In Spend Matters’ last pair of articles for the PRO series AI in Supplier Management, we reviewed some of the exciting capabilities that you will be able to expect in tomorrow's supplier management platforms, where we define AI, for the purposes of this article, as “augmented intelligence” because, as we've stated in our AI series, there is no true AI in any enterprise technology today.
In our initial entries of the series, we discussed how the advancements in usability and computing power have made it possible for platforms to implement better and more powerful guided on-boarding mechanisms that can allow a supplier to on-board from existing profiles more quickly and efficiently than ever before. We also discussed how embedded community intelligence will help you make better supplier selections, better performance monitoring will help you keep on top of performance problems before they lead to disruptions, KPI monitoring will identify a range of issues, risk monitoring will identify risks as soon as they come to pass, and resource assignment will be automated for common project tasks.
In our follow-up entries, we indicated that each of these capabilities would be improved with automated reasoning and machine learning technologies. Profiles would be automatically maintained. Community supplier intelligence will be augmented with supplier intelligence. Relationship status will be monitored in real time across all purchases and projects. When issues arise, corrective action plans will be automatically created. When risks are identified, mitigation plans will be automatically created. When resources are needed for more critical projects, they will be re-assigned, and projects realigned, in real time.
But is this the best we can hope for?
When we extend our event horizon out further into the future, we can predict that, at some point, industry-leading supplier management platforms are going to support:
— Supplier future state predictions
— Category-based supplier rebalancing
— Supply chain rebalancing
— Real-time order rebalancing
In Part 1 of AI in Supplier Management: Tomorrow, we began our discussion of some of the AI-enabled capabilities that you can expect to find in tomorrow's supplier management platforms, where we define AI as assisted intelligence (because, as we have discussed, there is no true artificial intelligence in enterprise platforms today and there won't be tomorrow either). AI is a buzzword, not a reality. But we don't need true AI to achieve software that can radically increase our productivity. Reaching assisted intelligence will add multiples to our efficiency and effectiveness.
In our last article, we discussed how tomorrow's supplier management platforms will offer smart, automatic, supplier profile update (suggestions) — taking the headaches out of profile maintenance that results in most profiles being out of date in a supplier management system shortly after they are created; market-based supplier intelligence that is more in line and reflective with reality — and not just the experience of an anomalous customer subset; and real-time relationship monitoring that paints a relatively full picture of the relationship, not just a point-based performance picture.
So what else will tomorrow's platforms do to help you focus more on the strategic side of supplier management? Let’s look at the next three areas:
— Automated resolution plan creation, monitoring and adjustment
— Automated risk mitigation strategy identification
— Optimized real-time resource re-alignment
It’s time to check in on Public Spend Forum, our sister site, to see what’s happening in public procurement. And what we see isn’t real. Instead it’s augmented reality and virtual reality technology taking hold. AR and VR don’t seem like the best fit for public procurement, but PSF writes that the innovative technologies can play a key role in a number of areas.
The article begins with an overview of the technology, also known as extended reality (xR). It gives these definitions for AR, MR and VR:
— Augmented Reality. This is a type of software which can be run on a device (smartphone, tablet) that uses our reality and incorporates images into it.
— Mixed Reality. This is a combination of AR and VR and utilizes a handset and a real environment for a more immersive feeling than augmented reality alone.
— Virtual Reality: Instead of projecting an image into our environment, VR instead creates a whole new environment. The user wears a headset as well for a completely immersive experience and a 360-degree vision field.
PSF says that xR has many uses, from offering hospital patients a sense of being outside the facility to education to workplace training — to aiding government work.
The Institute of Supply Management’s focus is on the future, and no educational session or speech at the ISM 2019 convention in Houston exemplified that more than recognizing Megawatt winner Jasdeep Sandhu and the other “30 under 30” recipients, the top young professionals in the field of supply chain and procurement. “It’s an incredible honor. If you asked me five years ago if I’d be in this position, I wouldn’t believe it,” said Sandhu, a blockchain specialist for the pharma firm GSK who turned 27 just before the early April convention. “Honestly, what it’s done, it has inspired me so much to continue down this path."
The sprawling, and often poorly managed, domain of services spend in procurement has not been fully solved by the digital transformation, but as companies adopt technologies to support their efforts, they are discovering the great potential that technology can unlock.
Managing services spend requires assisting the many stakeholders who are sourcing for a variety of needs. To help support all of those sourcing processes, procurement professionals need a robust technology like artificial intelligence (AI), which offers unprecedented capabilities and potential to streamline the process and improve the vendor match.
To shed light on that topic, we talked to Globality, a solutions provider with an AI-based procurement platform that helps clients around the world source services.
“Digital sourcing reduces time and improves the quality of the process,” says Yuval Atsmon, Globality’s Chief Customer Officer.
In this Q&A, Atsmon explains the value of bringing AI to B2B sourcing and how Globality uses AI to deliver results that save global clients and service providers time and money.
In our last pair of Spend Matters PRO articles about AI in supplier management today, Part 1 and Part 2, we overviewed some situations where you can find AI in e-sourcing platforms today, where we define AI as “assisted intelligence” because, as we've stated in our series about AI, there is no true artificial intelligence in any enterprise technology today. In fact, there is nothing close, at least not on the open marketplace.
But when we get to the point where we have an augmented intelligence solution that can help us not only monitor supplier performance (across a community), automatically identify issues and risks, and even help us with automated resource — and asset — assignment but can also help us identify automated corrective action resolution plans, risk mitigation strategies, and real-time relationship monitoring and resource re-alignment, they start to approach augmented intelligence and become quite useful to us indeed.
In this article, we are going to discuss the AI-enabled functionality that we expect to see in the leading supply management platforms tomorrow. We will continue our pattern and start by defining what we expect to see, how it will likely work, and then give some hints of the technology platform that will underlie it.
Tomorrow, we expect that the leading supplier management platform will also have the following capabilities:
— Smart information selection and auto profile updates
— Market-based supplier intelligence
— Real-time relationship monitoring
— Automated resolution plan creation, monitoring and adjustment
— Automated risk mitigation strategy identification
— Optimized real-time resource re-alignment
Procurement organizations previously embraced complexity in tools to enable both event sourcing and category management processes. Now, the tide has turned. Solutions that are best-in-class from a user-experience perspective, but may lack advanced features (e.g., sourcing optimization, the most capability/depth for RFP/RFI/auction support, full opportunity analysis like should-cost modeling, full project management, comprehensive integrated supplier and risk management, etc.) are increasingly winning the day — sometimes even replacing solutions that offer deeper functional capability.
Simply put, this is what I term the Scout phenomena (but in all fairness to Scout, the provider, is aggressively building out capabilities in areas that it has lagged in for our SolutionMap benchmarking tool).
In the forthcoming new releases of its sourcing product, SAP Ariba has not just co-opted Scout’s playbook. It has built on it. By masking complexity and prioritizing usability not just as a primary, but the top objective, forthcoming “SAP Ariba Sourcing” releases represent a fundamental replatforming that will put casual, business and procurement users at the center of a vastly improved and consumerized UX.
In Part 2 of the Spend Matters PRO research series providing analysis of the SAP Ariba Sourcing solution, we offer insight into the new user experience as well as analysis, commentary and customer recommendations based on SAP Ariba’s planned release schedule featuring the new UI/UX. Part 1 provided insight into SAP’s relative strengths and weaknesses today (based on the Q1 2019 SolutionMap release) and shared what we learned last month at the SAP Ariba Live event on an overall roadmap basis for the sourcing product line.
Ivalua CEO David Khuat-Duy on Tuesday kicked off the procurement solution provider’s customer event, Ivalua NOW 2019 Chicago, with an eye toward maintaining its dedication to serving customers, discussing its latest release and shedding light on its plans for the future.
“We have this long-term strategy of building a very big company with a fantastic product that we can offer to the market. And this is our vision,” Khuat-Duy said. “We don't have a short-term vision, like exiting or doing something different. We have this ambitious vision.”
As we have been repeating throughout this PRO Spend Matters’ AI series, AI is the reigning buzzword of the day in sourcing and procurement software. Supplier management is no exception. Just about every vendor out there trying to get an edge in the space is claiming to have AI, even if all they have is a pinch of RPA. That's why, in Part 1, we reviewed the technology ladder from RPA to "cognitive" — and insisted that while there is no true artificial intelligence out there today, we will start to see “assisted intelligence” and, later, “augmented intelligence” as the software gets more mature and more powerful.
And while we may not see true AI for decades, we do need assisted and augmented intelligence to efficiently and effectively do our jobs. As with supplier discovery, sometimes there is just too much supplier data to weed through to on-board, qualify, track and manage suppliers in an efficient and effective manner. It's really hampering our productivity.
But the right platforms will change all that. As per Part 1, the best platforms of today will:
— speed up and simplify on-boarding for us and our suppliers with auto-fill from databases, networks and third-party information sources.
— offer basic community supplier intelligence to provide quick, differentiating insights between suppliers with similar profiles but greatly differentiated capabilities.
— provide real-time performance insight and alerts to issues that need, or may soon need, attention from a real person versus just automated follow-ups with a supplier.
This is great, but it is not all they can do. We really need platforms that can be all they can be in order to truly take supplier management to the next level as an organizational practice ... versus a point-based endeavor with suppliers that we think are strategic or need our help.
The best platforms on the market today can also help with:
Two speeches this week at Basware’s Connect 2019 customer event in Chicago gave glimpses into the future of how procurement technology can make businesses faster, stronger and more efficient — as well as make them better businesses for people and societies.
To do that, businesses will need to harness all the data that’s being generated by devices, apps, the internet of things (IoT) and other technology to offer unprecedented visibility into all transactions — a new concept called “visible commerce,” said Eric Wilson, senior VP and general manager of North America for Basware, a global leader in networked source-to-pay solutions, e-invoicing and financing services.
“Visible commerce is believing that technology and humanity are interdependent and not in competition with each other.”
As supply chains get increasingly externalized and globalized, the broad scope of operations is subject to equally broad regulatory oversight and supply risk. Meanwhile, as consumers increasingly demand transparency and ethical behavior by value chain brand owners, supply chain organizations at those brands (and also at their suppliers), are having to increasingly respond to these demands. Procurement organizations, for their part, are trying their best to support this externalization on all fronts, but they are so busy with strategic sourcing and P2P execution that even the “basics” of supplier qualification, certification and on-boarding are suffering — never mind having time for more strategic activities in supplier innovation, advanced risk management, digital transformation and other areas.
So, what’s the solution? Well, procurement must first practice what it preaches by tapping supply market innovation for itself, and this innovation is taking many forms. In an everything-as-a-service (XaaS) world, procurement must not only take a leadership role in robustly contracting for these diverse cloud services, but also:
— identifying how various providers beyond cloud applications can help procurement execute much more efficiently — at the cadence of the business.
— embedding the best digital supply market innovations into its own service delivery in order to expand its own influence and brand within the enterprise.
— enabling and empowering functional partners in GRC, IT, Finance, Legal, HR, Risk/Audit, etc. to enable their own service value (increasingly in a cross-functional GBS environment) and integrate the disparate services together much more coherently.
For example, consider the question: Who is responsible for establishing the single face to the supplier when we digitally on-board and manage them to not only transact with them in a compliant manner, but also ensure that they’re operating securely, ethically and transparently more broadly? It’s not just procurement, but rather a combination of procurement, IT, GRC and various centers-of-excellence that should be working tightly together. Unfortunately, misalignment is the norm, but not because of outright conflict or malfeasance, but because functional folks are too busy just trying to execute within their own silos. And they’ll never extricate themselves from that situation unless they have drastically new capabilities to deploy.
This is where procurement organizations need to make smart choices on how they apply digital strategies and tools/services to this area of sustainability, ethics and compliance.
I was recently catching up with an industry colleague of mine named Tomas Wiemer on the topic (he’s a former procurement transformation leader from Nokia and Alcatel-Lucent). He is very deep into this area and typical of leaders at European firms who are definitely in the vanguard here. Tomas is considering some career changes right now, primarily with some emerging tech players who can have a dramatic impact in the industry. Tomas reminds me a bit of a European version of Roy Anderson, who just joined Tradeshift (here’s part 3 of an interview that I did with him), and I think that Tomas will do similarly well when he lands somewhere. He’s doing some interim work for a client, and I agreed to let him interview me for my inputs, but given my role, I asked him for the questions in writing so that I could fully respond in kind and publish it to our subscribers. The questions are below:
— How do you view topics as compliance and sustainability in the procurement digitalization landscape?
— Do you foresee a convergence/harmonization of sustainability/compliance requirements toward suppliers thanks to the rise of S2P platforms/marketplaces?
— What do you believe is the greatest added value of procurement digitalization / AI for compliance and sustainability?
— What do you think are the key conditions/requirements to enable the emergence of sustainability/compliance topics in digital procurement?
What’s interesting is that this topic is very hot right now. My business partner Jason Busch just attended the recent EcoVadis conference in Paris, and the buzz (beyond the buzz from the sustainably grown coffee that was undoubtedly served there) was palpable. Part of the reason is that the topic is giving many procurement organizations new ways to engage the business and the suppliers alike in a way that drives much more meaningful value across the value chain beyond just price-centric cost savings. And it also engages a new generation of procurement professionals who want to have a meaningful impact on value chains rather than just being deal-makers and “firefighters.”
Anyway, the questions above are big ones, and require very thorough answers, so without further ado, let’s get to answering them ...
Following the path from supplier discovery and selection is the topic of our current series, supplier management. As with each preceding entry, the aim is to define what is available with AI(-like) technology and what will be possible tomorrow. And just as the best platforms for supplier discovery are starting to use machine learning and RPA, so too are the best supplier management platforms — but we're getting ahead of ourselves.
