Procurement

Artificial Intelligence, More Data and the Transformation of Procurement

By Daniel White in Brighton

Artificial Intelligence, More Data and the Transformation of Procurement

Following our Proco Thinking feature about how multi-disciplinary procurement processionals can benefit a business, Brett Gilman provides some fascinating insight into how the role of procurement professionals will evolve over the next five to 10 years.

Today, procurement professionals spend a lot of time administering information and data. Internal demands for immediate RFQ turnarounds, detailed supplier due diligence, expedient and qualitative bills of material costing, rapid sampling requirements, etc., are constant in a purchasing organisation. Not unexpectedly, however, procurement leaders and their C-Suite colleagues want their teams focused on mitigating risks and optimising results instead of these essential administrative activities. 

Gilman says, “There is often an imbalance between the input and the output side of the procurement equation. As leaders, we want our teams focused on the outputs, such as on cost savings, supplier performance and cash flow improvement as well as on strategy development. Yet our teams are often busy supporting daily requirements because if they don’t, the risk to the daily business, immediate customer reputation and the relations with their internal business colleagues is simply too great.”

However, increased reliance on artificial intelligence and a continued movement towards information digitalisation now allows large amounts of data to be filtered through automated systems. This is changing how rapidly both daily and strategic decisions are made and, according to Gilman, is a turning point for all procurement organisations – whether they embrace the change or not.

As time progresses, procurement professionals will, Gilman says, “become almost like commodity traders who are complemented by an analyst support system. They’ll be making decisions a lot quicker and they’ll have information more readily available. The input-output equation will shift tremendously towards the output side as important time-consuming inputs simply become more automated. So, for procurement people, you’re going to be looking at data and making sourcing decisions that just happen much quicker. The RFQ, BOM costing and sourcing process that can take up to several weeks will be reduced to just a few days, if not hours eventually. Both service levels and results will be immediately upgraded through the embracing of AI and data analytics.”

He has personally witnessed the beginning of the transition and seen the tools being developed to allow individuals to respond more expeditiously and qualitatively. But Gilman says that the rise of fully automated systems does not mean that human beings will become obsolete in the procurement network; instead, procurement professionals will adapt and become more strategic, analytical and focused on outputs as time moves forward. It also doesn’t mean that supplier relationship management will be taken over by quantitative dashboards or transactional electronic processes. 

‘Rather it means, that more transparency and collaboration will develop and this will allow for a greater value-added focus in buyer-seller relationships. Certainly, this journey has already started but it will take several years to get there as Analytics and AI become a bigger cultural part of our procurement landscape.’

Gilman says that procurement professionals will have to learn how to perform a condensed version of a number of roles. But, in today’s climate of multiple global markets, they already must demonstrate a versatile and integrated approach to purchasing. Making an analogy, Gilman equates procurement professionals to athletes – they balance offensive and defensive roles in their job. The offensive side is focused on delivering the results that the company needs to be successful, while the defensive side is concerned with the alleviating of third-party risks to protect the business.

“With AI and data analytics the transition between the two happens instantaneously in tomorrow’s environment,” he explains.

These varied responsibilities, both offensive and defensive, are what Gilman refers to as the ‘how’. They describe the strategic thinking and adaptability that procurement professionals must demonstrate to achieve outcomes. Gilman says, “I think in the procurement world, a lot of us, as executives, we lose sight of that because we’re so numbers driven…It’s not just the ‘what’, it’s also the ‘how’ that’s key.”

If the role of procurement professionals is becoming increasingly analytical in the next decade, what does the effect of Industry 4.0 – the current rise of digital industrial technology – have on purchasing? Gilman discusses this and other topics our next Proco Thinking instalment.

This is the second instalment of an in-depth interview with Brett Gilman for Proco Thinking. Last week, we discussed what makes a successful procurement professional: The rise of the multi-disciplinary procurement professional https://www.procoglobal.com/proco-thinking/the-rise-of-the-multi-disciplinary-procurement-professional-168426/

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About the author

Daniel White specialises in recruiting at a mid-senior level exclusively across the function of Procurement. Working solely with clients and candidates within the EMEA region, specifically in the Automotive Industry

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