Technovations in Procurement

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Technovations in Procurement

A recent Kearney study highlighted that while helping businesses gain a competitive advantage by tapping into the value of their supply chains, procurement has become more sophisticated. Over time, the function’s role has been elevated from transactional management to strategic sourcing. Surviving in the digital reality will require procurement to move beyond bottom-line efficiency by embracing digital and transforming the supply chain to become a valuable strategic business partner. Our panel discussion on ‘Digitization & Automation in Procurement’ echoed the same sentiments by focusing on the various pieces of digitization and digitalization and their effective implementation, which is both cost-effective, fast, and brings in resilience across the Value Chain. Excerpts… 

Saurabh Palsania

Saurabh Palsania, Executive Director, Dalmia Cement (Bharat) Ltd.- "Supplier on-boarding process must be able to facilitate companies to investigate the compliances of vendors, their risk management, extending existing suppliers, better data quality, self-service capability in the system as well as transparency & speed."

What do you have to say about technology helping in evaluating and onboarding suppliers? How do you use technology to evaluate on onboard suppliers? Do you practice an e-bidding process? How do you do it and how successful has e-bidding been in your organization?

Digitization is now as essential as a mobile, which has replaced landline phone. Whenever we talk about suppliers, we should have a visibility of partners we are working with and whom we can further get on-boarded. Supplier on-boarding process must be able to facilitate companies to investigate the compliances of vendors, their risk management, extending existing suppliers, better data quality, self-service capability in the system as well as transparency & speed. In short, supplier on-boarding is the first software that one should start with when they think of digitization of procurement.

Apart from that, there are two more things that has helped us, first we got an e-auction platform and have been using for the last 3-4 years. The biggest advantage that comes out is speed and second is discovery of price. In this economic scenario and the volatile times today, we need to get into healthier activities to bring new suppliers to our vendor base and parallelly we need to explore new and cheaper metallurgy which can replace the existing ones; hence, we need to put our workforce more on those activities which can bring further value addition to the organization. We can take out 3-4 people from the team and could create a procurement excellence group, post putting all these things to auctions to save lot of time of the team. We could make them free from those activities and put them on these healthier activities, which can add greater value to the organization. We are operating at a level of almost 55 – 60% of total procurement through auctions in a company like ours, which has got cement units at 14 locations. Auction has given more value in terms of services contracts as well as the raw material procurement because you do not know what is the exact price that a service provider can offer us. As in today's scenario, people are building up not less than 50 – 100% on the cost of the services in many cases and e-auction has given us a big leap into their pocket and we could get very attractive and competitive prices through auctions. 

With so much of data, how is data analytics being leveraged for better management and different tools you have would look at data in different manner, so how is the data standardization process happening in your companies?

This is a big challenge being faced by many organizations. The problem is that there is a lot of data into the system. You need the right data to analyse to ensure that right information has come to you at right time to take the right actions there on. We have created a data lake into the system and through the data lake, we can collect the data of different requirements and sometimes different functions. Through the data lake, we are trying to get the reports being prepared and categorizing those reports, which is required by the top management, middle management, and execution team. Creation of data lake is helping us to take out the right data for the right function and right level. One more step, we are trying to do now is to set up the frequency of reports to look at, but sometimes we are not able to look into those reports or maybe that important issue is not being highlighted at the right time and at the right place. For that, we are trying to create a pipeline where various analysis happens through AI & ML also. The data is being popped up on the screen of the right person at the right time to take the right steps. For instance, if there are certain stocks, which are required to be maintained at plant level, popping up of such information on the screen of the person who has to take care of those material, that this stock has gone below the reorder level, the rates of particular material are shooting up, if you have to order aluminium or nickel or any other material where the prices are going high, maybe oil or granules, it is being highlighted in the morning hours at around 10.00am that these are the price list of various items. This is the way we are trying to set up certain information – first is data lake, then certain reports for different levels and then for the pop-ups, which require immediate attention.

What we have done in our organization is that the low value items or where repetitive POs are there, it hardly makes a difference whether we negotiate, or we buy it through a catalogue buying system because value may be 5% of the total procurement spent but the number of POs may be almost 30-35% of the total POs. We have put all those items on auto indents and also we have taken a platform like Amazon where all such items, which are of non-industrial use, we are buying it through that platform that is as good as a catalogue buying and we have observed that there is hardly any impact on the spent while the team on other hand is able to put more time on high value items and thus can save more.

What kind of start-ups do you see in this space, how do you differentiate and are there many me-too’s in the space?

The biggest concern to my mind, has been that, while they offer an incredible solution, its integration with my existing processes has been a challenge. Apart from that, we were not able to come out of our existing system 100%, so there was certain duplicity of both the systems running parallelly and maybe that 100% attention was not there, but as far as the auction platform is concerned, what I could see that even if it is not so much integrated, still it was delivering. These new start-ups must somehow develop APIs to integrate it with the existing systems of the customers and I think then it will give a very fruitful result, which will be online also and very much acceptable also, right from the bottom to top line. The way oil prices are going up, how they can help us in providing solution for replacements. For example, it may be a product, which is made from steel, but you can use it in other materials also, which can be cheaper. Certain materials are mined materials and we are looking for a waste from an industry, which also gives the same specifications and can replace the mine material that will help conserving these resources also and will help us in utilization of making the earth green as well. This is where we are looking for start-ups to work for us.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

I'll require people who are good visionaries and have good networking skills, so more time will be devoted by them on-ground. Apart from data analytics, they will have to move out and explore what is happening around the world to find out new technologies, to meet people, and set up a target to work for future because current work will be taken care of by digitization. What is required to be done in next three years, aligning the goals with the company's goals, what they are looking for, how they are expanding and ultimately, they have to be more futuristic and set targets based on the company's goal; and third is having good data analytics skill and presentation skills.

Can you share a case study?

We have implemented from PR to PO and an auction platform. Now we are trying to integrate PO to payment like the downstream part where post PO, dispatch readiness at the suppliers’ end dispatch from the supplier’ end, and then receipt at our end. We have been processing waste from any industry in our kilns and as on date, we are collecting good quantity of waste per month from pharma companies, FMCG companies, municipal corporations, fertilizer companies, automobile companies and it is being transported to our units. All customers of ours are not having storage capacities to store the waste that they are generating every day, so material has to be brought to our plants in time. We are looking to integrate the system in such a way that the waste generator and our plant team can know each other’s requirement and cater to it in time. We are already having one of the start-ups working with us for the outbound part, that is cement dispatches, now we want to integrate it with the suppliers’ end as well so that we can know the visibility of collection of material to disposal at our end and disposing it off in an environment friendly manner. 

Jaswinder Saini, Head – Procurement, Tata Play- "Going forward, we need more data analytics in procurement team."

A plethora of digital technology solutions are available today. Cost is a very big factor while evaluating technologies, so how does a procurement head decide on the best fit technology?

I think that when any organization is starting the journey of digitization, it must start with the problem statement. Every organization should check what is the problem that they are trying to address through this digital journey that they are embarking on. Second important element is, it must be aligned to the company's goal, and it must sync with expectations of management. As, each organization has its own set of challenges, and their own ways of working, it can’t be a one-size-fits-all approach. For instance, whether you are a manufacturing organization or a service organization or are into product distribution and selling, all these segments will have different challenges, into their requirements.

Similarly, whether you are a start-up or MSME or a large conglomerate, each one will need different solutions, it will also depend on which sector you are working in like automobile, telecom, pharma, retail, IT each segment or each sector has got its own challenges and today when we go to market, there is plethora of tools available. There are enormous numbers of companies offering solutions and they are offering their services in multiple shapes, sizes and formats, so based on what is your problem statement is and what solution your company looking at, should be the deciding factor and based on the problem statement, what is it that you want to achieve, then you can select your tool whether you want to pick the full P2P suite, whether you want to go for some particular segment of the whole suite, is it the on-boarding process or an e-bidding tool or an invoicing tool or vendor entitlement that you are looking at. Also, you should be cautious about the cost, and you need to be sure that whatever you are choosing, should give you the returns on the investment properly. I think that's the way to look at it. 

What do you have to say about technology helping in evaluating and onboarding suppliers? How do you use technology to evaluate and onboard suppliers? Do you practice an e-bidding process? How do you do it and how successful has e-bidding been in your organization?

I will touch upon vendor onboarding as well. We have on-boarded full P2P suite and vendor onboarding is part of our full P2P suite. As far as onboarding for suppliers is concerned, anybody can go to our website and register to be a potential partner for us, and all the information comes to us through the online tools. We do 170 checks on the partner before we start working with them and all these checks are performed in less than two days’ time. This was not possible without putting proper technology in place, so we have got bots and search engines, many web scrapping tools, which are working behind the scenes, pulling out entire information about the partner from various platforms available across the Internet. That is one on the vendor onboarding part. We have a well-defined process for entire procurement and as per that, anything above Rs Two Lakh worth of procurement, which doesn’t fall under the regulatory, statutory, rental, and proprietary category, and needs to be negotiated, has to mandatorily go through e-bidding process. We adhere to this policy to the ‘T’ and we run roughly around eight to ten e-biddings daily and I feel that this has been very successful for us because it has brought in four important success elements to the whole process of procurement. These include:

  • It delivers huge savings. Some time, it surprises even me that if I would have done this, I could have closed it at much higher price because at times, it is your limited visibility to the world, which you may miss during the manual negotiation.
  • It is super quick. I can configure e-bidding within one hour and you are on to the results in a couple of hours. If you must go through a manual route of negotiation, the same negotiation can take between four five to six days because you have been waiting for partners to revert on it.
  • It is a very transparent process. When we do a e-bidding, there is no grudge from the partner because while they are on e-bidding, they are clear that what level they are whether they are winning or losing, so there is absolute transparency when the e-bidding is happening. That brings lot of satisfaction on the partner side.
  • It is very unbiased. Whenever a manual negotiation happens, there is always an element of bias of buyer or the person who is negotiating, so those bias goes away when you are on the e-bidding platform. 

A big issue, suppliers are experiencing today is that technical issues are ambiguous and evaluation criteria seems to be doubtful. What’s your take on this?

As a partner, the amount of fear that you have in your mind related to technical specification, let me assure you, as a partner and a procurement professional, we are equally scared of unclear technical specification. Whenever we run e-bidding, on the back end, we always go to user teams, saying that technical specification must be clear because unclear technical specification will end up making our entire process futile, either we need to run e-bidding again if specification change or we are in threat of ending up paying much higher than the anticipated price. So, as a procurement team, we are on the side of partners. We always try to get as clear specification as we can, but there are cases where, as an organization, we are not clear what are we looking at. In those cases, we go ahead with some partial technical specifications, or we add specifications at the later stages. For a large organization, which has huge procurement spends, even they would not like to have ambiguity in their entire process because every sourcing, every requirement that they have for partners, is equally an expensive process.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

Going forward, we need more data analytics in procurement team. I see that most of the things will get automated and people sitting on this side of the table, must actually read through more and more data and data is such a thing that numbers may say something, but underlying information or underlying message could be different under the data, so I think we need more and more people who can understand and get meaningful insights from the data. Second is that we need people who can train AIs. Future is going more and more towards AI, we have already implemented AI in procurement for Tata Play and we need people who can actually train these AIs because in the initial phases, they need to be trained as more and more AIs will be implemented, it needs to be trained more and more, so we need people who can actually understand data and train AI, that's the future trend for, at least, next seven to ten years.

What do you think could be a very futuristic procurement technology?

Two things that are going to happen in very near future – one is the consolidation of the tail spend that is bound to happen in very near future. More and more companies and more and more organizations are moving to catalogue buying including us as well. This is going to be the norm of the industry that all the tail spend will move to catalogues and these catalogues will be AI enabled. I see that tail spend and the core spend will be differentiated going forward. Core spend will continue to be managed by procurement people directly because it is the lifeline of the business, it will continue to be there. The tail spend, which is actually contributing more than 30 – 35% of the POs that we issue year on year, will go to the automation tool, which will be a catalogue buying wherein you just type in your requirement, where do you need it, when do you need it, how much do you need it and it will throw back that this is the partner, this is the price, this is the place and this is the time when it can be delivered to you if we are okay, just say yes and it will be done. That is what is going to happen, and this is not very far away from now, this is a matter of couple of more years and that is what I envisage as of now. 

Kindly share a case study

We have implemented full P2P suite in our organization, which has been a very great success for Tata Play. It starts from vendor on-boarding and ends up to the payment. The full procurement suite has been implemented and delivered a lot of advantage to us. I will cite five top advantages and there is a long tail of advantages…

  • Our internal stakeholders were very happy after implementing this tool because our overall lead time to issue purchase orders and in completing the entire process has been shrunk to one fifth.
  • It saved huge amount of time from my procurement team because this is a seamless process.
  • It is end-to-end seamless process. It brings huge amount of efficiencies in the whole ecosystem.
  • It's a very transparent process, so my user teams were very happy because they don't have to hunt out where the process is currently stuck at. From all the perspective – internal stakeholders or vendors, it is transparent because everyone in the system knows where the registration process is, e-bidding also happens on the same tool, so they are fully aware what is happening to the negotiation, payment update is also there on the same portal, purchase order is also issued to the partner on the same portal, so on & so forth.
  • It throws huge amount of analysis and huge number of reports to us, which enables us to improve further. 

Tannistha Ganguly, Global Delivery Lead – Procurement IT Delivery, Kimberly-Clark- "It is not always necessary that you need to have a fancy tool, it can be a simple automation without having a fancy expensive RPA license or AI/ML being implemented, it can be a simple excel automation as well. It’s all about striking the right equilibrium." 

What are the AI and ML opportunities in procurement?

There are many opportunities that we have for advanced technologies today, where we can use AI ML or automation in procurement. If I just break down certain areas, for example, spend analysis – people who are from procurement, they will agree with me when I say that spend analysis is one of the key areas where everyone at least, in my experience so far, we have struggled. Spend analysis is one area where AI & ML is useful. Then you have price forecasting, it is spent budget forecasting for you, then supplier performance management, supply risk management assisted search sourcing. If you break down the end-to-end S2P process, everywhere, whether it's sourcing or contracting or P2P area, there are enough opportunities to utilize the AI ML automation. Supplier relationship management when you want to have a data driven conversation with your suppliers and how do you get meaningful information out of the vast data that you collect from your suppliers, these are some key examples where AI ML today facilitates or enables the business to have more meaningful conversation with your suppliers.

What kind of technologies are being used in supplier management and how is it playing a role in managing it end to end?

Supplier management is a big umbrella and if I have to say how technology is being used in supplier management today under the umbrella, there are many buckets and in each bucket, you will find technology being used, whether it is out of the box or whether it is advanced technologies – right from supplier onboarding to supply risk management to supplier performance measurement, the entire life cycle of a supplier once you onboard a vendor, it is today going through some tool or the other. Chances are it's going through multiple tools and talks in between to multiple tools and the need of the hour is that this data goes through each of the systems smoothly, that's where technology plays a big impact. Supplier data itself is vast. When you talk to any procurement professional, there are so many criteria that comes with the suppliers right from the onboarding phase to the entire life cycle, where you are regularly having your performance measurement conversations with your suppliers, the quality checks that you are doing, all that data is taken and it's not enough just to take data, you also must have meaningful insights out of it. For example, you create reports of let's say, On Time In Full (OTIF) or your quality checks reports, this is where the advanced technologies or even our standard out of the box software play a very important role in bringing out that insight from the data that you collect, When your teams talk to the procurement professionals and when they go and have their regular meetings or reviews with their suppliers, they need the entire performance of how the supplier has been performing year on year or month on month.

The other area where technology plays a significant role in bringing out these reports or insights from the data is for the leadership team where they can see where the inefficiencies are lying. For instance, we're talking about a KPI for the suppliers On Time In Full, that is a very key KPI for suppliers. Now when you analyse, you look at your key suppliers and their OTIF scores and then you go into the details like why is the score of your key supplier so low and out of all the times that it has not met the OTIF, how many times was it something triggered by the supplier themselves that they wanted to delay the date of delivery of a material or was it from our side where we didn’t want it on X date, we wanted it on Y date. Such analysis is needed even at our own level before we go and talk to our suppliers.

Another example that happens during on-boarding time. When you are on-boarding, you want to perform background checks of your supplier, their financial condition, if they are not financially viable, are they going to be financially viable in the next one year or two years, their reputation in the market especially when in some critical industries where you are looking for sustainable sourcing, all this data need to be gathered and processed. It is impossible to manually do this gathering of information and then processing and bringing out insight. I think these are the key areas where technologies are really going to be a shot in the arm, be a help for businesses and for the teams.

What are the challenges, which come up when you are implementing such a technology, when you are trying to automate some manual processes, what kind of change management is required?

Our own teams get more excited even if it's a simple solution that we put in, but it is really impacting their lives, their day-to-day work. For example, we have also implemented RPA in our company, which is a simple solution, but it really eases the life of the requisitioner and here is where I will link it to your question, what are the challenges that in terms of change management we find when we try to do automation. The first is to get the user buy-in, people will come, different teams, different team members will come with a lot of automation requirements. But they would also come to us with requests to implement new solutions because they would have heard from the market, from our vendor partners that this tool is so cool, this tool does this activity, with very spectacular user friendly UIs, all that and they would come to us directly with a request to implement this for them without telling us or forgetting themselves what is the problem that they're trying to solve. What we normally do is go through this entire process of understanding what are their pain points are and which technology would be the best to fit in and solve their problem. It is not always necessary that you need to have a fancy tool, it can be a simple automation without having a fancy expensive RPA license or AI/ML being implemented, it can be a simple excel automation as well. Getting the expectations set on automation is one thing. The second thing is there is always somewhere in the back of the mind of many people that automation, at a large scale, somewhere down the line, will impact my job, but for us, it's an effort that we make where we play out the scope of the software or the automation that we are doing. I think that is one of the key aspects that, as leaders or as from IT department, what we need to do is clearly write out the scope of how much a software can do for you and how much guidance is needed from the team members, so that balance needs to be clearly mentioned. Otherwise, the acceptance of tools may or may not be 100%. You can put in a fancy tool, but you have only 10-20% usage. These are the aspects where a lot of focus needs to go right at the beginning when you define the scope, and the expectations are set correct.

What kind of start-ups do you see in this space, how do you differentiate and are there many me-too’s in the space?

I have looked into a lot of start-ups who have pitched for their products. Today if you look at the market, there are very specific solutions that the start-ups are providing across all sectors but even in procurement, they come with very specific solutions. There are start-ups who will do only spend analysis or price forecasting. Since the last decade, the start-ups have filled up a huge void, which is targeting specific problems because earlier we used to have an ERP system or an SAP or some procurement specific processes like Ariba, Coupa etc. While all these are good and they are there from an end-to-end procurement process, but many times, these start-ups come up with very key solutions that can help you to get more value of your investment. It solves your problem without incurring a huge investment with even a shorter implementation cycle. This is where I think start-ups play a big role. As far as challenges are concerned, it's upon us when we are evaluating a product whether it is a start-up or whether it is an established vendor. You must look at aspects like who are the founders, what is the experience they are bringing in, who are the SMEs, what is the thought process that's going behind that start-up and especially when you are working with the start-up, you also must be mindful, how financially viable they are going to be in the next 3-5 years. Sometimes the brain behind the start-ups are actual industry experts who would have extensive years of industry experience, so the quality of start-up depends a lot on the founders also. You can look at it as a two-sided sword, it can be a USP and a risk as well.

Give us one example of a successful implementation?

In our company, we did realize that tail spend is, although a very small percentage of the total spend, taking up a huge amount of effort, number of hours percentage-wise. We connected with a start-up and what they promised us is they would take care of this entire process for all our PRs that we raise for a particular category of spend. The tool that we have from the start-up, integrates with our ERP system, and based on the defined criteria, the PRs which will be raised under a certain value, etc., those PRs will be picked up. The tool has its own network and its own AI ML algorithms, through which it will bring out the best bid to be delivered for us. It will select the best fit for that PR, it will connect back to our system, and it will help to create the PO and from there, rest of the process is automated again back in our system. We've done this just last year and we do look at not only a cost saving in terms of the values, but also a lot of man hours are being saved from our team perspective as well. 

Derek Lee, VP – Pharma & Healthcare APAC, JAS Worldwide - "Digitization really solves not just a procurement problem, but also a traceability and compliance problem. By digitizing, we have a single source of the truth, and we have that ability to trace the steps and that, for a lot of organizations, is the key for digitization."

A plethora of digital technology solutions are available today. Cost is a very big factor while evaluating technologies, so how does a procurement head decide on the best fit technology?

From the procurement head’s perspective on technology, we are really looking at Value for Money. We want to find out if I can get the most value from the solution, which we are implementing and that offers me a total cost of ownership. For sure, I am not looking at a cheap software, we look for a software, which is simple to use, which may not have the full functionality but it's good enough that can aid my teams in efficient functioning and ultimately, we achieve cost savings, efficiency enhancement as a by-product. Through the digital solutions, my team should start placing orders quickly enough, they should not need to be working until midnight every night. For me, that is what I call value for money. Naturally it also depends on the size of the business, but the most important part of it is just to make sure that what you get, can scale from a smaller to a larger business or in fact from a larger business, sometimes you look at the ability for it to shrink to a smaller business because of the M&As, that you may actually spin off a department, you may actually sell it out, you may do different things, you may want to manage it in different markets. So, we want extra flexibility and efficiency, to decide on the solution. Ultimately three defining factors for me are Cost Efficiency, Savings, and Scalability while evaluating any technology solution.

How does digitalization create value in procurement?

Digitization really solves not just a procurement problem, but also a traceability and compliance problem. By digitizing, we have a single source of the truth, and we have that ability to trace the steps and that for a lot of organizations is the key for digitization. Besides, we also enhance our knowledge because the information is available in one single system. We can have that information shared to different departments across the globe and of course, we can start doing comparisons side by side in a much easier way. All of that used to happen on paper earlier, through the right deployment of technology, we have the vision about it but between that kind of comparisons, global knowledge basis and really being able to communicate as a team internally and of course to extend it out to supplier networks that's where the digitization fits in. If I extend that to an overall supply chain network and digitization, the extended benefit is the ability to get supplier pools where you can have people joining into a network and you can start sourcing for suppliers. There are tons of these supplier portals available where the ability to start price comparisons, quality comparisons, getting feedback, all that as a holistic procurement ecosystem is what makes the digitization very powerful. To summarize, you've got an internal inward facing compliance and then you've got a company to the world, which is bringing everyone to the same ecosystem.

A big issue, suppliers are experiencing today is that technical issues are ambiguous and evaluation criteria seems to be doubtful. What’s your take on this?

I think technical specifications are quite often written with something in mind, for example, I want to build a warehouse and I want four walls. I want a white colour paint, but there are some things, which I am unaware of. For example, will my requirements comply to the regulations? Do I need to do something, which is in addition to the basics to meet mandatory requirements? In such scenario, the expectation is that supplier would know all these things. Supplier, in this context, has two functions – one is to supply the product or service and other is to act as a subject matter expert to provide intelligence and knowledge about the conditions or how we meet regulations. We expect that suppliers communicate and over communicate with us to ensure that we know what we're buying, we know what you're offering and then there's any doubts, we can have those conversations. I think we always need to have a balance in certain projects like these it's also usually often high value and this is also the best opportunity for e-bidding and when you have e-bidding with not very clear technical requirements, that's a recipe for disaster. In a sense that the supplier has one thing, the client has a different vision completely and when the contract is awarded, the SOW is so brief that no one understands what they are going to get because you're going to have 10 different parties for writing different documents who are not really communicating as well. If you ask me for evaluation criteria, I should be able to at least give you the high level evaluation criteria. I'm not going to tell you that I will give you three points for this activity, but I can tell you that 70% is price, 30% is quality or 30% is price, 30% is expertise, 40% is ESG for example and that's where I think the communication is really required between all the parties especially when you don't even understand the technical specifications.

With so much of data, how is data analytics being leveraged for better management? Since different tools would look at data in different manner, how is the data standardization process happening in companies?

We are trying to get a standardized taxonomy that we can use to talk across the globe with multiple entities, so first we actually use the USNSPC code, and we align all our taxonomies to the USNSPC. With that, all our reporting is based on that code and as an extension, we do have sub-categories, which extend the USNSPC code to get level of details. For us, transportation is a big one, so we end up breaking down into two-ton truck, four-ton trucks, outside of just local land transportation but I think from an analytics perspective, we're trying to get reporting reorder points. Besides, we are going one step further and looking at what analytics and reports can do for us. Are they predictive and are they actionable? We are trying to get to a point where the analytics provides us with something where we can action in time, and we are also trying to look at pulling in external data market information to give that prediction. To give an example, if I know that like last year, there was the evergreen vessel, which was stuck and blocking the Suez Canal and after one day, they should predict that my supply chain will be at risk, should I reorder more now before prices go even further or should I wait and pray for the best. I think that's where we're trying to get to from just analytics or post activity reporting into actionable analytics so that I get information far ahead enough and of course, going the next step is predictive analytics where we can get predictions of what to do and let that AI machine learning make a recommendation. Right now, the recommendations are done by ourselves based on that information, which we get, and I think a lot of it becomes the experience of the person, experience of the team and what we're trying to get away from this is trying to ‘bring back the brain’, bring that knowledge of the people into a system, which can make predictions and start learning & gaining systemic experience.

How can you automate manual repetitive tasks, and if you could come up with some examples there ?

The sexy one in the room is always saying that we use RPA (robotic process automation) to systematically manage invoices and so on. In my previous role, we had an RPA system, which was reading invoices and doing GL posting. That was actually a very efficient way of managing the task, but I think where we also saw a lot of value and a lot of buy-in from staff, from just a standard Microsoft form, which they could key-in themselves and which would populate into a system and generate POs and the POs of up to a certain value on a certain category would automatically be approved to give detail of for example stationary orders under $25 were automatically approved, so that actually got more interest from the teams and more happiness and internal engagement compared to doing RPA, which was extremely efficient, really sexy but that only got the buy-in from the suppliers and who got paid faster and the finance team who didn't have to work as long. The rest of the organization, which is 80% of the organization, didn't feel anything. So, I think when we talk about implementing these, we need to balance the visibility, how do we make life easier for a bigger audience, at the same time, we need to work on efficiency, which is the sexy stuff like RPA and so on to make things more efficient.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

I echo these sentiments completely – the AI knowledge, the ability to ‘bring back the brain’, transfer their knowledge to a machine, is actually very important, so they have to be comfortable, I expect all of them to be professionals to start with but they also have to be willing to share that knowledge to a machine without the fear of losing their jobs, but I think along the way, with a procurement manager outside of technology, they also need to be able to motivate their staff to use technology, there is a large community of middle, senior age procurement buyers and so on, which have a fear of technology and as a middle level procurement manager, I would also want someone to be able to bring the whole team of people and have the ability to enhance technology to a large range of users, to a certain extent, the procurement manager is also a salesperson for the function and for the technologies implemented by the function. So, the people's skills in addition to the technical skills are equally important compared to just having a technically sound person.

Can you share with us a case study?

We did catalogue implementation a few years back and we did a very much simpler version of it, but we did two parts of it. We had one part, which is a punch-out catalogue, which was for tail end spend, low value spent and that really punched out to only one agreed supplier where we negotiated a X percent of their catalogue rates. So, the upside for that was they had access to the full catalogue. Instead of everyone going to procurement team to do a transaction, they could do a self-service model and you could go in look at their own catalogue like their Flipkart catalogue and just buy what they want and if it's within their department budget, they'll be approved. This made whole process easier and the objective of that was really to enhance user experience.

The second part of the catalogue implementation, was for contracted spend where we have repeated POs and being purchased by different departments in different countries, so again instead of various buyers coming to the procurement team and coming to my team asking to help raise PO for 100 units of a particular item, we actually put all that on the catalogue negotiated prices and suddenly I had a team which is much more free and a lot of the users who are self-service, what we've actually found quite interesting is that, well I need a full-time buyer to manage all the requests when I spread that role out to 20 over different departments and who split up to say two persons per department for them to raise that one extra PO or they require their PR, it's really probably only taking them three minutes or something. So, the actual activity was split out and we had our procurement team being more focused on negotiation. Supplier management is working purely on the escalations, prioritization and so on, so that whole implementation of a two section of a catalogue was actually really valuable and I think the benefits it brought was so much more than we actually expected. 

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