Hey Alexa, Can You Buy Me a…?
Reducing and ultimately removing human effort from transactional procurement is the key to building a sustainable future. And even Alexa can help…
Is it counterintuitive to suggest that procurement would benefit from removing something that many would consider to be its lifeblood – people? Is it too bold a prediction to state that over the next decade, much of the procurement process will have minimal human input?
Before you think we’ve lost the plot, many of procurement’s leading thinkers agree on this. We’re not talking about removing people from procurement entirely, more adopting emerging technologies to digitise transactional tasks in sourcing processes in order to free up time and resources for key strategic activities.
The best thing is that these technologies already exist, and you will definitely have heard of them. AI, Machine Learning, wearables and even the same Intelligent Assistants you have in your own home – all of them just waiting to be harnessed by procurement.
Shifting technology strategies
An increasing number of organisations are increasing their investment in and adoption of these new technologies. When asked about AI and Cognitive in their organisations, 25% of respondents to Deloitte’s 2019 Global Chief Procurement Officer (CPO) Survey indicated they already had, or were piloting, these solutions, an increase of 6% from the previous year.
This trend will continue over the next decade according to John Evans, CEO at ProcureAbility. During a discussion at the Big Ideas Summit in Chicago, Evans made five bold predictions for procurement, two of which were linked to the implementation of emerging technology.
The foundation of Evans’ predictions, as well as those of other leading minds in procurement, focus on the use of AI, machine learning, and other cognitive solutions to replace manual or remedial tasks in the procurement process. These technologies can also be used to make risk identification easier and even support strategic sourcing and relationship management tasks by conducting faster and more efficient data analysis.
This allows professionals to focus on strategic tasks where human input and interaction is crucial, and are directly linked to how procurement adds value in an organisation. A report by Accenture stated that companies that fully leveraged AI in this way could increase profitability by, on average, 38% by the middle of the 2030s. When viewed in this way, it’s no wonder more companies are moving in this direction.
Linking AI and machine learning to procurement
So, should those with concerns over their roles in procurement considering the advancement of AI be worried? Or is it, as Consultant at ProcureAbility Rhiana Gallen states, more a case of implementing AI and Machine Learning in a way that “compliments/complements the human effort”, rather than replaces it?
The future is certainly more about people and technology working together than organisations staffing their procurement teams with chatbots and Intelligent Assistants (more on that later). Implemented effectively, AI is about adding to what people do already, rather than replacing them.
The most common area where AI is currently being used is in data analytics. AI is able to not only deal with huge quantities of data from multiple sources, but it can drastically improve the accuracy of the data too. According to Deloitte, projects using AI for spend classification have achieved 97% accuracy, far higher than processes solely completed by people. This provides better information for key strategic decisions, and better outcomes for organisations.
Machine learning builds on this, allowing computers to use the data analysed by the AI to make data-driven decisions without any human interaction. In essence, this creates a situation where the computer can do everything a human being can, just quicker and better. This opens up a world of possibilities for procurement to truly use data to make faster decisions, while reducing the time taking on transactional tasks.
Machine learning is already being applied in the management of tail spend, recommending the right suppliers for sourcing activities, searching contracts for savings opportunities and providing better data for negotiations. As Rhiana Gallen says, it has the potential to create “a streamlined sourcing process that can be executed in two weeks or less”, rather than the lengthy, drawn-out decision-making many organisations have now.
“Hey Siri/Alexa…can you order these?”
Another technological emergence for procurement is predicted to be the use of Intelligent Assistants. Organisations have used chatbots (literally ‘chat robots’) on websites for several years to provide an electronic interface for customers and suppliers. In procurement, chatbots use data gathered by AI to provide help and answers to third parties on information pertaining to stock availability, prices and even contact details.
This isn’t as easy as you might think, with the effectiveness of the chatbot intrinsically linked to the quality of the data that it’s pulling answers from. Even with AI in place, if work on data quality and integrity isn’t being done continuously alongside this, it’s liable to fall flat on its face.
Smart Assistants similar to Apple’s Siri and Amazon’s Alexa could become an integral part of the procurement team, drawing on data on previous orders, buyer behaviour and market conditions to anticipate future purchases and requests. Smart Assistants could also be linked to the procurement team via wearable technology, meaning procurement professionals could end up asking their Smart Assistant directly to order anything, from pens and pencils, to legal services and multi-million-pound machinery.
It’s clear that organisations cannot afford to not take emerging technologies seriously. If they do not adapt, they risk being left behind, shut out the market and, eventually, become redundant themselves. But, done well, they could end up with a world-leading procurement organisation, with the human focus on strategic tasks, enabled by a symbiotic working relationship with its AI.
It is the future. It’s just up to us to make it as close a future as we possibly can.
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