In the age of disruptive technologies, organizations must evolve beyond traditional
business operations, processes and frameworks. This is so that the new
technologies can be used to their fullest potential to deliver actionable
intelligence and accurate analysis for maximum business performance.
In order to fully step into digital procurement, an organization must rely on cognitive
procurement and the technology it leverages together to achieve a sound and
frictionless digitalization journey.
Cognitive procurement is the method which disruptive technologies are used to aid
the procurement function. It taps into machine learning to process data in order to
enhance sourcing activities. AI and smart technologies are also utilized to analyze
data and enhance spending visibility. But cognitive procurement goes beyond just
technology. It is also the combination of multiple business functions to form an
ecosystem that produces synergies, such as agile analytics, data fusion and
actionable intelligence.
Social development is the next step following cognitive procurement. The
organization develops full cross-functional teams and focuses on supplier
development. Using the performance data obtained to differentiate between vendors
and suppliers, digital procurement creates opportunities to refine and shortlist
vendors for selection into key suppliers.
Businesses must actively pursue digitalization in order to benefit from cost
management, improved data, actionable analytics and other new benefits.
Businesses that do not embrace digitalization will rapidly find themselves lagging
behind their competition. This is especially true when it comes to optimization of
processes, reduction of overheads and costs and missing out on new business
opportunities due to a lack of timely information.
As a result, the frameworks provided by cognitive procurement can most effectively
integrate monitoring, reporting and data feedback so that management can obtain
visibility in the progress of the projects. The scalability of the master data technology
also allows the company ecosystem to integrate seamlessly, taking in data insights
from different functions to value-add the analytical results. Overall the path to
digitalization is now fully accountable to all functional leadership and can be adjusted
as required when the situation requires them.
Big data management is a growing trend as businesses are obtaining the capability
to obtain and process larger amounts of data. This capability allows companies
access to gather valuable insights that can be acted on to take advantage of new
opportunities.
In a cognitive procurement framework, this transforms the human task of analyzing
spend data into automated spend analytics that can lead into predictive analytics.
Procurement professionals can then quickly obtain forecast revenue, preventing
negative disruptions and identify new market opportunities. AI-enabled systems can
use machine-learning to identify normal patterns in order to clean and curate its own data. This allows the business to benefit from performance reporting without raising
overhead costs since the system is now self-managing. This also returns precious
bandwidth to procurement professional so they can fully concentrate on studying
how to best make strategic decisions with the information on hand.
Since technology is now used to spot missed cost savings potential, procurement
can now focus attention on making internal operations more efficient, accurate and
centralized. Time is also saved as professionals are leveraging insights rather than
generate reports due to real-time dashboard reporting mechanisms.
When an organization starts managing greater volumes of data, and they transition
to cloud storage and cloud-based applications, there will be growing concerns over
data security. In order to manage this, procurement-led cross-function teams must
convene to draft a cybersecurity strategy to safeguard sensitive information,
especially since a breach can affect the entire supply chain. The breach will also put
the company at risk of exposure to liabilities and damages. However, the
organization can still benefit from cloud storage and cloud computing as it eliminates
the need for localized server rooms and other hardware-based risk factors in the
face of man-made or natural disasters. These disasters can render an operational
location shut down and subsequent damage to IT equipment leading to catastrophic
losses of data.
Cloud systems also allows greater device integration that improves the mobility of
procurement professionals who still need access to real-time data and analytics.
Reducing the risk of losing access to data simply because the user leaves his desk.
With newly available smart technologies, overhead costs within the procurement
process itself can also be better managed. With automation and RPA technologies
freeing up the bandwidth, procurement professional become the value-creation core
of the organization. By allocating this resource into cross-functional teams, the
procurement function can start to collaborate internally, cross-training, network with
external partners to create new, innovative business models.
With access to real-time market data, procurement professionals can offer valuable
information for strategic decisions that affect the top-line as well. Cognitive
procurement technologies have fundamentally altered the role of traditionally bottom-
line procurement functions. Category management also becomes more sophisticated
when procurement is empowered to lead the business to explore opportunities.
When the organization completes their cognitive procurement projects and starts
forming cross-function teams, social development can begin as the cross function
team starts to engage with external parties. With supplier performance management
systems, backed by historical data, the team can prioritize key performance
indicators and receive results immediately that separate vendors from suppliers.
The cross-function team can then focus on forward-moving initiatives to strengthen
the partnership alliance, while keeping an eye out for new opportunities where
vendors can progress into becoming suppliers.
For businesses to thrive in the new digital reality, procurement functions have to
move beyond bottom-line efficiency by embracing cognitive to transform their role
and become the new core driving force of an organization. When combining bottom-
line cost efficiency and top-line growth, cognitive procurement technology becomes a
force multiplier that can capture new business models and ensure continued
organization success.
Article by Nick Lai Weixuan, Management Consultant & Trainer at OnlyVenture Consulting