The Innovation Category

How Automatable are Procurement and Supply Chain Jobs?

robot

Last Tuesday, President Donald Trump signed an executive order to review the H-1B visa program, which brings 85,000 highly skilled foreign workers to the U.S. every year. The executive order was long coming. Critics of the current program argue that since workers under the H-1B visa cannot leave for another employer without starting the visa process over again, employers can give them lower wages than what American workers would receive. But what about the robots?

Sponsored Article

How B2B Integration Supports Digital Transformation Initiatives

digital business transformation

Spend Matters welcomes this sponsored article from Mark Morley, director of strategic product marketing at OpenText.

Successfully deploying a B2B integration strategy across a supply chain is key to driving improved performance and competitiveness in the market. There are many different ways, however, to deploy a B2B integration strategy. Quite often, the right choice is dependent on the budget, resources and the on-premises, cloud or hybrid approach that can be used.

Defining Blockchain For Procurement (Part 1): Background and Use Cases [PRO]

blockchain

For procurement, finance and supply chain organizations, blockchain has the potential to revolutionize different areas of supplier engagement, collaboration, traceability and management. But how (and when) it ultimately changes the way we use technology in such areas as supplier networks/supplier enablement, supplier management, contract lifecycle management, payables (and trade financing) and commodity management, among other areas, remains to be seen.

This multipart Spend Matters PRO series aims to both demystify (and explain) blockchain architectures while putting it in the context of procurement, providing a roadmap for practitioners to consider as they think about adopting the technology in the years to come.

Part 1 of this series starts by defining and explaining blockchain for a “non-technologist” and providing use cases for procurement organizations as they consider how they might adopt blockchain alongside their existing applications and supplier connectivity solutions. Part 2 and 3 will provide additional insight into early blockchain deployments and how providers, including both vendor upstarts as well as established providers such as SAP Ariba, may include blockchain as an integral component (or alongside) existing application and network architectures.

Why Every CPO is a “CEO” — But Not the CEO You’re Thinking Of

Global Risk Management Solutions (GRMS)

As value chains go digital, many enterprises have been trying to take a strategic approach in formulating digital business strategies rather than just translating existing business strategies into IT projects. Organizationally, many have appointed chief digital officers to manage this digital transformation. But digitization is only one megatrend. Its twin sibling is externalization, which is not just traditional outsourcing but the ability to similarly drive transformation by bringing the (increasingly digital) power of supply markets into the enterprise. You could then ask who would be best suited within the organization to perform the function of chief externalization officer (“CEO”).

Companies Are Largely Unprepared for Internet of Things Cyber Risks, Report Finds

Procurement is hardly the only sector excited about IoT. According to a survey of nearly 1,000 enterprise IT buyers worldwide conducted late last year by research firm 451Research, 71% of organizations are already gathering IoT data. Over the course of this year, 90% will be increasing IoT spending. There are still plenty of concerns, such as uncertain ROI, but the top factor impeding IoT deployments is security.

Disruptive Technology Meets Strategic Procurement: Short-Term and Long-Term Outcomes

digital business transformation

Blockchain. Robotics. Internet of things. Big data. Peer-to-peer connectivity. These are some of the newest and most talked-about technologies that Spend Matters expects will prove disruptive to the spend analytics, sourcing, supplier management and contract lifecycle management markets. They are collectively referred to as strategic procurement technologies in The Impact of Disruptive Technologies and Solutions on Strategic Procurement Technologies (Analytics, Sourcing, Supplier and Contract Management), a new research paper from the Spend Matters analysts.

Forrester’s Artificial Intelligence Report Spawns 10 Hot Technologies — For Procurement, Which Ones Matter Most?

We recently came across a Forbes piece that distilled the findings of a Forrester report on artificial intelligence into the 10 “hottest” AI technologies. As suckers for clickbait, as well as folks interested in the implications of AI for the procurement sector, we checked it out. ICYMI, here they are, according to Forbes contributor Gil Press, taken from Forrester’s TechRadar™: Artificial Intelligence Technologies, Q1 2017.

Matchmaker, Matchmaker, Make Me a Buyer/Supplier Match!

Matchmaking is an age-old practice. And as Tzeitel, Hodel and Chava will tell you, it’s a tough world out there when it comes to traditional matchmaking. The same goes for buyers and suppliers in the marketplace. Just as matchmakers once met with mothers and fathers to match their daughters to prospective husbands, businesses used to pound the pavement trying to find prospective clients, buyers, suppliers and anyone who would take a business card and put it in their pocket full of loose change and car keys.

Predictive Procurement Gets Real

Spend Matters welcomes this guest post from Dr. Marcell Vollmer, chief digital officer at SAP Ariba.

The physical and digital worlds have officially collided. In the old days, we’d get the morning paper delivered to our doorsteps and read it on the way to work while drinking the coffee we made upon waking up. Today, the news we care about is automatically delivered to our mobile devices and we scan it while enjoying the beverage that we ordered via mobile app to have ready and waiting for us when we arrive. We used to attend events after work to expand our professional networks. Now we link to our peers — and their peers — around the world online in real time.

Risky Business — Our Illogical Attitudes to Risk, Regret and Gambling [Plus+]

supply risk

We've featured aspects of Daniel Kahneman's brilliant book, Thinking Fast and Slow, over a number of articles looking at his concepts such as Priming and Anchoring, and in particular what they (and other ideas he and others in the field have developed) mean for procurement professionals.

Kahneman won the Nobel Prize for Economics, with his collaborator Amos Tverksy — not bad going for two psychologists. And the work that led to the prize was largely around the area of risk, which is what we will look at today.

He and Tversky showed that the assumptions economists made about human behaviour — that we acted rationally in hard economic terms — could be proved false. That meant many of the standard economic models and theories were also flawed, which rather upset many in the economics community!

Kahneman called the strange beings who behaved in this perfectly rationally manner "econs" as opposed to "humans," who behaved — well, like humans do. And his work on risk shows exactly why the assumptions of rationality doesn't hold up. Our decisions aren’t rational — but driven by factors like the “endowment effect,” risk-aversion, and regret.

There is obviously a huge amount of detail that we could look at here — an entire Nobel Prize's worth, we might say. But we will just focus on a few key conclusions and a handful of implications for procurement. As before, we strongly recommend you read the book if this interests you (and, really, it should).

So let’s get into three key Kahneman findings.

2017 Prediction of the Moment: How Big Blockchain Will Be in Sourcing and Supplier Management

blockchain

It’s no secret that the Spend Matters team has been geekily excited about the procurement implications of blockchain for years — seemingly right on the heels of the Dark Web, TOR and Silk Road becoming a thing. What is far more important to the world of procurement — and for that matter, the world of broader supply chains and global trade — is that blockchain brings the potential to become as important to our technology lives as the spreadsheet, ERP/MRP systems and source-to-pay technology suites that we use everyday, as Spend Matters Founder Jason Busch puts it.

Hone Your Procurement Negotiation Skills By Learning the Right Way to Think [Plus+]

In our previous piece looking at Daniel Kahneman's brilliant book, Thinking Fast and Slow, and its implications for procurement thinking and practice, we looked at the concept of Priming.

Granted, Kahneman published the book in late 2011, but is still immensely valuable for procurement practitioners to keep on their bedside tables today — and here's why.

One of the central premises of Kahneman's book is how our brains look for the easy route at all times, what he calls "System 1" thinking. If we can draw a conclusion, make a decision, or find a belief without actually going through a time-consuming and exhausting process of really thinking, we will. That is not our conscious decision — our brains are wired that way. "System 2" thinking, which is more logical, analytical and difficult, is something our brains avoid if they can.

So Priming is the phenomenon whereby something we've seen or heard recently influences our next thoughts. If I ask you to name an animal, and you've just walked past an advert for the zoo illustrated with an elephant, you are more likely to say "elephant." And remarkably, this is true even if you don't recall seeing the advert. Our sub-conscious is quite capable of priming our future thoughts.

In this Plus brief, we will consider what is in effect a particular sort of priming, with an obvious implication for procurement and negotiation behaviour specifically. Anchoring is the tendency for us to fix our thoughts around a particular number, point, or fact rather than thinking logically and independently about a decision.

In Kahnemann's words, "it occurs when people consider a particular value for an unknown quantity before estimating that quantity." The estimates then stay close to the number considered. And this is one of the most tested and robust results in experimental psychology; it is an absolutely proven phenomenon.

In a somewhat frightening example quoted in his book, German judges were asked to throw a dice before being asked what sentence they would give for a particular crime. The dice came up with either the number 3 or 9. When the dice said 9, the average "sentence" was 8 months. When it said 3, the average was 5 months!

Anchoring and Procurement Negotiation

The implication for procurement is very clear in the negotiation arena. Whatever number gets anchored in your brain is in danger of becoming the starting point and indeed the expectation for the negotiation. You may work up or down from there, but it is difficult not to mentally accept that as an anchor for the discussion.

Let's get into some tangible examples.