Author

Nell Walker

Published

14 November 2024

Estimated Read time

6Mins

Making procurement slicker, more streamlined, is the name of the game right now – and this is precisely why Globality…

Making procurement slicker, more streamlined, is the name of the game right now – and this is precisely why Globality exists. It’s an organisation which leverages advanced, native-built AI to make sourcing more autonomous for Fortune 500 and Global 2000 companies, meaning it has a finger on a pulse of the technology tools procurement now has access to as the industry shifts and evolves.

Keith Hausmann is the Chief Customer Officer at Globality. He has been working in procurement since the early 90s, both in industry as a service provider, and now, at a technology company. He came to Globality from Accenture, where he ran the operations business. During his first real job after college, Hausmann was also part of a training program at a major Fortune 500 company, working closely with a COO. At some point they got into a conversation about salespeople seemingly having an advantage over procurement people due to their access to information, knowledge, and training. The COO suggested that they launch a company to help support procurement. For Hausmann, it was a serendipitous entry to the industry.

“I came to Globality because I saw the business was struggling with how to scale, automate, and deliver a differentiated user experience. Ultimately, I found it really compelling, and joined about five years ago.”

Achieving 10X thinking

Hausmann admits that the concept of what procurement is has only been defined relatively recently, and he’s been in the industry long enough to have seen the shift happen and suddenly accelerate over the last few years. Now, procurement professionals are in a position where they’re able to think big, and they have the tools to support that way of thinking. One of the most-discussed topics right now is 10X, whereby businesses are setting targets for themselves that are 10 times greater than what they can realistically achieve.

“There continues to be, and always has been, so many mind-numbing manual activities that go on in procurement spaces,” says Hausmann. “We’ve built small armies of teams to handle those things. I think 10X has prompted us to take a step back and ask if there’s now technology that can uplift the role of people in the function and take on some of those automatable tasks. Whether that’s writing RFPs, discovering suppliers, or analysing proposals – these are all things that can be automated in today’s technological world. With 10X thinking, you can imagine the many, many, many things that can be automated and just go after them. 

“There are barriers, of course. The biggest one is not being able to convey a compelling vision of what we want people to do in the new world. It’s not necessarily about making them go away – it’s about making their daily jobs, lives, and work more valuable. There are so many things around category thinking and strategy that don’t get done because people are spending so much time on tasks that could be automated. So I think the barrier is creating that vision and that plan to shift the operating models, roles, and the skill sets to something new and different.”

People power

Hausmann believes that if roles are reshaped and honed in response to automation, it’s less likely that there will be resistance to change because employees will know exactly what they’re doing, rather than being concerned about their future. “They have to know what they’re doing before they jump on board. It just requires a mindset change and good change management.”

Hausmann believes it’s down to the CPO to drive that change management by conveying the activities, impacts, roles, and operating model they envision. If they can paint a picture of how humans can impact things in a new way, alongside the new technology rather than against it, suddenly it’s an exciting prospect and people are keen to make a bigger impact. 

CFOs and CPOs joining forces

While CPOs now have a long-deserved seat at the table to help push change business-wide, CFOs’ roles are also expanding and having an increased impact on procurement. “I think they’ve always influenced what’s going on in procurement,” says Hausmann. “CFOs are the champions of many things, but certainly improving the bottom line of the company. They’re also champions of using technology to make the organisation more resilient, more scalable, and more efficient. There was a time when people thought that the CTO or CIO would be doing that, but more often than not, the CFO is the ultimate owner of improving business impacts. More and more, we’re seeing our customers leaning on the CFO to help them make decisions about investments that have a big impact through technology and AI. 

“These days, the relationship between the CFO and CPO is wildly different to what it once was, and CFOs are showing more interest in procurement as a function than ever, making a difference to the bottom line. It makes sense because, in theory, procurement controls one of the biggest cost line items in a company, besides raw headcount.”

Matching the pace of technology

The fact that we still need to focus on change management and relationships confirms that the way procurement is changing isn’t just about the technology. Far from it. However, technology is moving at an incredible pace and needs to be taken seriously. There are things that are possible now which couldn’t be done even one or two years ago.

“A few years ago, technology couldn’t write an RFX document for you,” Hausmann says. “Technology could not instantaneously bring to light the most relevant suppliers from within a customer’s supply base, or in the broader market. It couldn’t write a contract, or an SOW, or a work order. It can now. Those are things that are near and dear to my heart that were impossible 3-5 years ago.”

With these tools in mind, procurement professionals are able to think about the future in short-term stints. Five-year plans are no longer good enough when it comes to the way procurement is shifting – a year is now the maximum for putting plans in place. 

“I’ve always thought that procurement, from the perspective of technological advancement and investment perspective, should sit under a broader business umbrella,” says Hausmann. “I’d guess that probably 50% of companies in the world right now have some kind of program in place to save money or improve agility by investing in technology. And speed to market is more important than ever, so sourcing can’t be a bottleneck.”

Looking ahead, Hausmann expects to see many of the unique, differentiated technology providers becoming interoperable together, because big enterprises want services that operate and scale well in combination with others. 

“We’re seeing that a lot, and working with our customers on how we improve interoperability and integration,” he says. “Tools will become more seamless, more easy-to-use, more scalable. Another big thing is, and will continue to be, analytics. It’s a hot topic in procurement, and I think there are profound opportunities to be deployed. For Globality, we’ll continue to endlessly innovate on user experience, ease of use, and beyond.”

Author

Nell Walker

Published

4 April 2024

Estimated Read time

4Mins

Global cloud services point-of-sale provider, GK Software, was founded over 30 years ago in Germany. For most of its existence,…

Global cloud services point-of-sale provider, GK Software, was founded over 30 years ago in Germany. For most of its existence, its focus was on expanding across Europe. However, in 2015, GK broke into the US when its partnership with SAP helped it drive into that vital market. The business has been thriving stateside ever since. Its core business is a point-of-sale software platform – CLOUD4RETAIL – which features the OmniPOS solution. Today, GK is ranked highly in global POS installations and has been among the top three for the last five years.

GK is an organisation committed to continuous improvement and customer engagement. It is evolving, getting into newer technologies like AI in a big way. It’s leveraging its expertise to improve insights into what its retail customers and their shoppers need. This includes everything from price optimisation to loyalty to self-service technologies.

Its ability to provide these services, through its expertise, is what attracted Virginia ABC to GK Software. Virginia ABC was a previous user of SAP’s point-of-sale (POS) solution, but as the authority evolved, it required an updated POS. 

GK Software meets Virginia ABC

Enter: GK Software. “As a result of our relationship with SAP and with Paul Williams at Virginia ABC, we were shortlisted in their new point-of-sale solution selection,” explains Max Francescangeli, Regional Sales Director at GK Software.

“With Virginia ABC, we went through quite an extensive selection process. It’s a government agency, so the rules are very strict,” says Francescangeli. “But we were able to prove that we could use our expertise to address and solve all of their problems in spite of the unique environment they operate in. They needed a flexible solution that would interact well with their legacy platforms during implementation. We were certainly able to provide that. So, we were eventually awarded the business and the project has been extremely successful.”

The approach GK takes with its customers during these projects highlights just how much out-of-the-box capability its solution has. GK’s team spent a lot of time with Virginia ABC. The organisation examined its business requirements and using a consultative approach to show how its software could be configured. This was so it could meet the end-state business requirements and take advantage of best-of-breed capabilities that exist within GK’s platform. 

“Rather than going there and trying to do a lot of customisation, we wanted to help them take advantage of the software as it exists,” Francescangeli adds. There were also other areas where GK was able to provide a lot of value and expertise to Virginia ABC. These include payment processing and its partner ecosystem. Virginia ABC was previously using a payment provider with limited capabilities, but GK was able to step in and expand the technology set. “We gave them more hardware choices, expanding what they could do with their in-store devices.”

Virginia ABC also needed more advanced reporting and analytics within its environment. So, GK introduced a solution called Advanced Central Electronic Journal and Reporting. Francescangeli continues: “It saved them a tremendous amount of effort, and gave them a lot of flexibility. We implemented that very quickly and they gained business value from it immediately.”

An evolving partnership

GK Software and Virginia ABC worked on initial deployment for the first 12 months of the project, and GK has continued to supply its services ever since. Each year after the first, Virginia ABC has expressed interest in something else GK offers. As a result, the relationship has remained close and Virginia ABC continues to expand the partnership.

“Paul and his team have been champions of ours and we’re champions of theirs as well,” Francescangeli states. “Due to the relationship we have with Virginia ABC, we have been able to secure business from other retailers in the same space because they have confidence that we know how to handle the market.”

“GK checks a lot of boxes retailers are looking for,” Bill Miller, North American VP of Sales at GK adds. “We’re in this inflection point where we offer modern technology that also has a lot of functionality out of the box, and that’s what people want. That’s what Virginia ABC wanted, and that’s what we supplied.”

Read more about Virginia ABC’s story, and the part GK Software has played, in issue 49 of Interface Magazine.

Author

Sean Galea-Pace

Published

16 February 2024

Estimated Read time

4Mins

Could generative AI be the answer to procurement’s problems: fewer workers, more work, and a rising bar for digital literacy.

It’s news to no one that the nature of the procurement industry has changed.

Spurred by the COVID-19 pandemic, an industry-wide surge in digital transformation, and the rising immediacy of the climate crisis, procurement has never been more important, or more complicated. However, as the industry’s demands grow and evolve, many procurement teams find themselves in need of skilled individuals that simply aren’t there.

A recent study conducted by Gartner found that just one in six procurement teams believe they have “adequate talent” to meet their future needs. That means just 15% of CPOs were confident in their future talent pools and ability to recruit skilled individuals, even if they believed their current staffing was sufficient to meet demand today.

Concerns over “having sufficient talent to meet transformative goals based around technology, as well as the ability to serve as a strategic advisor to the business,” were the primary cause of skill shortage stress, according to Fareen Mehrzai, a Senior Director Analyst in Gartner’s Supply Chain Practice. Essentially, the changing nature of procurement means not only that today’s procurement teams are unprepared for the discipline’s continued transformation from back office buyer to “orchestrators of value” in the executive team, but face an increasingly sparse hiring market as the requirements for a new procurement recruit become increasingly complex to satisfy.

Generative AI: Making digital accessible

Generative AI exploded into the public consciousness in 2023 with the launch of image generation tools like Midjourney and DALL.E, as well as chat-bots like Chat-GPT, powered by large language models. Investment has been immediate and almost unthinkably massive. In late 2023, it was estimated that generative AI startups were attracting 40% of all new investment in SIlicon Valley, and Bloomberg Intelligence estimates that the market for generative AI, valued at $40 billion in 2022, will be worth as much as $1.3 trillion in the next decade.

In the procurement and supply chain sectors, specifically, CPOs are reportedly dedicating 5.8% of their function’s budget, on average, to generative AI, according to a Gartner report from January.

Now, whether or not generative AI has the society-spanning, epoch-disrupting economic and social impact people are predicting (personally, I remain unconvinced, and anyone who disagrees can either fight me in the metaverse or try to run me over with a self-driving car) actually manifests, there’s no denying generative AI’s potential as a useful tool if adopted correctly.

Especially in an underskilled, rapidly digitalising procurement sector.

How can generative AI help procurement?

While Generative AI will never write a (good) movie script or create a piece of art that anyone with any taste would find genuinely moving, there are some things it does very well. Namely, it is very good at not only taking in and processing huge (and I mean huuuuge) amounts of chaotic, poorly structured information and answering questions about it, but most importantly, it can understand prompts and give results in simple, conversational language. There are still limitations and kinks to work out, however.

Generative AI still deals with hallucinations. However, the ability to input huge amounts of data and analyse that data in a conversational format could alleviate a lot of the technological literacy related teething problems that appear to be at the heart of the procurement skills shortage.

An EY report notes that, in the Supply Chain and Procurement space, generative AI has massive potential to: “Classify and categorise information based on visual, numerical or textual data; quickly analyse and modify strategies, plans and resource allocations based on real-time data; automatically generate content in various forms that enables faster response times; summarise large volumes of data, extracting key insights and trends; and assist in retrieving relevant information quickly and providing instant responses by voice or text.”

The future of Gen AI

Generative AI can be a source of simplicity for procurement teams at a time when new technologies often add complexity and necessitate upskilling or new hires. EY notes that a biotech company using a generative AI’s chat function has had positive results when using it as a way to inform its demand forecasting. “For example, the company can run what-if scenarios on getting specific chemicals for its products and what might happen if certain global shocks occur that disrupt daily operations. Today’s GenAI tools can even suggest several courses of action if things go awry,” write authors Glenn Steinberg and Matthew Burton.

Adopted correctly, generative AI could not only empower procurement teams to handle the pain points of today, but also tackling the looming threat of the skills shortage in an industry facing a relentless demand for skills that may not be in adequate supply for years to come.

By Harry Menear

Author

Sean Galea-Pace

Published

9 February 2024

Estimated Read time

3Mins

Interest and investment in generative AI has been massive, but does the technology actually have the capacity to meaningfully change the procurement industry?

Since the arrival of large language model-powered chatbots, like OpenAI’s ChatGPT, the corporate landscape has been frantically striving to invest in and adopt generative AI.

Executives floated (I mean salivated over) the possibility that generative AI could replace a staggering number of roles throughout virtually every sector from law to content creation and entertainment. Well, just look how well that turned out. The legal backlash has, in many cases, been severe and, just over six months into the generative AI hype cycle, cracks are beginning to show.

Whether we’re talking about the ethical issues of training LLMs and image generators on the work of artists and writers without their knowledge or consent, the fact generative AI will just make stuff up sometimes, or the revelation that running something like ChatGPT consumes the energy equivalent of 33,000 US households per day, the issues with generative AI just keep mounting. Despite these issues, generative AI is monopolising the tech investment landscape, with 40% of all Silicon Valley investment in the first half of 2023 being poured into GenAI startups.

But what about the applications? Surely all these issues and all this money is going into generative AI technology for a reason, right? Surely we all learned our lesson from the Metaverse, the crypto bubble, NFTs, and streaming and… I guess we didn’t, did we?

Well, actually, there are a few, but they won’t look like the Wild West of content generation we’ve seen so far.

In the retail sector, for example, 98% of companies plan on investing in generative AI in the next 18 months, according to a new survey conducted by NVIDIA (a company with an admittedly vested interest in selling shiny new GPUs). Early examples of adoption in the sector have included personalised shopping advisors and adaptive advertising, with retailers initially testing off-the-shelf models like GPT-4 from OpenAI.

However, many retailers are recognising that the strength (and weakness) of generative AI is that you only get out what you put in. That’s why the technology is, ultimately, useless as a way to replace creative roles like writers and artists. However, as a brand communicator meticulously trained on a specific set of data with carefully updated parameters, it could be invaluable. NVIDIA’s report notes that “many are now realising the value in developing custom models trained on their proprietary data to achieve brand-appropriate tone and personalised results in a scalable, cost-effective way.”

Generative AI trained on a company’s internal and customer-facing databases, web presence, and curated information resources could conversationally recommend, educate, and explain critical information to employees, customers, and business partners effectively and consistently. In an industry where communication relies on clarity and an understanding of large quantities of information, like procurement, the applications suddenly start to look a lot more appealing.

Chatbots and negotiation bots trained to converse with suppliers, programmed with company approved negotiation tactics and the latest pricing information, could automate a great deal of complexity out of the Source to Pay process.

I think the looming issue is the impact of generative AI adoption on a company’s Scope 3 emissions, as 2024 will unquestionably be defined by greater scrutiny on these sources of pollution. However, it seems that however many issues the more widely known aspects of generative AI have, the technology itself could still have a role within the procurement function of the near future.

Does it justify all the investment, hype, and endless industry media thinkpieces? I guess only time will tell. 

By Harry Menear

Author

Sean Galea-Pace

Published

26 January 2024

Estimated Read time

4Mins

Sapio Research found that just 48% of organisations are confident they are accurately reporting Scope 3 emissions through their P2P process.

More than half of the 850 procurement leaders in the US, UK, and Europe surveyed earlier this year could not claim to be “very confident” in their organisation’s ability to accurately report Scope 3 emissions, according to a new study conducted by Sapio Research and commissioned by Ivalua.

While 48% of leaders were confident in the accuracy of their companies’ reported emissions figures, nearly two-thirds (62%) of leaders surveyed admitted that “reporting on Scope 3 emissions feels like a ‘best-guess’ measurement.”

A significant majority of the organisations were confident that they are on track to meet net zero targets. However, the report also found that many don’t have plans in place for:

  • Adopting renewable energy (78%).
  • Reducing carbon emissions (68%).
  • Adopting circular economy principles (72%).
  • Reducing air pollution (67%).
  • Reducing water pollution (63%).

Procurement’s role

It has long been recognised that procurement has a vital role to play in the reduction of environmental impact in organisations’ supply chains, with as much as 90% of a company’s emissions falling within the Scope 3 band.

“Organisations are aware they must urgently address sustainability and understand the cost consequences of not doing so. But this lack of confidence paints a negative picture,” comments Jarrod McAdoo, Director of Sustainable Procurement at Ivalua.

“A lack of perceived progress could fuel accusations and fears of greenwashing, so it’s important to remember that obtaining Scope 3 data is part of the natural maturation process. Many sustainability programs are in their infancy, and organisations need to start somewhere. Estimated data can help determine climate impact and contribute to building realistic, actionable net-zero plans. Over time, organisations will need to make significant progress on obtaining primary Scope 3 data and putting plans in place, or risk financial penalties as well as ruining reputations in the long run.”

Regulatory and public scrutiny continues to mount against both public and private sector polluters. A report released in December highlighted the devastating annual emissions by militaries around the world, finding armed forces to not only be one of the world’s largest fossil fuel consumers (5.5% of all global emissions), but that the US military alone has a larger environmental impact than some developed countries. The scale of military contribution to the climate crisis, in addition to the lack of transparency when it comes to disclosing those figures, is a major issue that is also echoed in the private sector of the civilian world. 

Are some companies ‘unintentionally greenwashing?’

In the private sector, both activism and legislation continues to move (too slowly, but it’s a start) against corporations responsible for the climate crisis and pollution. In the UK, the High Court in London ruled that Nigerians affected by oil spills the corporation promised to clean up can bring legal action against the British multinational. The state of California is itself suing America’s largest oil companies for their role in exacerbating and covering up the effects of climate emissions for decades.

More recently, corporations that rank among the world’s largest polluters have been accused of adopting environmentally friendly rhetoric in order to make themselves appear more committed to environmental sustainability than they, in actual fact, are. The practice, known as “greenwashing”, has been criticised by politicians, activists, and members of the scientific community.

McAdoo notes that the inability to accurately report Scope 3 emissions—taking a “best-guess” approach—could be a contributor to organisations looking to avoid unintentionally greenwashing their emissions data by misrepresenting themselves.

“Nearly two-thirds of U.S. organisations agree that an inability to measure supplier emissions accurately makes it hard to turn words into action,” McAdoo continued. “There is a clear need to adopt a smarter approach to procurement. Organisations need granular visibility into their supply chains to ensure they can measure the environmental impact of suppliers but also collaborate with suppliers to develop improvement plans. Only with this transparency can organisations showcase meaningful sustainability progress and avoid accusations of greenwashing.”

By Harry Menear

Author

Sean Galea-Pace

Published

9 January 2024

Estimated Read time

4Mins

Procurement teams are under mounting pressure to minimise disruption and contribute value to the business. Here’s how Generative AI could help.

Across all industries, the unprecedented disruption caused by the COVID-19 pandemic, along with the “growing need for procurement to enable growth, mitigate inflation/risk, and drive significant levels of value” has, according to Deloitte’s 2023 Global CPO Survey, afforded businesses’ procurement function “a seat at the table.” However, with the recognition of procurement’s importance comes responsibility and, increasingly, pressure.

The procurement function of a modern enterprise is one of the final remaining frontiers where truly value additive transformations can occur. Cutting costs, identifying new efficiencies, and pursuing more sustainable practice throughout the supply chain are non-negotiable KPIs for all procurement teams.

Artificial intelligence (AI) and machine learning (ML) have long been a part of successful procurement and logistics strategies—automating manual and menial tasks, freeing up professionals to focus on more strategic objectives. The recent advent of generative AI, underpinned by natural language processing (NLP), pattern recognition, cognitive analytics, and large language models (LLMs), however, has the potential to support procurement professionals in new, more impactful ways than ever.

Here are our top X ways that generative AI can help procurement professionals deliver on the demand for smarter buying, more ethical sourcing, and the holy grail of an unshakably resilient supply chain.

1. Predicting Disruption

If the last three years have taught us anything, it’s that the supply chain is a fragile thing. Organisations struck by the pandemic that failed to adapt and recover as fast as their competitors are, at the very least, facing a harsher world today than they were in 2019, with many having been absorbed by more resilient, faster-moving competitors. Even with the pandemic behind us, its effects are still being felt, and disruptions are a fact of life.

In case of a disruption, procurement teams need to be able to identify and respond quickly—something only 25% of firms are able to do, according to Deloittle’s 2023 procurement industry survey.

AI tools bring a heightened ability to identify patterns and analyse large data sets to the procurement department, dramatically increasing procurement professionals’ ability to identify disruptions (both within the organisation and in the market as a whole) before they happen and adapt accordingly.

2. Textual Data Analysis

Artificial intelligence has been used to sift through large data sets for years, but Generative AI may allow the scope of those data sets to expand by orders of magnitude. The ability for ML-powered LLMs to analyse large amounts of unstructured textual data, such as news articles, social media posts, contracts, and customer feedback could create a wealth of new insight and recommendation generation opportunities to benefit businesses’ procurement functions.

Procurement professionals will have an additional angle from which to evaluate vendors, examine their compliance status, gather market intelligence, and assess risk. Unstructured text remains one of the great untapped data resources, and LLMs have the ability to convert that raw data into actionable insights for the procurement function. 

3. Intelligent Recommendations

In addition to internal purchasing recommendations based on compliance, generative AI could also be used to create highly personalised, granular criteria for business buyers. An AI-powered buying tool could, for example, scrape hundreds of thousands of item listings, eliminating results based on millions of data points, to create proposed shopping carts for particular applications weighted by any number of criteria determined both by company policy and the buyer’s own preferences.

4. Automated Compliance

Generative AI’s ability to analyse large, unstructured data sets and draw complex, human-like conclusions from them that are then translated into insights and decision recommendations could be transformative for handling compliance in procurement.

A generative AI model could be used to monitor company-wide activity for anomalous or non-compliant purchasing behaviour—alerting the procurement department if an issue arises. In addition to creating more freedom for buyers outside the procurement function, and freeing up time within procurement that would otherwise be spent reviewing company spend for compliance, a Generative AI could be used to make intelligent spending recommendations in order to increase compliance with minimum spend contracts, for example. 

By Harry Menear

Author

Sean Galea-Pace

Published

4 January 2024

Estimated Read time

6Mins

CPOstrategy explores this issue’s big question and uncovers what the impact of gen AI is in procurement.

The true possibilities of what can be achieved via AI is still being unearthed.

Indeed, the influence of new technology will only grow from here and new digital tools are being introduced all the time.

When it comes to generative AI, there is perhaps a misunderstanding that it is a new innovation. But the history of gen AI actually dates back to the 1960s. Among the first functioning examples was the ELIZA chatbot which was created in 1961 by British scientist Joseph Weizenbaum. It was the first talking computer program that could communicate with a human through natural language. It worked by recognising keywords in a user’s statement and then answering back through simple phrases or questions, in likeness to a conversation a human would have with a therapist. While ELIZA was seen as a parody and largely non-intelligent, its introduction has paved the way for later advancements in Natural Language Processing (NLP) and the future of generative AI.

Fast forward to today and the gen AI conversation and wider tech landscape looks very different. In late 2022, OpenAI launched ChatGPT – technology which has shaken the procurement function and beyond. ChatGPT interacts in a conversational way with its dialogue format making it possible for users to answer follow-up questions, admit mistakes, challenge incorrect answers and reject unsuitable requests. As such, the chatbot has created quite a buzz which has been felt across the globe.

Generative AI’s misconception

Speaking to us exclusively at DPW Amsterdam, Gregor Stühler, CEO at Scoutbee, believes there are some misconceptions around ChatGPT and the nature of how accurate the data it provides actually is. As is the case with any new technology, these things take time. “It’s always the same. It happened with electric cars, nobody thought that would solve the battery issue,” he discusses. “I think we are right at the peak of the hype cycle when it comes to those things and people have figured out what they can use it for. With wave one of gen AI, it is fine to have hallucinations of the model and if something is spat out that is not supported by the input. 

Gregor Stühler, CEO at Scoutbee

“But by the second use case, hallucinations are not okay anymore because it’s working with accurate data and should not come up with some imaginary creative answers. It should be always supported by the data that is put in. This is very important that people understand that if you train the model and if you have the right setting, those hallucinations will go away and you can actually have a setting where the output of the model is 100% accurate.”

Data security

Michael van Keulen, Chief Procurement Officer at Coupa, agrees with Stühler and despite obvious benefits such as time and cost, he stresses caution should be used particularly when it comes to valuable tasks. “If you look at ChatGPT, it’s fine if you’re looking for recommendations for something low-risk. I need something for my wife’s birthday next week, you input three things that she loves and ask it to help. It’s great,” he tells us. “But it comes from data sources on the web that aren’t always governed, controlled or trustworthy. It’s whatever is out there. What about the algorithms that come with ChatGPT? I don’t know what’s influencing the search criteria. On Google, if you pay you are at the top of the search bar. But I don’t know what ChatGPT is governed by.”

Michael van Keulen, Chief Procurement Officer at Coupa

Managing data leakage

Danny Thompson, Chief Product Officer at apexanalytix, explains that one of the biggest challenges with generative AI is being aware of a leakage of sensitive information combined with a contamination of important data. “We have a database of golden records for 90 million suppliers who are doing business with Fortune 500 companies and that is the best information we’ve been able to accumulate about the suppliers and their relationships as a supplier to large companies,” he tells us.

Danny Thompson, Chief Product Officer at apexanalytix

“We want to make sure we’re not loading sensitive information into a generative AI function that might allow just random people to access that data. Ultimately the customers in the space that we’re operating in are serious companies moving around large amounts of money and facing real risks that they have to manage. It’s really important that the data that they have is either highly accurate or at least they understand the degree to which it’s accurate. This means if you’re using the solution that you don’t understand the level of trust you can have in it, then you shouldn’t be using it yet.”

Can generative AI bridge the talent shortage?

Amid talent shortages in procurement, there are some sections of the procurement space questioning to whether AI and machine learning can plug the gap and reduce the necessity of recruitment. Naturally, this raises the debate of whether robots will replace humans. Stefan Dent, Co-Founder and Chief Strategy Officer at Simfoni, adds that while AI and machines won’t replace humans, it will mean people will need to find new forms of work and take on higher-value roles.

Stefan Dent, Co-Founder and Chief Strategy Officer at Simfoni

“The shape and structure of the modern procurement function will change quite dramatically and people will need to upskill,” he discusses. “A lot of the work will be taken over by the machine eventually either 20%, 50%, and then a hundred percent. But the human needs to have that in mind and then plan for that next three to five years. The procurement function of the future will be smaller, and they should purposely be doing that, to then look at solutions to find a way to enable it to happen naturally.

Future proof procurement

“For someone who’s joining procurement now, you’ve got this great opportunity to embrace digital. Young people can question ‘Well, why can’t it be done by a machine?’ They’re coming in with that mindset as opposed to fighting being replaced by a machine. I think for graduates coming into procurement, they’ve got the opportunity to play with digital and actually change the status quo.”

As we look to the future, gen AI and new forms of technology will continue to change the world and the way we work. In the short term, work is expected to continue to upgrade the user experience and workflows through gen AI in order to build greater trust for the end user. As transformation continues to happen, businesses and wider society must embrace new types of AI to thrive and stay ahead of the latest trends. The potential that gen AI tools possess is expected transform the workplace of tomorrow while delivering value-add such as time and cost savings on a day-to-day basis.

Given the speed of evolution and development, it is yet unimaginable exactly what form the digital landscape will take in years to come. However, that horizon brings with it fresh opportunity and excitement revolving around a whole new world of technology at our fingertips. The future is digital.

Author

Sean Galea-Pace

Published

26 December 2023

Estimated Read time

4Mins

Just how much of the procurement process can be automated, and who does it help?

It’s hard to argue that 2023 will be remembered as the year that generative AI exploded into the public consciousness. Image and text generation in the form of ChatGPT and Midjourney ignited excitement, controversy, contempt, and a fervour to adopt in equal measure. The generative AI industry is predicted to be worth more than $660 billion per year by the end of the decade.

But while there’s no denying that generative AI will be a part of the economic landscape of 2024 and beyond, it’s not yet clear what that will look like. More importantly, it’s no guarantee that generative AI will, uh, generate any ways for the technology to make back the hundreds of billions already spent to develop it. 

It wouldn’t be the first major trend to be backed to the hilt by big tech firms, only to dissolve into nothingness like that racoon who drops his cotton candy in a puddle. In stark contrast to 2022, this year’s tech roundups and trend predictions have put a conspicuous lack of emphasis on the metaverse. Now, to be clear, the fact that Yahoo Finance calculated that “Mark Zuckerberg’s $46.5 billion loss on the metaverse is so huge it would be a Fortune 100 company” is great news for those of us who didn’t want to spend our thirties attending meetings in a glowing virtual mallscape surrounded by cutesy, animated versions of our bosses and coworkers. Huge relief. It’s also quite funny. More relevantly to the topic of generative AI is the cautionary tale that, unless big, expensive technological developments can be monetised, they will disappear.

So, how do we monetise generative AI?

How to make generative AI useful

Technology is most valuable when it solves problems, and saves time and money, or at least improves people’s quality of life—when there’s a measurable benefit of some kind, sometimes to humanity, and usually to shareholders. That’s the stuff that sticks around.

While its applications and capabilities—especially when it comes to creative tasks or just the ability to make something actually original—are limited, generative AI may actually be a good fit for the procurement sector, potentially solving a major issue the industry is currently experiencing.

Generative AI and the Procurement Skill Shortage

The procurement sector is short on talent—with five out of six procurement leaders claiming they will lack skills, staff, and other vital human resources in the near future. This is the case for several reasons, but primarily: an ageing workforce is starting to retire faster than new hires can skill up; also, the requirements of the job are becoming more technology centric as procurement digitally transforms, leaving departments underskilled even if they’re no understaffed; and lastly, the amount of work for procurement functions is increasing overall, as it becomes more of a driver of business efficiency and innovation.

If generative AI could be used to reduce procurement teams’ workload by automating certain aspects of the job, it could be a key piece of the puzzle when it comes to solving the skill shortage.

Retail giant Walmart has been successfully running pilot projects using its AI-powered Pactum solution to automate supplier negotiations. According to Deloitte, not only did Walmart find it “helpful for landing a good bargain, three out of four suppliers prefer negotiating with AI over a human. This strongly indicates that the ecosystem is ready to embrace this disruption.” While I’m not sure if this example is an endorsement of AI or an indictment of Walmart’s procurement team, the ability for generative AI to take over routine communication, negotiation, and other interactions in the source-to-pay process could free up huge amounts of time to focus on more strategic activities.

Gen AI’s future

It’s not hard to imagine that both buyers and suppliers could input their desired results and parameters into a generative AI negotiator and outsource the relationship management entirely. Out of curiosity, this morning I set up ChatGPT in two windows and had it conduct an RFP, tender negotiation, and sale agreement for the sale of an order of self-sealing stem bolts between O’Brien Enterprises and Quarks. It was a very civil, if slightly roundabout affair, and everyone seemed to come away happy—hacky business journalists especially.

Goofy demonstrations aside, there’s real potential for significant elements of routine communication and relationship management in the procurement process to be automated, or at least assisted by generative AI. If correctly combined with data analytics on contextual information ranging from weather patterns, commodities pricing, and supplier behavioural history, a generative AI could offer useful insights to procurement professionals while its generally low threshold for usability allows less tech-savvy procurement professionals to harness more powerful digital tools.

By Harry Menear

Author

Sean Galea-Pace

Published

8 December 2023

Estimated Read time

2Mins

Only one in six procurement teams have “adequate talent” to meet their future needs, as industry demands grow and evolve.

Fewer than a fifth of procurement directors and executives believe that their teams contain “adequate talent” to meet the future needs of their organisations’ procurement functions.

In a recent survey of 111 procurement leaders, analyst firm Gartner found that, while procurement leaders remained fairly confident in their current talent pools, when asked about their ability to meet future demand, confidence plummeted.

“Procurement leaders are generally confident in the current state of their talent and the ability to meet their near-term objectives,” commented Fareen Mehrzai, Senior Director Analyst in Gartner’s Supply Chain Practice. “However, our data shows that chief procurement officers (CPOs) are worried about the future and having sufficient talent to meet transformative goals based around technology, as well as the ability to serve as a strategic advisor to the business.”

The threat of an industry-wide talent shortage has been looming for several years, and isn’t constrained to the procurement and supply chain sectors.

In the UK, half of all employers expect to face talent and skills shortages when recruiting procurement and supply chain professionals—something 20% of firms believe will be exacerbated by Brexit. In Europe, firms say they already lack “highly qualified procurement personnel”, with 78% of procurement leaders surveyed as part of a recent Accenture report “increasingly confronted with skills shortages in their procurement departments.”

A Different Beast: Procurement Professionals’ Key Competencies “Shifting”

One of the key reasons that procurement leaders lack confidence in their industry’s talent pipeline to meet future demands is reportedly the shifting nature of the modern procurement function.

“Procurement leaders are aware that the competencies required to drive transformation are different from traditional procurement skills, and that there are significant gaps between their current and future needs for the most important competencies,” Mehrzai said. Only 4% of surveyed leaders said that no gap existed between their current capabilities and their need for technology and data skills, with 68% of leaders saying technology and data skills had become more important to the operation of their procurement function in the past year.

Increasingly, procurement is a data-driven, technology-focused sector, but it appears the development and recruitment of available talent lacks behind the sector’s need to not only drive transformation within the business but also serve as a strategic advisor to its key decision makers. As generative AI and data analytics are adopted in greater concentrations across the sector, the demand for professionals who are primarily equipped with technology and data-centric skillsets — at the potential expense of a traditional procurement background — will only increase.

By Harry Menear

Author

Sean Galea-Pace

Published

6 December 2023

Estimated Read time

4Mins

Conrad Smith, Founder and CEO at Graphite Systems, discusses the similarities between Formula One and procurement amid significant digital transformation.

“Our business, like the F1 driver, knows to go fast.”

You’d be forgiven for thinking that procurement and Formula One are worlds apart at first glance. However, to Conrad Smith, Founder and CEO at Graphite Systems, they are actually a lot closer than initially meets the eye. A petrolhead by his own admission, Smith shared the stage with Haas Team Principal Guenther Steiner at DPW Amsterdam 2023. As a purchaser with almost 30 years of experience, Smith has overseen quite a transformation during his procurement career. He says that with everything going digital, you would assume that purchasing would accelerate. But it is, in fact, the opposite.

The pace of purchasing

“Over these 30 years, you would think purchasing would be getting faster,” he tells us. “Business is speeding up, but purchasing is slowing down – that’s stunning. When you think about it, where else in the world is slowing down when everything’s going faster and faster? Even though we’re investing in Coupa and Ariba and all of these expensive purchasing tools, it’s still slowing down. Our business stakeolders know business is speeding up, and so their tolerance is going away. In the nineties, when you onboarded a supplier, you just needed commercial data, name, address, tax, and banking.”

Conrad Smith (left) with DPW founders Matthias Gutzmann and Herman Knevel

Having been founded in February 2019, Graphite Systems is the premier supplier life cycle and risk management solution. The emergence of risk and due diligence has become a primary function within procurement. Vendor due diligence during the procurement process ensures users can identify and mitigate the risks present with a vendor they want to do business with during the contracting process. For Smith, he believes that this transformation has been 15 years in the making.

“I think that it was typical that a purchasing leader would point to other stakeholders and say it’s legal that’s holding this up, privacy or security. They’re the ones stopping the process from happening,” he explains. “And quite frankly, I’ll admit, those were my early thoughts. This is like a hot potato – I don’t want to be owning it. I look stupid because of the slowness I described. Think how stupid the business thinks we are when they come and say, I’m working on a project, I need this consultant here on Monday. And our best response is that it’ll take weeks or months to onboard the supplier”           

“Weeks matter, and we need to go through all this risk and due diligence. It’s really important to do the risk and due diligence, but we can’t do that at the expense of the speed of business. While business is quicker, in every measure that you look at, purchasing is going slower. It’s dumb, and the business knows that, and it means we lose credibility. It needs to happen, but we need to be very intelligent about it and not just do things the same ways we’ve always done them.”

Conrad Smith with Haas Team Principal Guenther Steiner at DPW

Procurement’s changing

Smith explains that one of the reasons he can relate to the F1 analogy is that while cars are going faster than ever, the drivers are far safer today. “Every year, we see massive accidents take place,” he tells us. “I think last year, a car that was flipping head over heels tumbling and hit the fence before slamming into the ground but the driver was okay,” he explains. “There’s this principle that is very important in almost any situation where somebody says, you can have this or you can have that. It’s a false choice.

“You have to pick speed, or you have to pick safety. If you go in with a requirement that says it has to be fast and it has to be safe, that’s the F1 example. You have to go into purchasing and say it’s a non-negotiable. It has to be fast and safe. How can we rethink the design so it can go fast and be safe? That’s really my passion, and it’s possible. It doesn’t mean it’s easy, but it’s possible. Frankly, in the case of this purchasing problem, it’s way easier than it should be. But we’re still stuck on passing paper back and forth instead of just saying, there’s my profile. Everything you need is in my Graphite profile – just like everything you need to know about me [as a professional] is in my LinkedIn.”    

The future of creation, management, and sharing of data and documents between buyers and suppliers absolutely needs to evolve from emails, spreadsheets, and PDFs into a modern social network architecture. This transformation of information sharing has already proved its speed and efficiency in most other aspects of our lives. It’s time to quit wasting time and money on supplier onboarding and embrace modern technology in this critical procurement process.

Author

Sean Galea-Pace

Published

22 November 2023

Estimated Read time

5Mins

At DPW Amsterdam 2023, Daniel Barnes, Community Manager at Gatekeeper, discusses the evolution of the procurement function and the influence tools such as generative AI are having in the space.

“It might sound harsh, but people just won’t have a job if they don’t change.”

For Daniel Barnes, Community Manager at Gatekeeper, his thoughts are clear. Technology is here and it’ll only get more advanced.

Barnes has been the Community Manager at Gatekeeper since June 2022. The company he works for is a next-generation Vendor & Contract Lifecycle Management (VCLM) platform that was born in the cloud and works on any device. Gatekeeper has a strong focus on collaboration, clear actionable data, obligation and compliance tracking, email alerts and most of all ease of use. The firm has a ‘zero training’ mantra driving a fanatical focus on usability that results in an application internal stakeholders and suppliers can use effortlessly.

The Gatekeeper Platform provides a suite of vendor management, contract management, kanban workflow, collaboration and reporting features. Customers can extend the functionality of Gatekeeper with additional modules to meet their required use cases, as well as integrating with over 220 third-party solutions.

Technology potential

Since joining the company, a key consideration for both Barnes and Gatekeeper has been the influence of generative AI. However, Barnes explains that while the potential of the technology is exciting, they are being strategic about how to leverage AI.

“We’re probably taking it a little bit more of a slower approach,” he tells us. “We have a contract summary function at the moment which means for any contract we summarise it so that anyone in the business can get a really quick understanding of that contract. We’re also exploring whether we’re going to bring in a Gatekeeper bot that allows us to get insights analysis in a very conversational manner. One thing we really believe is that contract and vendors aren’t just for procurement or legal. Everyone in the business has to contribute to make these successful. A lot of the issues, data and information behind these are legally complex. Procurement language is difficult when you’re talking about RFPs or you’re talking about risk. Someone in the business doesn’t care about that, they just want to get whatever they have brought, they want the service, they want it performed, they want it on time and they want a good relationship. We’re trying to figure out how to use AI like that.”

CPOstrategy speaking with Daniel Barnes at DPW Amsterdam 2023

The rise of Gen AI

Generative AI isn’t exactly new. In fact, it actually dates back to the 1960s. Among the first functioning examples was the ELIZA chatbot which was created in 1961 by British scientist Joseph Weizenbaum. It was the first talking computer program that could communicate with a human through natural language. But, given the introduction of a far more advanced model – ChatGPT – gen AI is the name on not only procurement’s lips but the wider world too. Barnes questions what you need to make AI successful at implementation.

“You get data and most procurement and legal teams have an issue with data because they don’t have it in one place,” he explains. “We fundamentally believe in this three-pillar approach. It’s to restore visibility and to have all your vendors and their contracts in one place. From there, you take control of that by digitalising all of your processes. Once they’re digital, you can track and automate them from various data points that you have in your vendor and contract records. That allows you to safeguard compliance, whether that’s regulatory, legislative or by contractual obligations. They’re all different forms of compliance that you need to track. Most teams are really struggling just with those. When we talk about gen AI, the reality is most teams are still so far away from even being able to realise those benefits. Today, gen AI looks powerful once you have the pillars in place and I’m really excited about its future.”

Procurement’s evolution

Indeed, procurement stands at a unique moment. With some in the space used to operating a certain way through legacy systems and others embracing a digital transformation and the technological innovation that brings with it, Barnes recognises that people who are reluctant to change could be left behind. “I think there has to be a willingness to change,” he tells us. “I’ve been talking about change in procurement since 2019, and I would say 80% of people who are engaged are hesitant and don’t want to change. That’s a really big concern. But my biggest worry is they don’t want to know in the first place. One of my fears is you’ve got so many solutions that genuinely can eliminate work in procurement teams. I’m worried for those people who don’t want to change because what are they doing when their work’s automated?”

The future

Barnes, who also hosts the World of Procurement podcast and YouTube channel, believes there is a current cultural divide in procurement and the industry is at a make-or-break moment. He affirms procurement will go “one of two ways”.

“You’ve got people who are stuck in the past that are archaic with what they’re doing. Then there’s those who are really pushing the profession forward,” he explains. “I see it as a moment in time where procurement kind of goes one in two ways. It’s extinct in terms of how it used to be. There’s solutions that I’ve seen which have automated workflows and are doing the work that traditional procurement people used to do. We can pull people along, but there has to be an initial willingness to change too or it’s not going to happen. That’s why I think it’s great to see people that are showing that willingness. They may not have the answers, but they want to learn.”

Author

Sean Galea-Pace

Published

1 November 2023

Estimated Read time

5Mins

At DPW Amsterdam, Ashwin Kumar, vice president at GEP, discusses procurement transformation and what tomorrow’s challenge could look like.

Transformation. Procurement has witnessed quite a bit in recent years.

Given the widespread adoption and acceleration of AI and data-driven processes over the past decade, change has been a necessity rather than a nice to have.

Evolution of AI transformation

Ashwin Kumar is not unfamiliar with change. Having worked at GEP since May 2008, he has had a front-row seat to the transformation and change procurement has overseen. Now Vice President, he tells us about the evolution of the procurement function and how the landscape is shifting to meet future market demands.

“I think the way we see the industry evolve over time is because we started with web 1.0, simple ERPs that were fragmented with no easy way to connect systems,” he tells us. “Data was all behind firewalls and it was very expensive to manage or mine data. Then we had a big technology breakthrough in cloud systems where the people who were managing the storage said they had a solution. You can just simply push data out of the cloud and what we saw was a lot of that control that the CIOs had on data architecture and the software systems and solutions was being given to different functions.

“A lot of that enrichment of data happened because of the cloud platform that enabled it. Back in 2010, we made the decision to move away from a SaaS platform because even then we believed the future was cloud and that’s where data is going to be which could mean a gold mine. Our CEO made a very conscious decision to basically stop a really good product that was working and move to the cloud platform.”

Ashwin Kumar, Vice President, GEP

The GEP difference

Today, a global leader in AI-driven procurement and supply chain transformation, GEP helps enterprises take the lead and, using the power of data and digital technology, to stay ahead in the connected global economy. More than 1,000 engineers have spent the last 7 months to design and launch GEP’s new AI-native, low-code platform for sustainable procurement and supply chains, GEP QUANTUM. This new platform, launched last week, powers GEP SMART, the industry’s leading source-to-pay procurement application, GEP NEXXE, its next gen supply chain solution, and GEP GREEN, enabling companies to track, measure and achieve their ESG goals.

With the transformative power of AI, GEP enables businesses to operate with greater efficiency and effectiveness, gain competitive advantage, boost profitability and maximise both business and shareholder value. GEP helps global enterprises across industries and verticals build high-performing, resilient and sustainable supply chains.

Investing in dedicated spend analytics and solutions has become an essential part of the procurement process. Data is king and ultimately the more companies know and can predict, the better off they’ll be. However, some companies are still lagging behind when it comes to adopting digital tools created for better visibility and transparency. Kumar questions the reason for this and points to the possibility that there could be a perception that digital tools were hype or a fad – but affirms spend visibility is the real deal.

“If you look at spend data, if I’m the business stakeholder, you’re coming and showing me things that happened six months before,” he tells us. “One of the things we actively tell customers is to understand that there is a difference between spend and cost. Spend is basically the last AP data that you get, which means it’s not even current.”

Procurement’s greatest time?

Given the disruptive nature of the past few years, procurement has had to stand up and be counted. For Kumar, he reflects on global challenges such as Covid, a war in Ukraine and inflation and its knock-on effect on procurement and the supply chain. He maintains that it’s a “difficult time” to be in the industry at the moment given the hurdles procurement and the wider world has faced head-on recently.

“We started off with Covid where we went and told suppliers, sorry, I don’t have money to spend so I’m going to stop spending,” he tells us. “Two months later, you tell them there’s a supply shock and since I’m your preferred customer, can you do something for me? Make sure my products are getting to me on time. Then six months later, there was a war in Ukraine where you were testing suppliers to see which side they were on and questioning whether or not to do business with them. After that, there were inflation concerns so things are constantly changing and you’re pivoting from one problem to another.

“It now means you need to have a platform ecosystem with multiple solution options so that there isn’t a single point of failure and avoid the need for a “transformation” every two years. Given the pace at which things are changing in the macro environment, those single points of failure are quickly going from lack of supply to resilience to risk to people to visibility. It could be something else tomorrow, it could be ESG tomorrow, we simply don’t know. I could have a really good risk assessment tool, but that might not be my focus six months from now – it could be something else. So resilience in the form of digital ecosystem housing different point solutions is paramount.”