Why don't we automate the entire Procurement and remove the human element?
Technology already has the capability to perform the entire procurement function from Supplier on-boarding, sourcing, contract management through to order placement. Human interaction introduces risk from errors without necessarily adding additional business value.
As technology increases its capabilities it is able to automatically undertake more and more complex procurements so why do we still need humans to be involved? If your answer is because of the complexity of the procurement, that is not good enough!
What we need to do is focus on where the human element adds value. If AI can do some of our work in eliminating potential suppliers from a sourcing process because they don't have the basic requirements then that's good. If tech can curate information to give us up to date knowledge when we're doing contract management then that's helpful and saves us time. They key will be not to see it as an either or question.
In my opinion the key will be to keep us people in the process where we're making all the difference and not cling on to roles in the process which tech can and really should take away.
You can't read an article, listen to a podcast or go to a conference with out hearing "its all about relationships" and "people do business with people". Not sure tech can replace that. Yet. And if and when it can, we all have bigger problems.
Technology helps with efficiencies, but procurement is more than simple processes, we truly add value when we have the opportunity to show our human flair.
Procurement is incredibly varied (certainly in my manufacturing environment), some days you are troubleshooting and finding innovative solutions based on knowledge and an intuitive understanding of the supply market, whilst on other days you are a producer taking people’s ideas and forming them into cost saving projects.
To be clear my answer isn’t about the complexity of procurement; it’s based purely around the need for a spark of human inspiration to make the leap across data streams.
I agree with Euan! While technology is great, it doesn't replace human judgment or relationships. There are often sourcing elements surrounding customer service which can't always be quantified in an automated fashion. Contract management can be automated but contract review requires human eyes and conversation. When problems occur, people respond and address them. When new products, services, or technologies become available, we rely on salespeople and account representatives to share them. At the end of the day, relationships still have a prominent place in daily business that can't be completely outsourced to machines. In my opinion, it shouldn't. Not only for job security, but because life has so many nuances that machines simply can't adequately address.
Because ultimately people still want to deal with another person, even taking into account the possibility of human error. We don't like dealing with automated answering services, we try to speak to people in call centres even when there are other options, and there's still a mistrust about the security of technology. As humans, I think we feel comfort in speaking to another real, live person, particularly when it comes to business.
Plus, I'd argue that none of the technology has developed far enough to operate entirely autonomously and automatically. There still needs to be a human being somewhere in the process to push a button, or provide maintenance when something fails!
Great answers from everyone however I still feel we haven't really justified the human element. If you were the CEO would you pay the extra salaries for Procurement based on the value it mainly offers today (Price savings) or would you look to automate and save money?
Some of the areas that I believe the human element could add value include:
1) Acting as a partner to the supplier. This may involve ensuring contracts encourage collaboration and benefit sharing to promote trust and encourage innovation, through to promoting supplier successes internally to the business.
2) Working with the business leaders to help select the supplier they require. Instead of running the procurement and procurement awarding based on its selection, procurement provides the options To the budget holders and lets them select the most appropriate supplier to meet their business needs. This is one of the biggest complaints I hear about procurement from budget holders , maybe its time to review the approach used.
3) Finding solutions to business issues (as mentioned by Ben Smith ). Technology follows process but finding solutions requires applying knowledge and experience whilst using human relationships to get to the core of the requirement.
4) Bringing innovation and opportunities into the organisation from the supply chain. Procurements daily engagement with suppliers can uncover new ideas that could add new opportunities for the business, an aspect rarely utilised today.
Procurement has amazing opportunity to add "significantly" more value than it does today whilst enabling technology to take care of the day to day processes. It is the gateway to the huge untapped value locked up within the Supply chain and it could be a highly desired function adding advice and guidance to business leaders in supporting their success. The difference between this and where we are today is attitude. If you feel your value lies in beating up suppliers, driving savings and keeping control then don't be surprised if your automated in the future. https://goo.gl/cY33y8
Automation and the human element from my experience is critical as a Procurement Officer or Supply Manager in the Supply Chain, especially when dealing with hundreds of thousands line items or hundreds of contracts. Errors occur with either and must be dealt with by changing critical data, interacting with your client to diffuse a situation. The human element will always be critical in business.
why not? the technology is here. defintely for spare parts, fast moving, perishables, off the shelves, repeated purchases.
Automation will removes all the inconsistencies, manipulation of data, massaging the figures and human error in complex, tiring, painstaking tender evaluation (eg offshore campaign or constructions).
Humans can argue, defend and justify their recommendations in board meetings based on accurate data.
We are in 2017, we should have tender-bid-evaluate-award web portals. Unfortunately, (here atleast), we are still locked in the 3'x4' steel 'Tender Box' with two different keys..kept in the boss secretary office!
Then, there's the legal view on electronic copies..that is a whole new story altogether...lol.
Automation of procurement can and will happen, what won't be automated are the negotiation, the vendor management, the ....
all the points whereby interaction, human creativity, non-data driven exchanges occur. How often as a buyer have you selected a vendor who was equal in every way to their competitor (on paper) but their ability to work with you to solve one of your problems put them ahead of the race...this is where the "people" part of the equation comes to the fore...perhaps as computers become more sentient this will change but for now that is not an issue we need to address
There are a lot of activities in Procurement , that can be automated , but procurement by itself cannot be Automated. Procurement is something that is more of building relationships and maintaining it. There are various unexpected situation that come in your procurement life and it cannot be expected that a machine would think and solve . It is the relationship that helps. Moreover ,as purchasing is moving more strategic , we need people to do the strategic thinking and not machines. In short , procurement involves lot of human factors that make it work and not automated process.
Perhaps almost all of procurement could be adopted by computers. At present, I think it's only beneficial for repetitive, admin/ transactional tasks though in the future a lot of what we consider complex, strategic or relationship-necessary could be adopted by machines. That's if algorithms are sufficiently intelligent to match the question & appropriate action or decision.
If 'X happens, do Y' - if exchange rate is favourable, preferential tax laws, global delivery and quality score above 95%.... = source from Supplier D for O type products with contract renewal in 2.5 years under Terms D-F.... Following these agreed operating and contract management escalation procedures... Feed enough into the system, with technology that's intelligent enough to decipher and adapt effectively, and there's no limit to what it could do!
What then in terms of negotiation? Perhaps everything could be simply 50-50/ partnership agreements, which would help foster supply chains.
It would be a nightmare to set something like this up and for it to be profitable, to uproot and move away from the well established account manager > buyer structure. However, business is largely driven by profit and super processing speeds at next to zero cost, capability to read multiple data streams simultaneously and other benefits will likely mean that humans are at some point pushed out of making procurement decisions, I think it's more a question of when.
Within 10 years we'll probably see driverless cars becoming a cheaper option to vehicles with a driver, in competitive industries perhaps we can judge how quickly the transition to driverless occurs to make a judgement on just how established, established actually is, & what part the human factor will play.
Because as procurement moves away from the Tactical end of the spectrum towards the more Strategic end, it requires cooperation and collaboration among the stakeholders in order to achieve win-win outcomes. This requires the input of an emotional element that machines (at this point) simply cannot contribute nor comprehend.
I believe that within 15 years, 80% of transactional decisions will be made by Artificial Intelligence.
Procurement people will become more and more problem solvers and opportunists (in the best commercial sense of the word).
They will be:
Analysing data sets
Looking for where value is not flowing or is not flowing fast enough.
They will also be looking for other areas where value can be identified.
I predict there will be big shrinkage in the numbers of procurement professionals unless they can do the above.
Why don't we automate the entire Sales process and remove the human element?
Technology already has the capability to perform the entire Sales function from Customer on-boarding, marketing, customer relationship management, contract management through to order placement. Human interaction introduces risk from errors without necessarily adding additional business value.
It is not because of the complexity of procurement, as after all look at the progress they are making with self driving cars, which is a very complex process. It is because of the lack of investment, at the same scale, in the technology, which is causing a lack of advancement of the technology. It is evolving and some processes, like Auctions, can be largely automated, but there are many more processes that have not been adequately addressed. As technology evolves, more processes will be automated, that is just evolution, but that does not mean that humans will get displaced, they will simply move on to doing more value add activities, including strategic and relationship initiatives.
Mike, and why don’t we automate a flying control and remove the human element of flight dispatchers?
After all, there is cost of error far higher than procurement! And robots are wrong much less people.
I agree Ben. Creative thinking and viewing a situation from a non-technical perspective can often bring added value and new approaches. Also, using the competitive sourcing process, or Lean and Six-Sigma tools can help a business realize that the end game at the end of the process is not the one that they were expecting or had first been pursuing.
Procurement often helps the business define its requirements (and ring-fence scope to stop it growing arms and legs). Where scope changes towards the end of the tender phase procurement will try to limit the damage where the supplier has the opportunity to ramp-up their cost. Procurement understand the value of controlling information flows (so, what’s your budget? How urgently do you need this = supplier premium) as well as ensuring a consistent and auditable approach to sourcing, allowing a level playing field for suppliers.
A good procurement professional will use their prior experience to build risk mitigation into each step of the sourcing process, as well as negotiate terms which manage risk throughout the lifecycle of the product or service and define what happens if things go wrong. Procurement is also a conduit for information, be that knowledge of the market, or having visibility of all of the silos in a business where people are working on similar issues, or with the same supplier. Procurement are good at helping the business to refine and fix business processes, and are usually called-upon for problem solving, freeing-up their technical colleagues to focus on their core role. Software will certainly allow the end user to source their own requirements, but procurement still has plenty to bring to the table. It’s a shame that procurement's contribution is often misunderstood.