Hype and Reality in Procurement: Pierre Mitchell’s “Improvisational” Talk With Phil Ideson

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There’s a lot more noise out there in today’s hyperconnected world, and the signal seems to be harder and harder to find. Separating the bluster from the information that really matters is a key skill for those working in knowledge-based professions, whether that means finding the supplier that really fits your company’s needs or picking a software solution that can add to procurement’s value proposition.

Just how to do this is what Spend Matters Chief Research Officer Pierre Mitchell explained in a newly released episode of the Art of Procurement podcast. In a quick “improvisational” conversation with Phil Ideson at ISM Indirect 2016, Pierre discussed internal service design, the real meaning of “digital” in a procurement and supply chain context and how to separate the hype from what really matters, from marketing to metrics.

Embracing New Challenges

On stage at ISM Indirect, Pierre spoke to how procurement has evolved since his time as a supply chain practitioner and one of the first “industry analysts.” In particular, he emphasized to students in attendance that this is something they can make a career out of. (Whether or not the profession will still be called procurement is a different matter.)

But the question for procurement now and in the future, Phil points out, is whether the function is willing to embrace those challenges.

Asking questions like “How do we tap supply markets for innovation?” and “How do we design not just those world-class supply bases but also supply chains of the future that are increasingly digital?” will be critical in shaping and driving those change efforts, Pierre says.

Unpacking the Definition of “Digital”

Of course, if supply chains are becoming increasingly digital, it would help to know exactly what that means. Yet nailing down a definition is not as easy as it sounds.

Is digital about efficiency, as some consultants like to pitch it? Or is about data?

“Digital and digitization is really about taking information in silicon-based form versus in our hydrocarbon-based form,” Pierre says. There’s an important distinction, however, between empty apps that just hold information — “a glorified machine tool,” Pierre calls them — and software that learns from the user, deriving intelligence that is served up to procurement in ways that help drive decision-making and planning.

What’s Hype and What’s Important

If you’ve ever wondered whether 2016’s big hype words like “cognitive” are issues procurement truly needs to focus on, you’re not alone. Phil asks the same question, looking to distinguish what’s essential from marketing speak.

Pierre says it’s “important that everybody take it upon themselves to personally educate themselves on topics,” artificial intelligence and machine learning included. AI, for example, is a field with a long history and many subareas. Developing a solid understanding on subjects like expert systems, knowledge representation and neural networks can go a long way to helping procurement organizations embrace emerging technologies that can help elevate the stature of the function.

Separating the hype from the meaningful is similarly difficult when it comes to benchmarking and metrics. Traditional cost savings metrics, along with the methodology of how they are used, top Pierre’s list of the most overused in procurement.

The most undervalued KPI that procurement organizations should prioritize? Check out the whole conversation at Art of Procurement to find out!

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