Technology Working in Practice for the Procurement Function

The first morning session at ProcureCon Indirect last month focused largely on innovation: innovative technology to help the procurement process, examples of innovation in action, and the need to innovate to respond to a changing market and world. We heard from Jean Latty, who is Group Head of Indirect Procurement at Generali, one of the world’s biggest insurance companies. Jean is leading the company’s transformation towards a group procurement shared services model, and is responsible for managing global external expenditure. His presentation focused on how innovative technology can help streamline the buying process and establish more efficient procurement operations.

As part of a wider group transformation, Group Procurement in the indirect space came into existence just a few years ago. It was started from scratch, with no tools in place, no practices or even a history to learn from. The objective has basically been to be simpler and faster, particularly in terms of transactions. He had good people, and good investment he said – but needed technology, because transformation often creates greater work volumes with no ability to hire more people. They were spending too much time on tactical activities, like supplier qualification, contract admin and tactical buying and not enough on strategic ones, like stakeholder management, strategic sourcing and SRM. Technology would be key to redressing that balance. They wanted also to improve stakeholder engagement, and gain from suppliers both quality and innovation initiatives.

They launched two pilots to make use of RPA and AI. The first – which was using Ivalua for its potential to leverage data - was IT and Professionals Services PR (purchase request), using RPA to automate the likes of checking data in a supplier quote, company details and rates against the group frame agreement, and to capture information in a report format. The second, Supplier Qualification, used RPA and AI to automate supplier information into the group’s systems, and to check for information correctness and document validity. Jean gave a step-by-step breakdown of how the RPA worked for the first example, how it checked data correspondence between the RDA code and the GFA file (from Ivalua) and the actions it took to flag errors and assign tasks in the owner’s to do list to remedy them. Quite clever; it even deletes the files it created to perform the checks once it has logged itself out of the system, but it saves a report file of findings.

Both proved successful in terms of people being able to take on more strategic work, and yielded good results with limited investment. But as Jean says, even your robots need maintenance! And you need operational management skills and ownership within the Group as well as a roadmap to make it happen.

One of the questions he got from his staff at the outset was whether they were going to be replaced, to which he replied, no! Good procurement people can really make a difference, there are many things robots cannot do right now. And he gave us a key takeaway which is a very valid and sobering thought for procurement people to remember: there is no other function that has such wide visibility of what’s happening in other parts of the business, in other countries, in relationships and so on. Procurement is advantageously placed to trigger and disseminate innovation ideas across the organisation.

It was a very good session with a real example of technology working at the procurement coalface, and it led well into the panel session that followed: Innovation in Action: What projects have demonstrated a clear value-add to your business through innovation in procurement?

One particular innovation story, from Eavan O’Halloran, Director of Group Procurement at Primark, told us how they are sourcing better as part of their CSR: by using the Scanmarket e-auction tool, they were able to source 100 million pairs of socks, for example, using more environmentally friendly materials and still make a saving of 30%. While Robert Turner, Head of Procurement Operations at John Lewis Partnership, explained how in the Waitrose coffee cup challenge, they couldn’t turn to suppliers to innovate fast enough to respond to customer-led demand for an environmentally friendly alternative. The answer, you would think, might not be called innovation: in a bold move Waitrose decided to simply stop buying and providing cups – but still offer coffee – a BYO cup policy. This example showed that innovation doesn't always have to come from technology or suppliers – it comes from initiatives that change opinion – customer response to the move has been very positive.

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