Bold Procurement Prediction: Cognitive Computing
In their Bold Procurement Predictions for 2030 series, ProcureAbility explores 5 emerging trends and, based on extensive research, here they explore the future of Cognitive Computing.
Cognitive computing is a catchall term for a group of systems comprising artificial intelligence (AI), expert systems, machine learning, robotic processing automation (RPA), and neural networks. The goal is to develop programs that mimic the way a human brain absorbs and processes information. In practice, a cognitive computing system is:
Adaptive—Learns and evolves
Interactive—Communicates across systems
Iterative—Solves ambiguous problems
Stateful—Invokes suitable information for the application at the time
Contextual—Identifies and extracts contextual elements
The market for this technology is expected to grow to $77.5 billion by 20251. In fact, applications based on cognitive computing will expand across consumer, business, healthcare, industrial, and education markets. The procurement field will be no exception.
Our Prediction
By 2030, due to cognitive computing, strategic sourcing will take no longer than two weeks. Nearly every aspect of sourcing will utilise machine learning or RPA – from setting up an event through contract execution.
Intake
AI will anticipate requests before they are submitted based on user patterns, stock levels, historic spend, contract/PO expiration, and other predictive analytics, to make proactive and anticipatory procurement decisions.
RFx Administration
Strategic sourcing processes will be augmented with much of RFx administration handled by AI driven systems. Integrated and connected data sets will allow intelligent systems to participate in the source selection process: creating bid groups based on capability requirements, partnership potential, supplier capacity, commercial alignment to business needs, and past performance.
Previously administrative activities will also be automated as the systems compile and distribute the RFx, manage vendor responses, conduct analysis, and deliver best value recommendations. All of this will serve to enable efficient and data-led decision making. A longer-term consideration is to have technical questions fielded by AI during the RFx.
Tactical Procurement
Tactical purchasing teams will turn to automated procurement mechanisms as they look to do more with less. Aided by AI-driven RFx support, tactical execution of discrete orders will be automated including the bidding, creation, and routing of POs. Runners and repeaters will be controlled by contracts with MRP systems autonomously executing orders and schedules against them. There will be a reliance on AI to manage order replenishment, quoting, lead time updates, and open order reporting. Tactical procurement roles will shift to focus on system maintenance, exception messages, relationship management, and procurement strategy.
RFx Strategy and Negotiations
Cognitive systems will complement the human effort in sourcing strategy and negotiations analysing past results to recommend options.
Source: https://procureability.com/bold-procurement-prediction-3-cognitive-computing/
Streamlined Sourcing
With cognitive systems at work in the practice, procurement teams can see some significant workflow improvements. Artificial intelligence will help procurement teams get ahead of a client’s business needs. Machine learning will sort through vast databases and cross-reference what was sourced in the past, how frequently, at what volume, and what end use behavior looked like. Intelligent systems can use this data to automatically trigger future intake inquiries at the optimal times.
Cognitive computing will yield efficiency gains. We expect most administrative tasks to be automated (intake, strategy recommendations, RFP development and administration, evaluation and scoring, and scenario analysis). Teams will need to pivot to more strategic skill sets, such as relationship development.
Impressively, cognitive computing will even help generate new sourcing strategies. By 2030, expect artificial intelligence to become a dispassionate aid to human efforts when executing negotiations and developing future strategy blueprints.
What Now?
We understand that cognitive computing will affect workflows and long-accepted process. ProcureAbility recommends that organisations conduct an assessment of their sourcing processes, develop plans to utilise next-gen technology systems, and then begin exploring areas to apply AI and machine learning technologies.
Want to understand more about navigating real, authentic and meaningful relationships? Join Procurious founder Tania Seary and Kristen Rellihan, Director of Operations at ProcureAbility, on Thursday 20 April from 11am ET. Register now!
About ProcureAbility
ProcureAbility is the leading provider of procurement services, offering advisory, managed services, digital, staffing, and recruiting solutions. For more than 25 years, they have focused exclusively on helping clients elevate their procurement function.
They combine leading-edge methodologies, analytics, market intelligence, and industry benchmarks with a uniquely flexible and customizable service delivery model. The Fortune 1000 trusts ProcureAbility to transform their procurement operations, drive growth, and reimagine what’s possible. For more information visit: www.ProcureAbility.com
1Markets and Markets, Cognitive Computing Market, March 2020
