Why Out Of Date Procurement Models Are Worse Than Useless
Manufacturing and procurement technology has moved so fast in recent years that it’s entirely possible the trusty maturity assessment you’ve always used is now hopelessly out of date.
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The other day, someone showed me a quiz from a 1960s Cosmopolitan with a title along the lines of How Good a Housewife Are You? The subject-matter, of course, had not aged well. The reader had to answer questions about what they did when their husband comes home from work – do they put dinner on the table straight away, or fetch his pipe and slippers first? For the 21-century reader, every question in the quiz came across as outdated, and you’d never dream of using it for its intended purpose (unless it was for a laugh).
Things change – whether it’s women’s equality, social mores, or technology. The point of the story above is that the way we measure performance must keep pace.
In the procurement world, maturity models are one such tool that can become obsolete.
Conventional maturity models for direct materials sourcing usually evaluate procurement in terms of outdated capabilities and enabling systems. You know the ones – they focus on concepts such as “upstream versus downstream” and rely on traditional metrics like spend under management. What they don’t do, however, is address the tremendous advances in technology that have transformed the manufacturing world in the last ten years. Nor do they address impaired agility and opportunity risks hidden by siloed data, fragmented ERP systems, and different product management systems.
A contemporary maturity assessment
Cognitive sourcing advisor, LevaData, were motivated to build a Cognitive Sourcing Maturity Assessment after their 2017 cognitive sourcing study revealed the following trends:
- Only 13 percent of companies continuously engage their suppliers; the average organization engages with only 52 percent of their suppliers once a year.
- Outmoded enterprise analytics and sourcing tools lead to reactive, inward-looking decisions, rather than proactive insights that identify market risks and opportunities before they become a problem.
- Compared to an average organisation, the most advanced procurement teams use technology to speed up their prep and negotiation time by a factor of ten.
- Only 5 percent of organizations utilize a purpose-built platform for direct materials sourcing operations.
Proof of LevaData’s Maturity Model’s currency is the fact that it takes into account so many of the aspects of Industry 4.0. Founder and CEO Rajesh Kalidindi said the Model is “unique because it captures the impact of contextual market intelligence on sourcing professionals’ decision-making and their ability to leverage open-source analytics, machine learning, and AI-enabled insights with cross-functional teams”.
The survey takes about 10 minutes to complete, and will provide you with a summary report with recommendations for near-term improvements. Kalidindi explains: “This maturity assessment enables companies to quickly and easily close the performance gap. It offers an objective, third-party perspective of an enterprise’s strategic readiness and visibility into actionable business intelligence. C-level executives and board members who may not be familiar with these issues gain a clear picture of resources and processes needed to improve outcomes in increasingly volatile global markets.”
Click here to take LevaData’s Cognitive Sourcing Maturity Assessment.
Don’t miss out on the 2018 Cognitive Sourcing Summit
LevaData will host the 2018 Cognitive Sourcing Summit in Santa Clara, CA, on September 13, 2018.
The event is expected to attract 150 attendees, with speakers and panels exploring how to accelerate the journey towards cognitive sourcing, with a focus on the latest trends in digital transformation and the adoption of AI among procurement teams.
Attendees can expect to hear insights from executive leaders from the high tech, industrial equipment, medical device, telecommunications, and consumer products industries, along with industry analysts and thought leaders from IDC, Supply Chain Insights, Gartner, Chainlink Research, and Spend Matters. Presentations and workshops will include:
- Cognitive Sourcing: Maturity Model, Innovation and Competitive Advantage
- Digital Procurement: Building a Successful Roadmap
- Driving the Transformation: Making the Case and Enabling Change
Participants will also hear from Fitbit’s Kevin Purser and others regarding their successful digital procurement journeys and recommended best practices.
Here’s the really exciting part – the closing keynote presentation will be delivered by Procurious’ very own founder Tania Seary, who will discuss:
- How to formulate an action plan for when delegates return to the office.
- The attributes needed to successfully orchestrate, collaborate and negotiate within a complex, technology-enabled global supply network.
- The uniquely human skills we’ll need to untangle the gridlock of competing interest and find a resolution to the supply challenge in an AI-boosted environment.
Interested in learning more? Visit www.levadata.com.
Register now for the 2018 Cognitive Sourcing Summit.
