Recent press coverage has called the end of Moore’s Law – the Intel founder’s prediction that computing power would double every two years. Reducing processor size no longer guarantees the cost and performance benefits achieved over the past five decades. The pace of growth is decelerating.
However, there’s no slowdown in the procurement world judging by the inaugural Global Procurement Technology Summit held recently in Baltimore, Maryland. Organised by analyst firm Spend Matters and the Institute of Supply Management (ISM), the event focused on trends in supply management, the latest solutions and their adoption across organisations such as DuPont, Google and IBM. There was a wealth of content and debate but I pick out just two presentations below as they’re being disruptive right now and present significant questions today.
The Amazon experience is built on convenience – something that applies as much in the business world as the consumer sphere. Amazon Business will show your business price against others in the marketplace to end users. This may send shivers down the spine of the buyer aiming to drive spend under management and de-risk supply through contracting.
The reality for many organisations is that the genie is already out of the bottle as users are buying from Amazon anyway and reclaiming through expenses. Amazon’s data, technology, logistics and market presence mean that the erstwhile books retailer’s tanks are well and truly parked on procurement’s lawn. So for many, it’s a question of how and when, not if, you engage with the eCommerce leviathan.
Cognitive procurement – automating decisions
We’ve heard a lot about artificial intelligence (AI) recently with AlphaGo beating the best human players at the ancient game of ‘Go’ and Tay, Microsoft’s AI chatbot, getting dirty. Cognitive systems differ from traditional ones in that, rather than being rules-based (which is self-limiting as all outcomes are considered and coded), they are able to be educated and learn behaviour. This means that they continue to evolve as new scenarios and information are presented.
What does this mean for procurement? IBM are using their Watson platform to deliver tangible value across the procurement cycle including sourcing (market insight), supply chain management (risk analysis), purchasing (guided buying) and contract management. Whilst ‘traditional’ automation has reduced process costs dramatically in P2P by removing clerical overhead, IBM’s cognitive procurement moves this into both core sourcing and decision-making too.
The new buyer – ecosystem manager
Amazon Business and IBM are just two examples that highlight how the traditional Buyer role is fast becoming redundant. For a start, procurement is no longer just about managing the physical supply chain but also the financial and information ones. At the same time, the pace of innovation and corporate change makes it hard to keep up. The ‘clock speed’ in most organisations – particularly larger ones – is such that traditional systems implementation approaches mean solutions are out of date almost before being used in anger. Whilst that is true of all business functions, procurement can respond by moving from Supplier management to managing ecosystems. These ecosystems comprise strategic suppliers, platforms, managed service providers, business process outsourcing, third party logistics and the like.
‘Deep into the darkness peering’
So while there will be a slowing in growth of the silicon chips’ capacity that underpinned Moore’s Law, other developments – notably in AI, cloud and computer architectures – mean we’ll barely notice. Similarly, the burgeoning of innovation in the procurement space means there will be an increasing need to discern what lies beyond the threshold of the present day. With Baltimore the birthplace of Babe Ruth and ‘The Star Spangled Banner’ as well as home to Edgar Allen Poe and ‘The Wire’, the Global Procurement Technology Summit is in good company as a launch pad for future success.
By Dr. Jonathan Betts, Market Development Director at Science Warehouse
Jonathan has spent his career developing and marketing new technologies. As co-founder of Science Warehouse, the last 15 years have been devoted to liberating value in the procurement space. His leisure time is parsed between trail running and channelling his inner Robert Plant via a Martin D35.
To view more insight and coverage, visit the Spend Matters site: http://spendmatters.com/tag/gpts/