Why Procurement Must Help Fundamentally Rethink and Improve RONA

AnyData Solutions

Over on the CPO portion of our site, in part 1 and part 2 of this series, I discussed how “assets” in the new digital economy are sources of supply (i.e., equipment, people, software, products, suppliers, user roles) that increasingly interact in complex ways and therefore go far beyond how traditional applications model and manage these assets. An entirely new breed of intelligent applications needs to be developed that can manage the choreography and orchestration of these many-to-many assets.

And they don’t yet exist — other than in pieces.

However, we are seeing pieces of this new vision emerge. For example, sharing apps like Uber or Airbnb are really just mass consumerized systems that make use of assets — cars and houses — and obviously this is coming fast to B2B and procurement. (See our coverage of Uber for Business and Airbnb Business Travel below.) There’s no reason why procurement and supply chain technology providers can’t do the same for other assets, but it’ll take more than the current model that’s usually out there. Too often, and perhaps understandably so, technology providers merely say, “We listen to our customers,” as they manage a traditional “Feature 500” list rather than also thinking how to model and manage this new world more robustly.

For example, you can’t manage the future of work by treating services as SKUs or just layer in some screen-stuffing integration software called “robotic process automation.” Similarly, you can’t call yourself a provider of supply chain applications because you manage “kits” of items or support the exchange of direct procurement POs, ASNs and invoices.

A new class of value chain applications, which includes the full spectrum of indirect and direct spend, will include the best aspects of the niche applications that currently manage them. For example, this includes:

  • Enterprise asset management (EAM) functionality for equipment
  • Digital asset management for software
  • IT asset management for IT equipment
  • Vendor management systems (VMS) for contingent labor
  • Workforce management applications (including scheduling and tracking)
  • Transportation and warehouse management in logistics
  • RFID tracking and other telemetry for supply chain scenarios
  • Product lifecycle management (PLM) support for serialized product assets
  • Contract assets in a contract lifecycle management (CLM) application
  • Any spend category specific solution that mashes some of the above together

Whew, that’s a lot of asset types that are converging!

The notion of platform-based thinking and platform-based service architectures will be key (here’s an introduction to the topic) to managing some of this complexity so that they can plug-and-play resources that they need for various spend categories (and category management processes) and contexts, but so will using AI-based software that uses an object-based model underneath for these assets — even if it’s just for predictive analytics that layer on top.

OK, I know this stuff is getting a little heavy, so let’s close this series out with the example of services procurement. Some services are very straightforward in terms of being simple rate-based services or simple outcome-based services, which are provided by humans and/or software. But in many more complex services, you only know that you need certain types of workforce assets. And they can come from anywhere — small independent contractors, BPO firms, large consulting firms, freelancers, MSPs and so on.

This is where work intermediation platforms (WIPs) come in. They represent the next phase of labor procurement, where work can be procured and consumed in a variety of new forms (e.g., online workers, on-demand, very brief engagements, crowdsourcing, microtasking, work as a service). In other words, you manage work and labor-based services at the atomic level and correspondingly manage a new digital ecosystem and channels connecting the platform-based suppliers that provide them. It’s like a mirror image of “omnichannel retail” service outbound to a consumer, except it’s omnichannel inbound provisioning of worker and labor-based services to specific, differentiated enterprise needs. In a world with an increasingly fragmented and digital ecosystem of supply, you better know how to be a solutions assembler for your stakeholders. And you’re not going to be able to do it very well with your existing flotilla of older-technology solutions.

We’ll be covering more of this area in the future and will certainly be diving into examples of it at our upcoming Global Procurement Technology Summit on March 15–17. We hope to you see you there! In the meantime, if you’re looking to better manage your assets in the extended value chain, and you’re having trouble thinking about how to best meet your needs, please don’t hesitate to reach out to us.

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