Making Procurement Autonomous: Embracing the Future Now
Posted by Amenallah Reghimi, VP of Product Management, Cognitive Intelligence, Category Management and Analytics in Autonomous Procurement on February 11, 2020
The world is digitizing right before our eyes. From Cortana, Siri, and Alexa to Tesla, Uber, and Waymo, autonomous devices and so-called artificial intelligence are all around us. Even long-time escapes like sports have become playgrounds for IoT fitness devices and big data statistical analysis. Forbes predicts that AI will revolutionize everything from scouting and performance analysis to player health and broadcasting angles. So with increasing smart tech working its way into our homes, recreation and commutes, the next logical question is, “What about work?”
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In modern procurement teams, many are wondering what will happen when AI technology is truly integrated into purchasing systems. Will humans and computers work together, much like they do today, or will jobs be eliminated in favor of computers that can make faster, more accurate financial decisions in a fraction of the time? The good and bad news is that autonomous procurement isn’t here yet. In fact, we’re only mid-way through the process. That means that team leaders have time to prepare their employees, but to properly prepare, you’ll have to understand what the future looks like and where procurement is really headed.
Where Most Stand Today
There are four main steps to autonomous procurement. Those companies that have only digitized their processes as they existed on paper–by replacing physical documents with electronic forms–haven’t yet reached step one. Instead, the first step focuses on robotic process automation, decision trees, and low-level artificial intelligence to actually reconfigure the way that workflows are handled. Of companies surveyed, this is where the majority of advanced procurement teams stand.
The primary goals in phase one of the autonomous journey are to increase data transparency and improve usability, centralizing information and automating previously manual practices that might have been repetitive and time consuming. However, this step doesn’t yet reach the level of truly digital procurement. Systems at this stage aren’t yet learning from feedback to improve their performance over time. Instead, that sits in step two.
The Cutting Edge
The forefront of today’s technologies largely sits in phase two. Here, learning algorithms begin to get better at decision making, improving outcomes over time based on feedback. If you have a recent iPhone, you probably experience this kind of machine learning every day. Apple’s FaceID security system is built on a learning algorithm that regularly updates its facial models, improving results so that it can continue to recognize you when you get a haircut, grow a beard, or get new glasses. Some of today’s most advanced procurement tools use very similar technology. Take, for example, JAGGAER’s On-Time Delivery Predictor, which uses suppliers’ performance history to determine the likelihood that an order will arrive on time, even before it’s placed. Similarly, JAGGAER’s procurement chat bot learns from each conversation it has, using this information to anticipate what the next request will be and what actions users are looking to take.
Machine learning tools provide their greatest advantages in speed and efficiency. By giving users the ability to accurately perform actions with a simple plain-language command or performing background analysis that the user will want later, the system saves time and makes the job easier. It also provides a more natural, simpler interaction for the user instead of consuming them with detailed steps.
What is the Future of Procurement?
The future – both near and distant – will provide continued technological advancements that reshape the procurement industry.
First we’ll see truly cognitive systems that can learn not only through repeated human interactions, but on their own, removing much of the decision making from humans. This will be a truly strategic learning ability, allowing the system to learn at a higher level than just executing basic tasks. They begin to learn from situations, not just commands.
From there, procurement can become truly autonomous, learning new situations intuitively without human instruction at all. It can be put into a new situation or given a new task, and execute successfully. Systems will be built fully on embedded intelligence, carrying out strategic operations and performing sophisticated tasks with ease. Buyers will be freed up to identify new opportunities, reexamine category strategies, and redesign both their products and their supply chains.
So what does this all mean for employees?
The natural question following such a forward-looking roadmap is what impact it will have on employees. Even knowing what’s coming, how can teams adapt to ensure that talent is developed well to be successful in an autonomous era?
“Good procurement teams look for ways to develop new approaches to sourcing, supplier management, purchasing, and more.”
In truth, technological development isn’t a threat to procurement jobs. Just as technology has always been met with some skepticism and concern about its impact on employment, autonomous procurement will be questioned. However, rather than presenting a threat, it provides a massive opportunity for procurement professionals to take a more strategic role. The goal of the job has never been simply to process paperwork, match invoices, and track budgets. Instead, good procurement teams look for ways to develop new approaches to sourcing, supplier management, purchasing, and more. With autonomous procurement handling the mundane, humans will now have the chance to focus exclusively on impactful strategy-level changes.
The key to maximizing the benefit of advancing technology is to embrace it now. Be realistic about what technologies are available now and what’s coming so that your team can stay on track. By giving your team the skills to stay on the cutting edge of technology, you’re preparing them for the evolution into a fully strategic role. Fighting the changing tides won’t benefit anyone, so make sure that your team is riding the wave.