Procurement of Tomorrow (or the day after that) Part 2

Ed Cross, Executive Director at Odesma Ltd continues his take on how procurement might look in the future – part 1 is here.  

In simple terms the existing shift is that all processing-type activities will ultimately be completely automated, thus eliminating all transactional jobs done by people. But procurement comprises three high-level processes: transacting, sourcing, and risk and compliance management. Information integration and processing automation will eliminate the need for quality checks, anti-slavery inspectors and so forth, as information will be shared seamlessly, perhaps with block-chain at the heart of the information record.

So, this leaves sourcing and decision-making, areas that I have always thought would permanently remain with people and not systems. However, now I am not so sure.

Analytics and Decision Support is still in its infancy from an application perspective, though the enabling components are readily available in the form of off-the-shelf AI programmes supported with easy-to-use integration languages (it’s aptly called R) mean that almost every decision could be made by an intelligent computer. This means that the Procurement AI could tell the procurement leader or another intelligent computer exactly what to do and when – I envisage an Alexa-type bot on every person’s desk. It could align corporate objectives quickly and simply with every sourcing or business decision based on all the same things as a procurement person would rely on. Albeit, the AI could do it much faster, more accurately and in much greater quantity than a human. Link this with the five points listed in part 1, Process Automation, Supply Chain Integration, Information Integration, The Unit of One (Gig economy), and Global marketplace intermediation, and the question becomes what is left of the role of procurement?

The question then centres around the level of creative difference between a person and an AI.

Going back to my initial point about the snail’s pace to adoption of technology, this seems to me the continuing impediment and is not for want of solutions but quite possibly because leaders don’t understand the technological opportunity, nor the cost effectiveness and relatively straight-forward application of it. It is still thought of as a massively high cost balance sheet decision that will impact short-term profitability. Just look at the travails of retailers who knew about Amazon 20-plus years ago, who didn’t react and are now losing money and closing stores.

I believe that procurement technological enablement will ultimately eliminate virtually every task and result in the procurement function as we know it not being needed any longer. I postulate that procurement thinking and creativity will move into a commercial or strategic function with one or two roles considering direction and how to create competitive advantage. The rest will be automated and AI-enabled.

The upside for procurement personnel is that though change is much heralded and suggested to be fast, my experience tells me it will not be. This change will take another 10 to 15 years at least.

 

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