Technology has been augmenting everyday life for quite some time now, but procurement has historically been slower in adopting the technological leaps seen outside of the industry. Now this idea of augmented procurement – and eventually autonomous procurement – has surfaced, and many are asking when the change will happen, and more importantly what it means for them.
To answer that let’s take a step back. Think about your house for a moment. How many smart devices do you have? How many smart devices do family members or friends have? Smart TVs, Alexa, Google Home, Siri, Cortana, the list really does go on and on. This technology was revolutionary when it first arrived, and now most people are empowering their day to day activities and simplifying their lives. Now, just imagine that technology specifically tailored to procurement. It must be years off before that kind of technology is ready for day-to-day use though, right? Wrong.
What is Augmented Procurement?
At JAGGAER we’ve been talking a lot about this idea of autonomous procurement and the journey to achieve it. Nothing is going to happen overnight, but the second stage in the journey is augmented procurement, and it’s here today. Augmented procurement, as defined in our white paper, is “a system that can learn from human feedback and provide better insights and recommendations over time on one or more specific tasks”. In other words, this technology is designed to learn from humans in order to make predictions and recommendations that are relevant and can be adapted to real world situations.
However, keep in mind that augmented procurement is based on the idea to use technology to augment human capabilities, not to replace them. The result is to free up procurement professionals time to focus on strategic activities where a human’s insight is crucial. It’s important to note that this is meant for specific tasks – we aren’t at the stage of autonomous procurement yet – but if it’s something that people need time to do or have trouble doing, a machine can do it faster and with fewer mistakes.
Why Should You Care About Augmented Procurement?
You may be wondering what this means for you and your day-to-day. Having a Smart Assistant for procurement sounds great, but how is it really going to help? Augmented procurement allows you to interact with the platform in a conversational way. At first this is going to cut down on the time it takes to find documents and run reports. Overtime though, this Smart Assistant is going to learn from your interactions. It will pick up on things like if you typically download all attachments or run different reports in differing situations. Then it will start doing this in the background for you. No more needing to request it, instead you will get a notification saying it has already been done.
Another example — let’s say you have many dead-end product searches around a specific text. JAGGAER will then give you recommendations to go and source these items, as well as providing supplier recommendations. Taking it a step further, the system will then ask the user a few questions, and fully run the sourcing and awarding event for you. It can then ask if you would like this function to be done on similar items in the future. This is going to free you up from manually having to run reports, crunch numbers, and perform tedious sourcing actions. If I had to guess those tasks aren’t why you joined the procurement profession. Now, with the help of this technology your time will be freed up to focus on big picture items and improving your overall procurement strategy.
On Time Delivery (OTD) Predictor
It is virtually impossible for a human to process all the information that is required to determine if certain categories of materials or components will arrive on time for a manufacturing process to proceed efficiently with any sort of accuracy. Even if one could perform the calculation, in most cases the margin for error would still be quite large. JAGGAER however has applied machine learning in its On Time Delivery (OTD) Predictor to predict if a supplier will deliver goods on time or not.
Carl Zeiss is one such organization already taking advantage of this breakthrough. In the press release Michael Rösch, SVP Operations for JAGGAER in the DACH region says, “The algorithm predicts if an order will be delivered on time. In our tests, the accuracy was greater than 95 percent!” which is an impressive level of accuracy considering the OTD Predictor can arrive at its forecast in seconds. Again, this application needs plenty of data in order to be able to give an accurate prediction. But this is an incredibly powerful example of how machine learning and augmented intelligence can come together in the procurement industry. This technology will allow you to find risks of late delivery and get ahead of the problem, truly becoming a proactive procurement department.
Data: Relevant, Clean and Plenty of it
I can’t say it often enough: this is a journey. Autonomous procurement is coming, but not for a while. Augmented procurement though is here and will only continue to get more advanced as companies start to adopt these technologies. You’ll miss out on a big competitive advantage by waiting and seeing. These tools, no matter how advanced they may become, will always need data – lots of it – in order to work. However, it must be relevant and clean data, only a few bad pieces can ruin the entire process. In other words, if the foundation of the data isn’t strong, the results that are given will be fundamentally flawed.
Taking the steps now by integrating these new technologies with the end goal of autonomy in mind will help you build that much needed data baseline. This will put you far ahead of those that wait (generally 3-5 years of data building), and will help to free up your time to sharpen the skills that this new wave of procurement will rely on so much. Paralysis by analysis is real, don’t fall behind on the journey.