To learn more about how rapidly evolving technology changes the future of procurement, the next BriefingsDirect panel discussion explores how and why innovation-fueled procurement will fill an increasingly strategic role for businesses.
Listen
to the podcast. Find
it on iTunes.
Get the mobile app. Read a full transcript or download
a copy.
Our future of procurement panelists are Julie Gerdeman, Vice President of the Digital Transformation Organization at SAP Ariba; Shivani Govil, Vice President of Artificial Intelligence and Cognitive Products at SAP Ariba, and Matt Volker, Vice President of Supply Chain at NatureSweet in San Antonio, Texas. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: Julie,
SAP Ariba recently published a point-of-view on what procurement
will look like in 2025, and it shows procurement as far different from how we
know it today. Paint a picture, if you would, of what we should expect from procurement
over the next several years?
Gerdeman:
We
are on the brink of more change than ever before in procurement. We think
procurement organizations are going to rethink everything -- from technology to
resource allocation to talent and skill-sets. This all can entirely remake the
function.
 |
| Gerdeman |
And how they will do that means
a few things. First, they are going to leverage new and emerging technologies
to automate the mundane tasks to refocus on more strategic-level work, and that
will allow them to become key drivers of corporate goals and business
innovation.
How are they going to do that?
It will be through use of intelligent systems that are self-learning and that
provide a consumer-like, highly personalized user experience that makes purchasing
easy.
We also believe that
procurement strategists will become ambassadors of the brand for their
companies. Unlike in the past, all companies want to do well financially, but
we believe procurement can help them also do good, and we are going to
see more-and-more of that in the future. Procurement will become the stewards
of the corporate reputation and brand perception by ensuring a sustainable supply
chain.
In the future, procurement
will become even more collaborative -- to achieve cost-savings goals. And that
means companies will be connected like never before through leveraged networks.
They are going to take the lead in driving collaboration and using networks to
connect buyers, partners, and suppliers globally for efficiency. On the tech
side we believe super networks may emerge that create value. These super
networks will network with other networks, and this hyper-connected ecosystem
will become the standard.
Finally, data is the new
currency and buyers and sellers are going to leverage things that I believe
Shivani will be talking about, like predictive analytics, real-time insights, AI,
blockchain, and using all of that to move the business forward. We are really excited
about the future of procurement.
Gardner: The adoption
and the pace at which people can change in order to acknowledge these technical
changes -- and to also put in place the organizational shifts -- takes time, it’s
a journey. What can companies be doing now to think about how to be a leader --
rather than a laggard -- when it comes to this procurement overhaul?
Gerdeman: That’s
such a great question. Adoption has to be the key focus, and every company will
begin at a different place, and probably move at a different pace -- and that’s
okay.
Adoption
[of modern procurement] has to be the focus, and every company will
begin at at different pace, and probably move at a different pace -- and
that's okay.
Gardner: Matt
at NatureSweet, you are well on your way to making procurement a strategic
element for your company. Tell us about your transformation, what your company
does, and how procurement has become more of a kingpin to how you succeed.
Greenhouse growth with IT
Volker:
We
have more than 9,000 associates across our operations and we consider them our
competitive advantage. That’s because people create the expertise at the
greenhouse -- for the best growing and harvesting techniques.
With that said, our intention
is to bring more innovation to the table, to allow them to work smarter versus
harder -- and that entails technology. As an example, we currently have five
different initiatives that are linked to automation and systems solutions. And SAP
Ariba Snap happens to be one of those initiatives. We are creating a
lot of
change management improvements around processes. As a result, our
people’s accountability shifts from a transactional solution in
procurement to a strategic
sourcing play.
Gardner: Tell
us more about NatureSweet. You are an innovative grower of vegetables and other
organic produce?
Volker: Yes,
we grow fresh-produced products, predominantly in tomatoes, cucumbers, and
peppers; both conventional and organic. We service North America -- so Canada,
Mexico, and the US -- with a brand of products across a spectrum of small and large
tomatoes, varieties of peppers, and varieties of cucumbers.
Gardner: Now
that you’ve put strategic procurement into place, what are the demonstrable
benefits?
Volker: Being
in the mid-market, we were in a position where the sky was the limit. In a
transactional sense, we still had basic processes that were not fully in-place --
down to identifying item numbers and stock items across a broad range of
purchases across 8,000 different commodity items.
 |
| Volker |
That led us to do the due
diligence to be able to identify what those items were, which then drove us to
category management, siloing specific purchases into categories, and then
applying our resources against those categories.
The net result was that we moved
from transactional to strategic sourcing. We didn’t know what we didn’t know.
But once we brought SAP Ariba Snap internally into our operations, we gained access
to three million-plus vendors. It provided us the visibility into worldwide
opportunities across each of those purchase categories. It was a benefit -- both
on spend as well as services and products available.
Gardner: Just to
be clear, SAP Ariba Snap is a new, packaged solution to help small and
medium-sized businesses (SMBs) become purveyors of the top-line technology, processes,
and networks when it comes to procurement. In this case size really doesn’t
matter.
Shivani, SMB companies like NatureSweet
want to be thinking about the top-line capabilities of AI and machine learning,
but perhaps they don’t want to take that on as a core competency. It’s really
outside of their wheelhouse. How can an organization like SAP Ariba tackle the
complexities of these technologies, get the deep data, and then help companies
like NatureSweet better accomplish their goals?
 |
| Govil |
Govil: At
SAP Ariba, we are enabling transactions across more than three million buyers and
suppliers, and for more than $1.6 trillion in value across the network. If you
think about that statistic, and you think about how much data resides across
our network and in our systems, what we are looking at is applying AI- and machine
learning-type technologies to unlock the value of that data and deliver
actionable insights to companies, such as NatureSweet, so that they can perform
and do their functions better.
Our focus is really looking at
the technology and how can we apply those technologies to be able to deliver
value to the end-user. Our goal is to bring together better connections between
the people, the processes, the systems, the data, and the context or intent of
the user in order to enable them to do their jobs better.
Gardner: And
looking to this initiative about predicting through 2025 how procurement will
change, tell us how you see technology supporting that. What is it about these
new technologies that you think will accelerate change in procurement?
The future is now
Govil: I
see the technology as being a key enabler to help make the transformation
happen. In fact, a lot of it is happening around us today already. I think some
of us can point to watching science fiction movies or looking at cartoons like The Jetsons where they talk about a future age of flying cars, robot maids, and
moving roadways. If you look around us, that’s all happening today. We have
self-driving cars, we have companies working on flying cars, and we have the
robot vacuums.
Our
goal is to bring together better connections between the people, the
processes, the systems, the data, and the context or intent of the user
in order to enable them to do their jobs better.
Gardner: For end-users
who are not data scientists, or are even interested in becoming data scientists,
the way mainstream folks now experience AI, bots, and machine learning is often
through voice-recognition technologies like Siri and Alexa.
What is it about those technologies
that allow us to educate people on AI? How can your average line-of-business
person appreciate the power of what AI and a cloud business network can do?
The conversational AI advantage
Gerdeman: Alexa
and Siri have become household names, and everyone is familiar with those types
of technologies. Those are the conversational interfaces that enable us to have
interactions with our applications in a seamless manner, as if we are talking
to a friend or trying to get something done.
When we think about this whole
space of technology, AI, and machine learning, we actually span multiple different
types of technologies. The natural language processing, the speech-to-text, and
text-to-speech -- those are the types of technologies that are used in the
conversational interactions. You also have things like machine learning, deep learning,
and neural networks, etc., that provide the insights that span across large
amounts of data and deliver insights and uncover hidden patterns to enable
better business outcomes.
Let me give you an example. We
think about Siri and Alexa in our everyday life. But imagine an intelligent
assistant on the business sourcing solution, one that is guiding a category
owner throughout the processes of running a sourcing event. This can really
help the category owner better understand and get intelligent recommendations
as to what should they be doing -- all through conversational type of
interactions.
We
are applying techniques such as deep learning and convolutional neural
networks ... We see that it saves people from what used to take days to
less than 11 minutes to do the same task.
We are now applying techniques
like deep learning and convolutional neural networks (CNNs) to be able to
automatically start classifying those invoices into the right spend categories.
By doing so, we have seen that it saves people from what used to take days to
less than 11 minutes to do the same task.
Gardner: Matt,
now that you have heard about some of these AI capabilities, does this resonate
with you? Are you excited about it, and do you prefer to see a company like SAP
Ariba tackle this first and foremost?
AI for excellence
Volker:
Our
long-term strategy is to become a consumer package goods company and that
places us in the same conversation as folks like Proctor
and Gamble, Hershey,
and PepsiCo. That strategy is ambitious
because if you consider produce traditionally, it’s been a commodity market
driven on temporary workforces that are migratory by nature. But that’s not who
we are.
We are a branded company. Our
claim to fame in the marketplace is that we have the best products in the
market. They are always the best products on the market, always at the same
price, always available, 100 percent vertically integrated and in a direct relationship
with the consumer. Why I mentioned that is for us to continue to excel at our
growth potential, the need of automation, AI, and digitizing processes are
critical to our success.
We
are building toward an end-to-end integrated supply chain, and we must
have that link of a qualified tool in procurement to make that a
successful transformation.
Gardner:
Shivani, we’ve also heard that people are concerned that their jobs are going to
get taken over by a robot. We don’t expect necessarily that 100 percent of
buying is going to be done automatically, by some algorithm. There has to be
a balance. You want to automate as much as you can, but you want to bring in people
to do what they do best.
Is there anything about your
view towards 2025 that addresses this idea of the right mix of people and
machines to leverage each other to the mutual benefit of the business?
Human insights add value
Govil: We
don’t think technology is going to replace humans. In fact, what we think is
happening is that technology is augmenting the abilities of the humans to be
able to do their jobs better. The way we look at these technologies is asking are
they really allowing the procurement professionals to be smarter, faster, and
more efficient in terms of what they are doing? Let me give you an example.
We all know that digitization
has happened. Paper invoices, for example, are a thing of the past. Now,
imagine if you can, also adding in what’s stored in many digital records? You’d
get the insights from all of that together. Let’s say there’s a drop in
commodity prices, you’ll be able to intelligently give the contract negotiator
the advice that it’s time for them to negotiate a contract, as well as provide
benchmarks and insights into what kind of prices they should be looking for.
The way we’re approaching this
is looking at the type of user, the type of task that they are performing and
based on that, evaluating different ways that these types of technologies can
help. For example, if you have a casual user and the task is very repetitive,
like a customer support-type activity, where the questions are fairly generic,
commonly asked questions, can you look at automating those tasks? In this case,
we would look at automation-type functions.
On the other hand, if you have
an expert user doing a very deep, complex task, which is highly variable, such
as a contract negotiation, how can you then best help? How do you then use
these technologies to help that contract negotiator to amplify what they are
doing and get even better results for the business?
Depending
on the type of user, whether a casual or an expert user, and whether
it's a repetitive task or a highly variable unique customized task, we
can look at these types of technologies to enable in very different
ways.
Depending on the type of user,
whether they are casual or an expert user, and the type of task, whether it’s a
repetitive task or a highly variable unique customized task, we can look at
these types of technologies to enable in very different ways.
Gardner: Julie,
for organizations to prepare themselves to make that right call between what
machines can do well and what people do best at a strategic level requires a
digital transformation of the organization, the people, process and the
technology. Is there anything that you can offer from what you’ve seen in the Procurement
2025 vision that would help organizations get to a digital-first advantage?
Gerdeman: What
we have seen in doing the research is that it’s at three structural levels. First,
at the corporate procurement level, and addressing risk and security, and
thinking about the experience of satisfaction. And then, at the business unit
level, we’re seeing procurement get more embedded into the business unit, and
actually work more closely in a line of business, in a production or
manufacturing facility to be closer to the line of business, and that then helps
a transformation.
And then finally, at the shared services level, a lot of what Shivani was referring to, some of those more mundane
tasks being digitized. They become more arbiters of satisfaction to the end users
-- really to be overseeing the digitization rather than performing the task
themselves.
To
get on that journey at the corporate level, then the business unit, and
the line-of-business level, procurement gets more embedded.
To get on that journey at the corporate level, then the business unit, and then line-of-business level, procurement gets more embedded. Finally, shared services were viewed as things in the future as like complete lights-out facilities, which then would change the dynamic.
Gardner: It’s
interesting to me that this can be quite easily customized. You could be a
smaller organization, or a giant enterprise across different vertical
industries with different geographies. You can enter this transformation on your
own trajectory and begin to layer in more use of AI and automation. It can be
done at your own pace.
But one of the things we have seen
is the pace has been slower than we expected. Matt, from your organization’s
experience, what can increase the pace of adoption when it comes to digital
transformation, automation, and ultimately robots and AI and artificial intelligence
benefits?
Increase the speed of adoption
Volker: As an
organization we pride ourselves on being transformational. In our world, there are
9,000 people for whom we want to improve the living standards, and from that it
develops a strategy to say, “How do you go about doing that?” Well, it’s about
transformation.
So, through automation and
system solutions we intend to get there by December 31, 2019. It was referenced
earlier by Shivani that you move folks away from transactional to strategic
sourcing through categorizing your vendor community and allowing them to say, “Now
I can move away from requisitions and purchase orders to really searching
globally for partners that will allow us to accelerate our spend the right way,
both from a cost, service and quality perspective.”
Gardner: Shivani,
we have been looking at this in the future, but let’s just go short-term for a second.
In my experience with software development and moving from traditional software
to the cloud, it’s really important to demonstrate upfront the benefits that
would then accelerate adoption.
While we are still looking
several years out, what could be done around AI, machine learning, and data analysis
now that would become a catalyst to the adoption and the benefits in the future?
The value-add bucket list
Govil: We are
seeing the values of these technologies manifest in many different ways. I
actually largely put them into four buckets. The first one is really around
driving deeper engagement and user adoption. So, if you imagine having these
types of conversational interactions, intelligent assistants that really drive
the engagement and adoption by the end user of using the systems, that then
means bringing more spend under your management, getting the better outcomes for
the business that you are trying to deliver. So that’s number one.
If
you imagine having these types of conversational interactions,
intelligent assistants that really drive the engagement and adoption by
end users, that then means bringing more spend under your management.
I talked about the sourcing,
contract negotiations, you can think about it in terms of ethical sourcing, too,
and how to you find the right types of suppliers that are ethically appropriate
for your business. So, that’s the second one, it’s around unlocking the data
and discovering hidden patterns and insights.
The third one is around
driving retention of talent and knowledge. A lot of companies are facing an ageing
workforce where people are beginning to retire, and you don’t want the
knowledge that they have to go with them; you want to retain that in your
business and your applications.
These types of technologies
enable that to happen. Also, being data-driven allows you to track new talent
because everyone wants to work with the latest and greatest technologies, and
so this becomes a way for new talent to get attracted to your business.
And the fourth, and the most
important, is around driving better business outcomes. This can be in the form
of efficiency, it can be in the form of automating repetitive tasks, or it can
be in the form of driving increased accuracy. Together these all allow you to
create strategic value for procurement as a function and become a value creator
for the business.
Gardner: Julie,
you had some other thoughts on accelerating adoption?
Support at the top
Gerdeman: Because
so much of what we are about is amazing technology, it can only be successful
through effective change management at the organization level. So, it’s in that
process and the people side that if you embrace the technology, that’s fabulous.
But structuring the organization and supporting and enabling folks -- whether
they are users, category managers, sourcing managers -- to then adapt to the
change and lead through that change -- and gain the support at the highest levels
– that’s what we have seen be really effective in driving successful digital
transformation. It’s through that high level of change management.
Gardner: We’ve
often seen patterns where it takes longer for change to happen than we thought,
but the impact is even greater than we anticipated.
So, looking out several years
for an understanding of what that greater impact might be, my final question to
you all is, what’s it going to be like in 10 years? What will astonish us in 10
years?
Outstanding People and processes
Volker: In
our world of produce, it’s about the investment. As land and resources become
more scarce, we need to be much more productive from the standpoint of being
able to deliver a highly perishable mix of products with speed to market. Part
of the solution is automation, AI, and digitizing processes, because it’s going
to allow us the opportunity to consistently reinvent ourselves, just like any
other organization. This will allow us to maintain our competitive advantage in
the marketplace.
We are extremely well-suited
to pull the consumer and customer along with us in an emerging economy where
speed to market and flexibility are mandatory.
Organizations will look completely different, and people in them will be data scientists and strategic consultants.
Gardner: A
workforce of force multipliers, right?
Gerdeman:
Absolutely.
Gardner:
Shivani, same question, what’s going to astound us 10 years out?
Govil: I agree
with Julie on the people’s side of it. I also think that the technologies are
going to enable new things to happen in ways that we can’t even imagine today. If
you begin thinking about we talked a lot about -- AI and machine learning, blockchain
and the possibilities that opens, you think about 3D printing, drones -- you
can imagine sometime in the near future rather than sourcing parts and materials,
you might be sourcing designs and then printing them locally. You might have a
drone that’s delivering goods from a local 3D printer to your facility in an as-needed
manner, with no advanced ordering required.
I think that it’s just going
to be amazing to see where this combination of technology and skills will take
the procurement function.
Listen
to the podcast. Find
it on iTunes.
Get the mobile app. Read a full transcript or download
a copy. Sponsor. SAP Ariba.
You may also be interested in:
- Bridging the educational divide - How business networks level the playing field for those most in need
- Diversity spend: When doing good leads to doing well
- SAP Ariba and MercadoLibre to consumerize business commerce in Latin America
- How a large Missouri medical center developed an agile healthcare infrastructure security strategy
- How The Open Group Healthcare Forum and Health Enterprise Reference Architecture cures Process and IT ills
- How a Florida school district tames the wild west of education security at scale and on budget
- How SAP Ariba became a first-mover as Blockchain comes to B2B procurement
- Awesome Procurement —Survey shows how business networks fuel innovation and business transformation
- Seven secrets to highly effective procurement: How business networks fuel innovation and transformation
- Pay-As-You-Go Models for Acquiring IT Provide Multiple Cost and Operations Advantages for Northrop Grumman
No comments:
Post a Comment