It’s Not Dumb If It Works: Why Autonomous Procurement is a Really Smart Idea
Posted by Amenallah Reghimi, VP of Product Management, Cognitive Intelligence, Category Management and Analytics in Autonomous Procurement on March 10, 2020
As talk of “autonomous procurement” increases, critics are quick to dismiss the idea. However, some of these doubts might be a bit preemptive. Over the next five to ten years, procurement will be largely reimagined as technology continues to advance. Autonomous procurement is coming and leaders will embrace it.
What is autonomous procurement?
Let’s start by looking at what an autonomous procurement system means. At JAGGAER, our own definition of a truly autonomous procurement solution is one that will not only have cognitive capabilities embedded throughout the platform, but will build on those capabilities to automate entire sourcing and procurement processes without any buyer interference whatsoever when the opportunity arises.
— JAGGAER (@JaggaerPro) February 20, 2020
That final piece is key; “when the opportunity arises.” The goal of autonomous procurement is not to eliminate the human element of sourcing and procurement. Instead, it is to remove unnecessary tasks that take up time and resources, and enable team members to think and operate at a strategic level. This is not just a good idea – it’s a really good idea. Here’s why:
We’ve only scratched the surface on autonomous procurement
Many procurement suite providers already offer functionality that can loosely be defined as “augmented,” but this is only the second of four steps on the journey to autonomy. “Smart” technologies like vendor-managed inventory tools are a strong start, but current technology can go well beyond rules-based systems.
“…this kind of rules-based programming is not autonomous”
Instead, modern technology exists in the third step toward autonomous procurement: Intelligent Procurement. Intelligent systems should already be learning from past purchases, user preferences, and experiences, not just responding to direct stimuli based on rules and decision trees. Tools like vendor-managed inventory can remove the ordering step when inventories hit predetermined levels, but this kind of rules-based programming is not autonomous.
Autonomous procurement will deliver on its promises
Artificial intelligence (AI) is, in many ways, still in its infancy. And yet even now, AI capabilities already go beyond their human counterparts in some areas. For example, a 2018 study pitted 20 barred attorneys against the LawGeex Artificial Intelligence solution. The results were staggering, with the attorneys catching 85% of mistakes on average and the AI system spotting 94%. Moreover, it took the attorneys 92 minutes, while the computer did the task in 26 seconds. AI is not just the future – it’s already here.
Other pieces of the procurement workflow are not autonomous yet, but their time will come. As software providers develop AI on more and more individual areas of procurement and autonomous technologies mature, we’ll begin to see fully autonomous end-to-end suites. Just because systems aren’t fully autonomous yet doesn’t mean it’s wise to write them off as a total failure or predict that they’ll underdeliver. Procurement technology has always been doubted, with some even questioning the viability of true source-to-pay suites. As we know now, many of those doubts were misplaced.
Sourcing and procurement professionals should be excited
The point of the procurement function has never been to process paperwork. However, like many business roles, mundane tasks come with the territory. But autonomous procurement seeks to right this fundamental wrong.
Procurement professionals by and large want to be doing strategic, meaningful work. Autonomous procurement, when implemented correctly, will enable this by augmenting employees, not replacing them. As Joshua King, VP and CPO at American Water Company says, “The procurement professional of the future is going to be more adept at using insights for their daily work.” He goes on to describe the future procurement employee as “more of a business consultant, working with the business around very specific needs and ultimately trying to source those needs in an intelligent manner.”
The best leaders prepare their teams for the challenges they’ll face tomorrow, not just today. Ignoring or fighting advancement in technology leaves employees underprepared for tomorrow’s job markets and functions. Today’s economy is amid a fourth industrial revolution, and companies face a choice between embracing it and being left behind. Those that lean into autonomous procurement will reap the benefits.
It reduces the burden on employees
One of the many frustrations of procurement leaders is when employees insist on spending off contract. But if employees aren’t using preferred vendors, it’s often because the usability and experience of purchasing through the approved system are clunky, difficult, and frustrating for the employee.
Providing a better user interface, and ultimately an autonomous system that needs no interface at all, makes it easier for employees to order what they need. Smart assistants, often taking the form of chat bots, already exist inside software suites, allowing procurement professionals to quickly navigate and execute tasks. The next logical step is a smart assistant for end-user purchases. For the everyday purchaser, writes ProcureCon, chat bots “can make suggestions based on several factors including the needs identified during the chat, preferred suppliers, preferred items, contracts in place, purchasing history, real-time availability of products, context, and numerous other variables.” A chat bot that users can simply tell, “Order new notepads,” makes the purchasing process much simpler while guaranteeing on-contract spend. As one procurement professional we spoke to said, “The better the user experience, the higher the adoption, the more they use the tool, and it becomes a flywheel effect. And that is the chatbot.” The process becomes even easier when the bot is integrated into tools like Outlook, Microsoft Teams, or Slack, where employees are already working every day.
“The better the user experience, the higher the adoption, the more they use the tool, and it becomes a flywheel effect.”
As TJ Nguyen, Senior Director at Coca-Cola Bottlers’ Sales & Services says, “It’s so important to pick and partner and implement technology in a way that has the user experience in mind… so, people can get what they need in order to do their job.” Nila LaVanaway Charles, CEO at Pierpont Holdings, agrees, suggesting, “the way we carry technology around in our pockets, we don’t want to go to work and have it be more difficult.” As technology evolves in our personal lives, so too must purchasing systems so that buyers have a seamless experience.
Autonomous procurement doesn’t mean restricting suppliers, cutting costs, and having a computer say “no” all the time. An autonomous system will learn the employees’ needs and work to satisfy them better than people can. Ultimately, the system exists not to make employees’ lives more difficult, but to improve them. That is autonomous procurement.