We are now living through the fourth industrial revolution, and our daily life is being influenced and augmented as IoT, cloud, cognitive and artificial intelligence tech becomes more prevalent. The trend towards increased automation is benefiting business and improving procurement’s ability to transact.
But will it really revolutionize the way we work?
Machines are efficient at performing repetitive work, however where there are dysfunctional, chaotic, and unchartered environments; and where rules of engagement have not been established, replacing humans with machines would be considered untenable (and for future tech, seemingly improbable). For many of us, the last few years have been unprecedented, unpredictable and extraordinary. In the world of procurement, whilst many the problems have similar themes, each day brings different challenges. Although we would love to structure the business in such a way that would make it more predictable, the reality is that a large number of transactions do not follow a ‘happy path’.
the People Factor ……
Procurement act as natural trouble shooters, ‘go to’ individuals, champions of external relationships (who does the supplier call when they have an issue!), and supply chain disruptors. BUT the desired goal is not to develop a bunch of hero’s. Hero mentality reflects a process truly out of control and extraordinary effort is required to put things back on track.
Creativity, innovation and relationships are positive human factors. Unfortunately conflicted motivations, self-inflicted disarray, and obstructive organizational politics are human downsides. Typical organizations have elements of both good and bad, which means intermediaries, such as the procurement function, will continue to be in demand.
Strategy vs Transaction
Given the challenging complexity of procurement process, today’s AI investment market is targeting the simpler transaction problems: aiding and accelerating the PR/PO transaction, processing invoices that already match, asking if we want fries with our cheeseburger selection etc. This is a great start, but we want more!
AI, as a tool, has potential to add the greatest value with Spend Analytic Insights (e.g. spend trends and patterns, price variances, focus points), Contract Lifecycle Management (e.g. contract formation, key term assessment, meta data analysis, and renewal support), Demand Management (e.g. resource forecast, material shortages, order and inventory reorder), and Risk Management (e.g. spend irregularity identification, price outliers, suspect supply situations, block /value chain) Solutions.
Work impact … Advanced Procurement Business Management
Assuming we have laid the right foundations, our fate is to advance our value proposition. This is a hugely positive outcome. I am not suggesting that Procurement are more important than other functions; we are all part of the same team, however imagine a football team without a goal keeper and midfield players. Procurement can help secure and play the ball forward to ensure a team win.
Good procurement functions wear three hats: gatekeeper, subject matter expert and business partner. AI will give Procurement the ability to grasp new insights, manage by exception and develop deep expertise. Of course, the tech still needs to catch up with the hype. It will 🙂
AYSCO CONSULTING 