A person with a laptop © 123RF
A person with a laptop © 123RF

'Cognitive procurement' will drive profession forward

posted by Natalie Wain
22 April 2016

The procurement profession has come a long way since the days of sitting in an office signing purchase orders all day. And while maintaining cost-efficient relationships with trusted suppliers remains an essential part of the job, the need to evolve remains the key to future success.

This was the overarching message that emerged from Procurious’ Big Ideas Summit on Thursday. The event in London was attended by an impressive rollcall of industry heavy hitters, among them senior procurement brand manager at IBM Global Procurement Barry Ward, who spoke at the event.

Ward acknowledged the benefit of recent transformations within the industry, but warned the exponential growth of data, combined with the need for brands to react quickly to events affecting their supply chains, will require a radical shift in the paradigm.

“Technology will replace a lot of roles in the near future, and we’ll need new skills in procurement,” predicted Ward. “Without innovation you will never meet the needs of your supply chain. This ability to drive innovation is going to be an essential requirement.”

In the future, adopters of what Ward calls “cognitive procurement” will be the ones driving the profession forward. Platforms such as IBM’s Watson, which can help process and reveal insights from large amounts of unstructured data, should be embraced, said Ward, and will put the balance of power back with the buyer.

“Harnessing this technology will allow procurement professionals to analyse contracts quickly and efficiently, and give you immediate access to data feeds about suppliers, so you can make immediate and effective decisions.

 “Don’t underestimate the changes coming our way,” he added. “With the pace of progress, now is the time to act.”

The ability to evaluate suppliers was a theme picked up by Gabe Perez, vice president of strategy and market development at Coupa. According to Perez, one of the greatest challenges facing the industry is complacency. Relying on legacy networks when it comes to conducting business with suppliers is excluding up to 90% of the potential supply base, he claimed.

“To get suppliers to participate, you have to have an open door. There are suppliers all over the world, but you have to connect with them and take out the barriers to openness.”

Essentially, what this amounts to is agility. Something Chris Sawchuk, principal & global procurement advisory practice leader at The Hackett Group advocates if the sector is to flourish. According to Sawchuk, 74% of procurement professionals say agility is important, yet only 36% say they know how to improve it. “Agility is there, it’s just not systemic,” said Sawchuk.

So what does agility actually look like and how to you implement it? Like Ward, Sawchuk recommends investing in and piloting new technology, as well as evaluating your ability to respond to fluctuating business demands, which may involve using outsourcing providers to help manage tail spend.

Before you can implement any of this, however, you’ll need to do what Sawchuk calls an “honest inventory of procurement’s identity and culture” within your company.

The chances are there is room for improvement, but how quickly procurement professionals implement these improvements could shape the future success of the sector.

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