AI that can uncover value through spend analysis, blockchain-based supply chain financing, and chatbots answering procurement queries... with technology like this at our fingertips, it’s an exciting time to be in procurement.
We recently wrote about some of the macro trends transforming procurement this year; namely an accelerating move towards green procurement, the rise of Agile work methodologies in procurement teams, and the inexorable demand for supply-chain transparency.
But what about technology trends? If you follow the industry news, you’ll know that every week there are dozens of technology providers announcing “game-changing” solutions that promise to transform the profession. Only a rare few technologies get adopted at such a scale that they become industry-standard.
Let’s look at three technology trends in procurement that are emerging (or accelerating) in 2020.
AI in procurement
Sievo’s jazzy little book titled AI in Procurement gives an excellent snapshot of where AI in procurement is now, and where it’s headed in the future. For now, write the authors, AI can support supplier risk management, purchasing, payments, spend analysis, supplier information management, strategic sourcing, and contract management.
In the future of procurement AI, we’ll see an increase in automated tasks, the capture of key data from outside the organization, and decision support. The “end game”, says Sievo, is total process automation, automated value creation, full spend transparency, and agile supplier ecosystems.
With the technology in its infancy, Sievo’s recommendation is to first concentrate on cleaning up your AI-enabling data, and secondly to put AI to work (initially, at least) on repetitive, predictable tasks such as spend analysis or supplier information management. As it matures through machine learning, we’ll see AI’s true value in cool applications like predictive analytics or even negotiating robots.
Blockchain-based supply chain financing
Trillions of dollars are lent daily by U.S. banks to finance trade transactions in global supply chains. Suppliers need working capital to pay their own suppliers or buy materials while they wait for their customers to pay them (often with very extended payment terms). Having access to supply chain financing is therefore crucial but factoring, which involves selling your debt to a bank, isn’t available to everyone.
Recently, fintech providers have begun offering blockchain supply chain financing that enhances trust, security, speed, and control in financial transactions. As with all blockchain-based tech, transactions are highly transparent and easily authenticated while reducing paper-intensive processes and limiting the possibility of fraud.
Chatbots in Procurement
A significant chunk of most procurement professionals’ time is spent answering the queries of business stakeholders. For many, this is just seen as part of the job because procurement is traditionally a “service function”.
But what if we had an Alexa or Siri to answer our stakeholders’ queries and guide them through the buying process? This would free up the time of professionals to focus on more strategic, value-adding tasks such as driving innovation.
With chatbots now widely used in personal finance, customer service, and in the home, isn’t it time we embraced voice-first technology in procurement? Voice-activated technology is accelerating, with Gartner predicting that 30% of web browsing sessions will be done without a screen by the end of 2020.
Procurement digitalist Bertrand Maltaverne predicts that procurement chatbots will be used for two main applications:
- Guided buying: chatbots deployed as a procurement assistant to handle the demands of the rest of the business; and
- Operational support: chatbots acting as an “AI colleague” and the single point of contact for questions about purchase orders, invoices, or any of the countless procurement-related queries that we have to unearth the answers for every day.
Chatbots will be omnichannel (accessible from anywhere), will reduce the burden on stakeholders to learn how to operate procurement software, will drive efficiency, and improve customer satisfaction.
What’s your prediction for the next big technology trend in procurement? The next time you attend an industry conference, take a stroll through the exhibitor hall and engage with some of the vendors present. You’re under no obligation to buy their product, but conversations like this provide an excellent opportunity to keep your pulse on the rapidly-changing technology landscape in procurement.