Why all the hype about AI and cognitive purchasing?
Yes, AI and cognitive purchasing seem interesting, but their benefits are unsubstantiated. There are no definite commercial products available that use AI or cognitive purchasing to optimize purchasing. Also, in spite of the long run in healthcare, where data is huge and highly structured, IBM Watson has had very limited success. Given all this, should we not be measured in our recommendation of AI and cognitive purchasing?
I agree, there is a hype but I know of businesses that are already applying AI and Predictive analytics to make decisions of when, where and what to buy; basically looking for the appropriate time and place to buy at the best price.
I don't think many businesses will publicise what they have done in this area because advanced data analytics is becoming a competitive advantage, and it will be until the competition also embeds it.
It's easy to get excited about all these buzzwords and disruptive technologies of the future, but what do they actually mean to the average person when we don't have many tangible examples of success? I agree with Hugo on this, a lot of the transactional activities that cannot necessarily be automated right now will be in the future. This will mean procurement can evolve into being seen as more of a value-creator than the process-driven cost-cutting perception (rightly or wrongly) I think procurement generally has in the present. Data science/analytics will be a key skill required of the future procurement professional in a world of automation and digitisation. A mentor of mine said she sees the big skills gap in this area is having people that get BOTH data science/analytics AND an area in which it is applied - like supply chain management. This is where a lot of opportunity is - in the crossover between disciplines.
Interesting topic. I have procurement background but works as a data scientist. Would be interesting to hear about examples where AI has been used!
Machine Learning is part of the AI and here we have developed some models for our clients. One example is that we predicted which invoices that will be paid late. Many organisations are handling so many invoices that AP don't have resources to find the root cause. Reduced late payment fees and hygiene factor as result.
hi Piyush, I agree with you that the human element shouldn't be ignored. I also agree there is a lot of hype, but it is important to recognize the potential impact of Machine Learning, which is really what it is. It is slowly entering our daily lives in software like Google Photos where you can search through your personal pictures using image recognition, just type car, or house, or receipt.. and it will select all those images for you. Google assistant is also becoming more and more capable, soon it will be able to call and schedule appointments for you. In Procurement there are already strong user-cases on the Invoice management side. I think with any new technology, the hype and dreaming of the possibilities is part of a larger process of tech adoption.
Two aspects to this: (1)whether all transaction activities should be outsourced? Talk to any experienced purchasing professionals (not software experts or consultants) and they will tell you the value of transactions. For example, calling up suppliers with a schedule change allows the buyer to judge the flexibility and dependability of the supplier. Mindless automation would make companies lose a rich source of supplier information. (2) Like I had pointed out, AI has had limited impact in medicine - in spite of the fact that data in medicine is (hopefully) more structured than in purchasing. So, the future when AI / cognitive purchasing 'revolutionizes' purchasing could be distant. Looking forward to hearing loads of cases from Luis Giles.
Hi Piyush, Highly recommend you take a listen to the coming webinar next week on AI and it's impact on category management. Luis Giles is a wealth of information and gives loads of real case studies from the construction/project procurement area. You can sign up here: http://cleanupyouractwebinar.procurious.com/ Love to hear if Luis manages to convince you of the value of AI afterwards!!
It would be great to see a Procurious member from IBM jump onto this thread to give their view..
Great question, Piyush. My understand is that Cognitive will potentially bring about the biggest step-change for procurement since the big wave of procurement technology back in the 1990s. The automation of the tactical elements of the average procurement professional's day-to-day job will also make time to do the things you really want to spend time on to create value and make a real impact. But... you are right about it being early days for the technology.