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Algorithms have performed wonders for shopping around in the B2C space. From finding your next holiday destination to finding your dream home, sourcing what you need - when you need it - has never been easier or quicker.
This has always been somewhat of a painful comparison to the B2B world, where finding the right supplier for a product or a service at best price has always been more difficult. And this holds particularly true for spending money outside of producing your main offering, the categories known as indirect spend.
For too long, hiring, say, external specialist legal expert advice to meet a thorny problem in a specific geography, or applying additional performance marketing to a specific strand of your audience, has been a bespoke process each and every time, requiring a lot of hours and detailed sector knowledge. Getting the genuinely best deal, as well as predicting and tracking this spend adequately, is just too hard.
This difficulty around indirect spend has often been blindly waved-off. It can account for as much as 40% of total overhead yet rarely draws proper C-Suite attention, with outlay on things like marketing and real estate upkeep outlay being just accepted as ‘the cost of doing business’. This casualness has now somewhat disappeared as the realities of the current global economic downturn become more visible on a daily basis, and leaders are desperately looking to protect their bottom lines.
Cometh the hour, cometh the bot
AI is now rapidly changing all of that - quickly and efficiently scoping needs and matching companies with the suppliers that best meet the project requirements. The most innovative solutions allow users to compare project costs and timelines instantly across proposals, giving them a negotiation advantage. And all of this information can be sent electronically and seamlessly to the customer’s contracting and record keeping systems.
These new AI-advisors also keep totally up to date in a market by automatically analysing proposals and developing appropriate negotiation recommendations. And the more you source with the help of AI, the more the AI learns, and so feeds useful data and insights back to you exponentially. Businesses embracing this now make better-informed, merit-based decisions in a much more efficient way than the traditional, manual procurement processes.
The AI wave has begun with the early adopters
It’s already starting to happen. CPO of BT Group, Cyril Pourrat who is an early adopter of AI and uses autonomous sourcing platform Globality, achieving double digit savings, recently said – ‘“We want to fully leverage AI, machine learning and the digital ecosystem to position ourselves differently compared to other procurement companies,”
Another great example of a champion leading the way and embracing autonomous sourcing is Logitech’s Head of Global Indirect Procurement, David Latten. He said: “Logitech is quite an autonomous company and if people feel that our purchasing model hinders rather than helps them, they will bypass us and simply use whichever suppliers they want.
“So, the key for procurement is to provide a seamless, user-friendly experience which makes the business stakeholders’ lives easier and makes them want to work with us to find the best supplier for each project, ensuring that the list of providers they are offered includes diverse options. New technology is the way to make it easy to drive gender equality and at Logitech, our autonomous sourcing platform, delivers a consumer-like interface which our business stakeholders love.”
Leading businesses such as BT and Logitech are using AI-powered autonomous sourcing to discover new suppliers in real time in addition to their existing ones; effectively collaborate with colleagues and suppliers; and significantly reduce costs through increased competition, data-driven insights, and intelligent analysis.
What does it mean for the humans in procurement?
The reality is this. As automation becomes more prevalent in procurement to achieve the kinds of economies of scale and efficiency in indirect spend that we see in direct spend, companies may decide they no longer need large procurement teams focused on transactional work.
But that doesn’t mean mass layoffs. Procurement teams will actually improve their position within a business. As transactional tasks will be completed much quicker, they can swing their attention to leverage insights derived from the technology to aid the business as a whole. They will become business advisors and relationship managers, focusing instead on supplier collaboration, innovation, and R&D. And, as a result, they will get a much more prominent and valued seat at the table.
This will also start to elevate procurement as a whole to become the central accountable point for the whole enterprise. As custodians of the most impactful data a company generates, they will end up controlling an increasingly strategic lever that helps companies better manage costs while prioritising resources in fully data-driven ways in key areas.
AI-enabled autonomous sourcing is a powerful breakthrough that at last helps companies drive maximum value from every pound they spend , and indeed, from the people who currently oversee it. Jump on board or be left behind.
The author is Chief Customer Officer at Globality, the autonomous sourcing platform used by leading global companies to manage their company spend .