Google’s radical decentralised procurement model unveiled at ProcureCon Indirect

Date Posted: 03/04/2019 Category:
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Google’s radical decentralised procurement model unveiled at ProcureCon Indirect

Date Posted: 03/04/2019 Category:

Google has revealed a radically decentralised model of procurement in which any of its employees are empowered to buy any product from any supplier. The revelation was made by Google’s strategic sourcing lead for EMEA and Latin America, Vaishali Salmond, who was addressing delegates this week at the ProcureCon Indirect conference in Copenhagen. The new system, she said, was based on trust – the company trusts its employees to spend the firm’s money as they would their own. Last year, 12,000 Google ‘requisitioners’ produced 120,000 purchase orders.

Salmond explained that while ‘Googlers’ are implicitly trusted by the company, the firm also needs to help them make good purchasing decisions. To that end, Google uses machine learning solutions for spend analytics, spend categorisation, and spend prediction – useful, considering that the tech colossus has 27,000 active suppliers. Of these, 500 account for 83% of the company’s spend. Google’s largest area of spend, Salmond revealed, was data centre components, but indirects, such as marketing, logistics, and building services accounted for large swathes, too.

Salmond’s colleague, Michael Tiano, a strategic sourcing manager at Google, explained to delegates that the firm had analysed over $100bn of spend data covering 10 million lines between 2014 and now. A new system of taxonomy had been crafted to sort the data automatically. Tiano said: “We are able to classify our spend now, looking backwards and forwards.” The model, he explained, had proven accurate in predicting an impressive 84% of all products. He added: “It sounds crazy but we often didn’t know [previously] what was being spent at Google.”

In a hint that this procurement decentralisation model would be a hugely expensive business, dependent as it is on massive investments in machine learning systems, conference delegates were told that the latter ‘required resources’ to identify spend patterns and put the right data taxonomy in place. Businesses lacking Google’s seemingly bottomless pockets may prefer to invest in skilled procurement professionals or a reputable procurement consultancy.

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