. As Emmanuel revealed Procurement cloud addresses a $5 trillion scope.

Procurious attended Ivalua Now The Art of Procurement earlier this month. Find out more here.

Could RPA Make Procurement Jobs More Human?

The new “hot” technology generating hype in 2019 is Robotic Process Automation (RPA). Here’s how it can help procurement…

By Viktor Gladkov / Shutterstock

Procurement is, by nature, in the business of relationships. Whether it’s managing suppliers or stakeholders, the success of any procurement organisation relies heavily on building relationships between people.

Despite this, many procurement professionals do not have the time to focus on the human side of their job. Data collection, reporting, transactional activities, urgencies, etc. are all tasks that eat up their precious time and prevent them from focusing on relationships that could generate more value and better outcomes.  This problem isn’t new and is the main driver behind the constant, growing interest in procurement technologies that automate processes and increase efficiencies.

What is new, though, is the pace of innovation and the hype around some of the latest technologies.

Emerging technologies have begun to dominate discussions in the procurement space, and it has become impossible to avoid debates, articles, publications, etc. on artificial intelligence (AI) or blockchain. The new “hot” technology that has been generating a lot of hype in 2019 is Robotic Process Automation (RPA).

Before jumping on the RPA bandwagon, it is critical to look beyond the features to understand the bigger picture. In the case of the latest RPA technology that has integrated AI, it is about making procurement jobs more human by offloading even more mundane, robotic tasks to… robots!

The goal is to augment, not replace, people by combining the best qualities and capabilities of both human and machine to achieve better outcomes.

RPA: Copy/paste on steroïds…

“[RPA is] a preconfigured software instance that uses business rules and predefined activity choreography to complete the autonomous execution of a combination of processes, activities, transactions, and tasks in one or more unrelated software systems to deliver a result or service with human exception management.”

Source: IEEE Guide for Terms and Concepts in Intelligent Process Automation (whose purpose is to provide standard definitions of concepts, capabilities, terms, technology, types, etc. for emerging process technologies)

This technical definition of what RPA is and how it works can be summed up with a simple analogy. Imagine that you have to repeatedly copy data from one Excel file to another to produce a monthly report. One way to eliminate these mundane, low-value, tedious tasks would be to create a macro that would do all the copy/paste for you. In addition to saving hours of your precious time over the course of the year, it would also reduce the risk of errors. This is, essentially, a simplified definition of what RPA is about. It’s a way to automate repetitive and scripted actions that are usually performed manually by users (not just copy/paste!). It is a form of business process automation.

The typical benefits of RPA are:

  • efficiencies to free-up resources usually spent on manual tasks and re-focus them on core business (efficiency fuels effectiveness)
  • better consistency and compliance in data entries by reducing errors
  • from a system/IT perspective, RPA is a valuable workaround to break data silos. It avoids the costs (investment, change mgmt.) and risks associated with replacing an existing system or creating interfaces. RPA solutions sit on top of the existing infrastructure and simply simulate user actions to take data from system ‘A’ and put it in system ‘B’.

RPA has limitations and it is important to be aware of them and consider if the trade-offs are worth it. Some of them are:

  • RPA can do one thing and only one thing. If there are changes in the source or in the destination systems, then it will stop to work correctly
  • It requires extensive programming to ensure that the RPA solution takes all cases into account. If not, it will not work or, even worse, it will create even more issues as it is very consistent in executing rules. If something is off, the same error(s) will be consistently repeated
  • For the same reason, it is vital to ensure that processes are running well before implementing RPA

If RPA only Had a Brain…

There’s no getting around it: RPA is a very dumb technology.  It does exactly what it’s told, blindly executing whatever set of rules it’s given. Such technology has been in use for years but on a limited scale. However, with the advancement of other, smarter technologies opening up new opportunities to make RPA more useful and less “dumb,” it is experiencing a revival. AI is one of the emerging technologies revitalising RPA, and stirring up hype. These days, it’s rare to see RPA without an AI component, which has also lead to a lot of confusion between RPA and AI.

“[AI is] the combination of cognitive automation, machine learning (ML), reasoning, hypothesis generation and analysis, natural language processing and intentional algorithm mutation producing insights and analytics at or above human capability.”

Source: IEEE

By nature, RPA and AI are very different technologies:

Because most business processes require a combination of “DO” and “THINK,” newer generations of RPA solutions integrate AI components to:

  • Understand input via natural language processing, data extracting and mining, etc.
  • Learn from mistakes and exceptions
  • Develop/enrich rules based on experience

It is this new, smarter generation of “RPA+AI” solutions that has broader applications as a valuable tool for Procurement.

RPA Applications for Procurement

“It is not the type of business process that makes for a good candidate for RPA, but rather the characteristics of the process, such as the need for data extraction, enrichment and validation.”

The Hackett Group on Procurious

RPA is particularly well-suited for operational and transactional Procurement because these areas are characteriSed by countless manual activities. Here are some examples:

  • Automation & elimination of mundane tasks
    • Invoice processing: It is possible to drastically reduce efforts and cycle times to extract essential information from an invoice and perform an m-way match by using a combination of RPA and AI (Optical Character Recognition + Natural Language Processing)
    • RFx preparation: Tasks related to data collection (quantities from ERPs, specifications from PLMs or other file sharing systems, etc.) and even the drafting of RFXs can be streamlined by using RPA.
  • Data compliance and quality
    • Supplier onboarding: RPA can automatically get more supplier data or data needed to verify registrations or certifications by crawling the web or other data sources.
    • Data mappings and deduplication: RPA can be a great support in Master data Management (MDM) by normalizing data (typos, formatting, etc.) and by ensuring that naming/typing conventions are respected.
  • Support to gain better insights
    • Supplier scorecarding: This is an activity that requires thorough data collection. RPA can be leveraged to collect data from various sources and integrate the information into one system either for internal purposes and/or for the preparation of a negotiation or business review
    • Contract analysis: RPA can crawl file sharing systems, network disks, and even emails to collect and gather contracts in one central location. Then, it can extract key terms and store them as metadata in a contract management solution.

Conclusion

RPA, in combination with other technologies, is an efficient way to connect silos (from a data perspective) to win back valuable time and remove the “robot” work from the desk of procurement teams so they can focus on the human side of their job.

On top of that, procurement organisations can gain tremendous insights from implementing RPA because it can make new data digitally accessible and more visible.

However, it is important to keep in mind that RPA is only a workaround; it does not break silos like an end-to-end procurement platform would do.

Pizza, Medicines and Death Rays: The Future of Drone Delivery

We’re still a long way away from drone deliveries and drone-run supply chains being the norm – so what’s the current state of drone delivery worldwide?

There’s no question that the world has gone drone mad. If you didn’t receive one for Christmas (bad luck), you’ll probably know someone that did. But, despite all the hype, we’re still a long way away from drone deliveries and drone-run supply chains being the norm.  

So what’s the current state of drone delivery worldwide?

The idea of drone deliveries for useful things is a lot more fun to think about than drones being used for dropping bombs or killing people with death rays – so let’s focus on that for the time being.

Drones are already capable of being deployed for many types of delivery services such as pizzas in urban environments and desperately-needed medicines flown by drones to remote, inaccessible villages. 

In many instances, drone technology has advanced so quickly that it runs afoul of the local laws. For example, the Federal Aviation Administration (FAA) in the United States says that, without special permission, a drone needs to be flown in the line-of-sight of the operator and that a drone cannot be flown from a moving vehicle. 

Perhaps pizza-delivery observation towers could become a new industry in America?

In this article I outline some of the societal benefits of drone delivery, the risks associated, the prevalence of drone delivery today and what the future holds.

Societal benefits of drone delivery

Some of the societal benefits of drone deliveries include economic considerations, improvements in emergency response systems, overcoming delivery problems to remote areas and pollution reduction. 

  • Economics

The most difficult part of any delivery challenge is “the last mile” (metaphorically speaking). This is the portion of the supply chain pathway from the warehouse to the customer’s/buyer’s home or office. Drone delivery is faster and saves money on fuel costs, fleet maintenance of commercial vehicles and labour costs for human drivers. 

  • Emergency Response and Healthcare

In some medical emergency situations, a few minutes could make the difference between whether someone lives or dies. Delivery drones can bring first aid supplies, needed medicines, blood for transfusions, and medical equipment. For example, those suffering from a heart attack might get help from an emergency drone, which maintains communication with paramedics and can deliver a portable defibrillator.

The paramedics are able to observe through a remote video what is happening and instruct those giving aid to the heart-attack victim on how to use it.

  • Pollution Reduction

If drone batteries are recharged via renewable energy systems, such as solar power, the air flight is pollution free. The only downside to drone use is noise pollution. Whilst it might not be very noticeable when a single drone is flying, imagine a future where there are overly-active, drone-flying corridors.

To address this problem an inventor, Edgar Herrera, has developed a blade-less drone, which flies in complete silence. The drone is not yet in production but the design is spectacular; solar-powered, silent-flying, drone delivery is nothing short of revolutionary.

Drones and Privacy

Privacy is a big concern for many people when it comes to commercial drone use and the main reason that legislation came into being all over the world. In many places, using drones for surveillance is a crime. Authorities are increasingly concerned about delivery drones being used for terrorist acts or criminal purposes. In Europe, a study published by RIMMA noted that drones had been flown over nuclear power plants and used to smuggle items into prisons and carry drugs across the U.S./Mexican border

These are just a few of the reasons that legislation has been put in place all over the world – to protect critical infrastructure from unauthorised drone surveillance or attack.

Commercial drone flyers that operate a drone delivery service need to be careful not to break these laws or lose control of their drones because the penalties are harsh.

Consumers have other concerns regarding drone delivery services besides safety, privacy, and security. eMarketer reports than 72 per cent of consumers worry about problems with packages, such as theft or damage. Drones equipped with video surveillance technology can reduce these criminal risks but these cameras raise further questions about privacy and security.

This is an area of opportunity for supply chain managers and entrepreneurs to focus on providing solutions. 

Drone delivery around the world

USA

In the USAThe FAA has been slow to allow commercial drones for delivery services. Drone flying is still restricted to line-of-sight, which makes drone delivery less efficient and not possible in all areas. 

  • In 2015, the USPS starting testing postal delivery using Horsefly drones and since October 2017, REMSA, an ambulance and emergency services company partnered with Flirtey to deliver portable defibrillators for 911 emergency calls in northern Nevada. 
  • Fortune reports that Uber is testing food delivery by drones. Google, FedEx, Intel, and Qualcomm are working with the Department of Transportation on commercial testing of drone delivery services. 
  • Forbes reports that big efforts are being made by Amazon, Target, Walmart, and many others to incorporate a viable, commercial drone-delivery service in their long-term strategic and logistics plans. 

UK and EU

  • The UK is moving faster than the US to approve the widespread deployment of commercial drones, which should hit the market in 2019 or 2020. Amazon has made significant advancements in the UK. 
  • The European Union is in the process of creating laws to regulate commercial drone-flying corridors of airspace called U-Space to allow a wide deployment of drone delivery services. 
  • Since March 2017, in Switzerland, Matternet has been working with the government mail system, Swiss Post, to deliver emergency medical supplies.
  • In December 2014, the French postal service, La Poste began testing drone delivery systems. 

The future of drone delivery

If the regulators cooperate, commercial drone delivery will become a widespread reality to be enjoyed by consumers and those in need of urgent medical supplies and emergency services worldwide. 

It is most-likely that large-scale, commercial drone-delivery deployments will occur in Europe, the UK, and Australia during 2019 with Amazon and Google leading the way. In China, JD.com is moving ahead with widespread deployment very quickly and Alibaba is advancing as well using drone delivery to support offshore islands. 

McKinsey reports that the drone delivery industry in the USA alone, grew from $40 million in 2012 to $1 billion in 2017. Madison estimates the global market depends on what happens with the regulations. Ultimately, the global market for commercial drones may reach over $127 billion annually. 

This article, written by Mark Sheehan, was originally published on My Drone Authority.

How To Enable Smarter Procurement Today

If AI is the light at the end of the tunnel, why are there so few success stories to be found? How do we enable smart procurement?  

Success with today’s broad set of complex objectives requires Procurement leaders to think strategically and process ever greater volumes of diverse information. Unfortunately, this is an area with significant room for improvement at most organisations. A survey of over 400 procurement leaders by Forrester found their top priority to be “improv[ing] business insight on purchasing activity through reporting and analytics.”

The obstacles to more informed, strategic decision-making are quite consistent. The study, entitled “Enabling Smarter Procurement” found three common issues

1. Firstly, despite efforts at automating processes, too much capacity is still consumed by operational or manual activities. Teams must free capacity to work on new projects, conduct analysis and plan, but are struggling to do so.

2.  Secondly leaders struggle to access relevant insights when and where they are needed. The volume of information now available is of little help if not digestible, simply leading to information overload.

3. Compounding this, respondents also cited poor data quality as a key challenge. Duplicate supplier records, inaccurate data and poor integration between systems all were cited as sources of data quality issues.

Fortunately, new technologies are available that can empower procurement to address these and other challenges and rise to the occasion. AI in particular is finally coming of age and often viewed as the answer to many of Procurement’s challenges. The same survey found that 71 per cent of business leaders plan to adopt AI in procurement over the next 12 months. Yet if AI is the light at the end of the tunnel, why are so few success stories to be found?

A key reason is the approach taken to implementing AI solutions to date. As vendors struggle to burnish their innovation credibility, there has been significant marketing ahead of capabilities which has led to unmet expectations post implementation. As capabilities are now coming in line with past marketing, this problem will subside. Of greater concern, the innovation race has led to nearly an exclusive focus on the algorithms, leading to poorly designed implementations. Less innovative but equally important areas, especially data quality, are being ignored. AI relies on a solid foundation of data, in terms of volume and quality, so solutions that offer clever applications alone are sure to disappoint.

To remedy this problem, organisations must implement AI in conjunction with cleaning up their data, rather than using poor data quality as an excuse for inaction. Source-to-Pay suites that are built upon a unified data model partially address the challenge by generating clean data that can be mined by AI applications across all processes. For example, suites with a single supplier record can provide true 360 degree visibility of supplier performance and activity, and enable AI applications to predict potential risks.

That still leaves issues with existing data or data in other systems. Here, master data management solutions should be leveraged that can actually fix issues in back end systems, linking vendor and item master records across systems. This further improves visibility and the potential for new and better insights.

Empowering procurement to make more informed, strategic decisions is no longer an option. There is simply no other way to effectively meet the broad set of objectives now expected. Fortunately, new technologies are finally reaching the level of maturity where they can have a transformative impact. By implementing AI applications in parallel with initiatives to improve their data foundation, leading organizations are both enabling smarter procurement today and ensuring they are well positioned to leverage tomorrow’s innovations.

Ivalua sponsored today’s London CPO roundtable. If you would like to attend or sponsor a Procurious roundtable please contact Olga Luscombe via [email protected] 

Is It Time For Procurement Pros To Go To Market?

Going to Market (Place) : The Future of Procurement goes live on 13th November. Sign up now.  

Could a  B2B e-marketplace transform the lives of your procurement team? What are the key benefits of using a marketplace and why are some procurement leaders reluctant to take the leap?

We hear from Molly Dobson, Head of Enterprise Customer Success – Amazon Business and Mary Hetherington, Director of UK Group Procurement – AXA to get the low down on the future of marketplaces, how they can benefit procurement professionals and what reservations are still held by the profession.

Whist digital marketplaces have evolved over time, and come and gone with varying success, the core functionality remains in that they are a central place where people gather to buy and sell goods and services.

“The digital marketplace isn’t a revolutionary concept.” explains Molly. “But it definitely has been more prevalent in our personal lives than our professional lives – e.g. Uber, Airbnb and Amazon.”

Having said that, “early innovators really did introduce a concept in procurement that still underpins the business marketplaces of today. These are capabilities like electronic procurement, reverse auctions and buyer discovery.”

Molly outlines the three core components of any procurement marketplace:

  1. Breadth of choice

The  first core characteristic of a marketplace is having that “wide range of choice within a single interface, which is why we all like to use marketplaces within our personal lives. Within a marketplace like Amazon Business you can access 250 million products from toilet paper to precision test and measurement instruments, to professional medical supplies.”

2. Competition 

“Users of a marketplace get access to multiple sellers for the same offer. Each of these sellers is competing against one another to get your business and with this competition you can have reduced commitments to some of those long, inflexible contracts. We like to talk about a marketplace being dynamic in that sense.”

3. Transparency 

“In a marketplace you can have transparency of product and seller reviews and pricing and delivery options. You really get the capability to compare all of your options and make informed buying decisions.”

“In the procurement space, in particular, you have additional requirements with things like the ability to integrate with other procurement applications.”

Marketplaces and maverick spend

Mary recently began piloting a marketplace at AXA.

“In the short space of time that we’ve been [trialling a marketplace] it has really surprised me the depth of information that we can attain about who’s buying what, the types of goods and services we’re buying,  at a very low level which hasn’t always been that transparent in the past.

“This is really useful for a large organisation like mine where we’re supporting several different business units with very diverse sets of requirements and lots and lots of small purchases. It gives us the opportunity to consolidate information and identify rogue spend very quickly.”

Measuring marketplace success

AXA has been measuring the success of its marketplace with three metrics; customer satisfaction, billing and fulfilment and  management of information.

  1. Customer satisfaction

Customer satisfaction on the solutions and the process around Amazon Marketplace is one metric AXA have been using to measure success.

“We all know that Amazon is the go to place for purchases. We use it in our private lives and people like that experience so we want to try and give our business customers some of that experience and flexibility when dealing with business purchases.”

2. Billing and fulfilment

Making sure that billing and fulfilment of the goods is effective, [that it] interfaces neatly with our purchase to pay solutions  [and] that we get the granularity we want on our invoicing.”

3.  Great management of information

It’s important to ensure procurement leaders can make well informed decisions about their future spend and future requirements.

“It can take some work to get [a marketplace] off the ground, [fitting into] your strategy [to a point where  multifunctional leaders can buy into it.”

Marketplace adoption

So what’s holding procurement teams back when it comes to adopting marketplaces. Mary Hetherington, Director of UK Group Procurement – AXA believes part of the challenge is procurement’s need to achieve a healthy balance between enabling the business and applying controls.

“We need to show flexibility but also proportionality when we’re looking at different sizes of purchasing,” she argues.

“The challenge with a marketplace is ensuring we determine the appropriate level of control that gives that flexibility to the business but doesn’t compromise any of our existing  preferred supplier  arrangement or bypass certain checkpoints of governance as a finical services organisation that we need to carry out.

“The key here is pitching it at the right level to ensure both the procurement team and the business get the solution they want.”

Are marketplaces the future of procurement? What are the pros and cons? We discuss in new Procurious webinar. which goes live on 13th November.  Sign up now (it’s free!)

Food Allergy Deaths Avoidable With Blockchain

The recent cases of tragic deaths caused by food allergies has opened afresh the debate on fully transparent supply chains.

Many of you will have seen or read news reports in the past couple of weeks regarding the tragic deaths of two women due to severe allergic reactions to eating pre-prepared food. In both cases, the food in question was purchased from the same retailer, though the resulting actions from the cases have been markedly different.

The cases have highlighted industry-wide issues regarding food packaging and labelling relating to allergens, as well as reigniting the debate on where the responsibility lies for food content and allergen checks within the supply chain.

Inadequate Labelling and Mis-sold Products

The first incident occurred after a woman ate a pre-prepared baguette that had sesame baked into the product, but had not been listed on the product’s ingredient list on its packaging.

A recent inquest found that the retailer had “inadequately labelled” its products, failing to highlight the presence of sesame in the food. While the organisation agreed with the coroner’s verdict, it has thrown a spotlight on industry packaging requirements, particularly when it comes to listing potential allergens.

The second death was as a result of a severe allergic reaction to the presence of dairy protein in a pre-packaged sandwich. However, unlike in the first case, the retailer has pointed the finger of blame squarely at one of its second-tier suppliers, claiming it was mis-sold a guaranteed dairy-free yoghurt.

The supplier in question, with whom the retailer has since ended its relationship, has rejected the claim that its product was to blame. They had their own supply chain issue in February 2018 when they were forced to recall some of its products due to undeclared milk, resulting in it ending a relationship with a third-party supplier. The supplier has denied that the recalled product is the same product as caused the allergic reaction, though the retailer and two independent authorities have conducted tests showing that the yoghurt in question had levels of contamination.

Where the fault lies for the contamination will be established in due course. And though this ultimately pales in comparison to the tragic loss of life, it does raise a couple of serious questions: Where does responsibility lie for ensuring product quality in the supply chain? And what can organisations AND suppliers do to ensure full supply chain transparency?

Introducing Blockchain to the Food Industry

The debate on the first question will continue to rumble on. In reality, the responsibility lies with every party, irrespective of which tier they are in the supply chain. That said, the buck ultimately stops with the end user, retailer or seller to ensure products are fully labelled and they are satisfied they are selling a quality (and safe) product.

The answer to the second question may be closer than you think, however. Blockchain has been discussed at length on Procurious and its applications in the supply chain are well documented.

Plus it helps that the world’s largest retailer, Walmart, has just unveiled its new food industry blockchain ambitions in China. The retailer plans to use the existing, proven, technology to ‘overlay’ the supply chains in the notoriously complex industry.

And with major producers such as Dole, Nestle and Unilever on board, as well as IBM as a technology development partner, this does have the signs of being the first step on a (long) road to success.

Success that could usher in new processes for how food information is obtained, stored and shared, allowing all parties to track the provenance of food from farm to table. This will give all levels of the supply chain the transparency required to know products are both safe and of the highest quality.

With what has been in the new recently, with impacts that none of us can predict and that potentially extend further than any of us know, this may also represent the first step to ensuring the similar tragedies don’t happen again.

Read more on Walmart’s food industry blockchain ambitions here.

Big Procurement Questions Deserve Big Answers

We know that procurement professionals like to get the latest intel on the hottest topics from the best in the business – so we’ve sorted you right out.  Your big procurement questions: answered. 

Elizaveta Galitckaia / Shutterstock

What are the surefire ways to speed up procurement processes?

Can procurement ever completely eliminate maverick spend?

Why shouldn’t procurement simply squeeze their suppliers for every dollar they’ve got?

What technology will be the most game-changing for procurement?

What’s the best question to ask a candidate during a job interview?

Procurement questions as big as these require big answers from  people who know their stuff.  Happily, we gathered 50 of procurement’s top influencers and thought leaders in Chicago last month for Big Ideas Summit 2018 and managed to steal a few quiet minutes to put some of them to the test.

Pat McCarthy,  SVP & GM – SAP Ariba

Pat on eliminating maverick spend…

“Procurement can [eliminate maverick spend] but it has to make the purchasing process a destination people want to come to”

Pat on supplier relationships…

“You have to have a great relationship with your suppliers, one where they benefit and you benefit so that making a profit and you fining value in their solutions is the right balance.”

Pat on his favourite job interview question…

“I love to ask candidates about the last book they read because I’m most interested in curiosity – are they curious, what are they curious about – it tells me a lot about them.”

Read more from Pat McCarthy in his blog Procurement with Purpose – Not All Rainbows and Fairytales. 

Doug Leeby, CEO – Beeline

Doug on eliminating maverick spend…

“I think there are certain people, especially executives, who are special and they will always go around the system. If you had the power to say only those that are in the system will be paid then perhaps you [could eliminate maverick spend] but i’ve never seen a situation that had 100  per cent compliance.”

Doug on  his favourite job interview question…

“My go to question is – what are two or three things that you’re really really bad at?  What I’m looking for is A) what they’re really bad  at but more importantly the degree of introspection they have. If they’ve been honest with themselves and done a real inventory of what their areas of development are, what are their weaknesses then they’re somebody I can trust and work with.  If I hear somebody say that they don’t have any then they’re not going to be a good fit for us”

Read more from Doug Leeby in this blog The Rise of the Contingent Workforce… And How to Manage It. 

Daniel Perry, Global Alliances Director – EcoVadis

Daniel on eliminating maverick spend…  

“I don’t think procurement can necessarily eliminate all maverick spend, buyers find ways around any rules that you might put in place.  But if you can provide a very strong vision and mission for procurement and the company in general as to why you are trying to avoid maverick spend, if you can align it to your company’s  sustainability mission or the fact that you want to try and avoid using suppliers that use modern slavery then it gives the buyer another cause for pause before going off and doing maverick spend.”

Daniel on game-changing technologies… 

“Transparency is really changing the way that business is being done these days –  there is much a higher expectation for businesses and their supply chains, who they work with and who they’re associated with so I think the technology around due diligence, around assurance, around using companies that are reputable is going to be a big game changer in the way that companies decide which suppliers to use.”

Read more from Daniel Perry in this blog, Making Sustainable Procurement Work. 

Check out all of our exclusive video content from Big Ideas Summit Chicago via the Digital Delegates group on Procurious. 

The Key Procurement And Technology Trends for 2019

The times, they are a-changing, and so are the markets and environments that procurement operates in. What then are the key trends in procurement and technology you need to watch for in 2019?

View Apart/ Shutterstock

As I am reliably informed by my Christmas-mad colleague, there are only 125 sleeps (as I write) left until Christmas. That means there’s a little over 18 weeks until the year ends, so it’s time to start looking forward to what’s coming in the next 12 months.

2019 is set to be a seismic year around the world. Major changes, such as further geo-political upheaval, the looming spectre of global trade wars and tariffs aplenty, have the potential to disrupt supply chains and set metaphorical trip wires for procurement professionals everywhere. And, as we’ve already heard, it’s rarely been more important to get a solid grips on the key factors in the market and external environment.

So gather round as we gaze into the opaque mists of the future and make some educated insights into the key procurement and technology trends waiting around the corner.

  1. Supplier Management

Let’s start with an oldie, but a goodie. Wait, I hear you cry, supplier management isn’t a new trend! We’ve been talking about this for years. Well, if we’ve talking about it for years, why aren’t we any better at it? And why is it that it’s one of the key areas a large number of procurement teams fall down on?

Like it or not, your suppliers hold the key to all your wildest procurement dreams. Innovation, top and bottom line cost reduction, avoidance and savings, stress-free supply of services and goods and free cake for all! (Ok, maybe not that last one!)

In their Vision 2020 publications, pwc state that the top 25 per cent of procurement functions will have gone beyond incremental improvements and be implementing fundamental change to process and policy alike. This includes how they interact with suppliers and shifting focus from cost and value to Return on Investment (ROI).

These outcomes all hang on better supplier relationship management in order to tease out further innovation from suppliers (who are seen as partners, rather than sponges to wring cash out of) and closer collaboration to source solutions to problems we don’t even know we have yet.

At the heart of this is great communication. Select the right suppliers and talk to them more. You never know, you might just learn something!

  1. Blockchain and Digital Adoption

Unless you’ve been living in a cave on a remote hillside (or perhaps a Faraday cage in your basement), you should have heard by now about blockchain.

From blog articles to webinars, it’s one of the hottest topics in procurement right now, and is likely to still be throughout 2019. Blockchain is and will continue to be a key tool in shaping the transparency of a supply chain. Information is shared and transmitted easily and safely, while the technology allows an “immutable signed and time stamped record of identity, ownership of assets, transactions or contractual commitments”.

This transparency will have the added benefits, and some drawbacks, of making procurement and CPOs more visible in the public environment, say EY. Procurement will wield greater power and have greater opportunity to interact with external stakeholders. But, at the same time, organisational processes and procurement will play out in a public setting like never before.

In line with blockchain’s increasing influence, there is a predicted rise in digital adoption and use of the Cloud. An estimated $1 trillion of IT spend will be moved to the Cloud by 2020, according to Gartner, as organisations look to make their IT services more agile.

  1. Social Value

There is a prevailing opinion amongst the procurement professionals I speak to that 2019 will be the year for social value and sustainability to really take hold. Organisations have begun to realise that cost and quality are only a part of the overall package and not only do they need to be seen to be doing more in the community, but they need to follow through on it.

That goes for the wider supply chain too. Using work practices and value-adding benefits for communities into tenders will become the norm and procurement will no longer be able to award contracts on cost without taking the wider impact into consideration.

  1. Next-Gen Workforce and Automation

Disregard what you’ve heard very recently regarding automation, machine learning and AI as scaremongering. Yes AI will take on tasks and people may have to move to new roles, but it’s not a future that we should be burying our head in the sand about. It’s a natural human reaction to fear change, but procurement needs to muscle up and be brave in order to evolve and survive.

Infosys estimates that AI and procurement automation will eliminate human intervention in 15 per cent of digital spending by 2019. If that’s the case, then procurement needs to embrace the change and develop, train and retain its Next-Generation workforce to meet the demands of new roles where human interaction and input is still key.

  1. Risk

From Brexit to trade wars, risk is going to be possibly the biggest trends for businesses as a whole in 2019. The organisations who will thrive in this unstable environment will be the ones who are best prepared to deal with the unexpected.

Deloitte believe that procurement will become the forecasters of risk in an organisation, raising the profile of the function as it factors total cost of risk and risk mitigation in supply chains into contracts and tenders.

Risk runs throughout the other trends that have been suggested above. Brexit, protectionism and trade wars make supplier and supply chain management all the more important. The increasing need for cyber security as technology advances is something that cannot be ignored.

Procurement is ideally placed to deal with all of these risks, but it needs to put its hand up and be at the front of the queue, or face being left behind and marginalised at a time when the function has a crucial role to play.