A McKinsey analysis published last week suggests that Chief Procurement Officers would do well to familiarise themselves with next-generation Artificial Intelligence tech to help manage the vast amounts of data erupting from the procurement process if they are to achieve their self-declared priority of organisational cost reduction.
The data that procurement professionals must analyse and respond to flows from multiple sources: not only purchase orders, invoicing and payments, but strategic supply relationship management, compliance and spend and cash flow management.
CPOs polled by McKinsey believe AI has the potential to generate significant annual cost reduction and slash time spent on sourcing.
Yet a survey by Deloitte earlier this year found that while the top concern among CPOs in 2018 was cost reduction, over half (51%) reported that their current procurement teams lack the capacity and the skills to deliver all the new functions required of them (not only cost reduction but keeping track of new market developments and projects as well as risk mitigation).
The sheer volume of data assailing procurement staff makes it exceedingly difficult to understand what’s happening at a granular level. And next generation procurement tech, including AI, machine learning, blockchain and even virtual reality, has the potential to do precisely this.
But how to address the lack of skills in this new technology among procurement professionals? The solution may lie in tapping this expertise via high-tech procurement-as-a-service providers. These providers may help organisations “make the digitization leap and embrace artificial intelligence in procurement”, PYMNTS magazine suggests.
But significant barriers remain to be surmounted. As PYMNTS puts it: “Deloitte found that nearly half of procurement professionals cite a lack of data integration and data quality as their top barriers to integrating technology in procurement, though executives highlighted several additional challenges as well, including limited understanding of data technology and limited skills necessary to embrace analytics tools.”
But collaboration with procurement-as-a-service providers could be the key to helping CPOs implement these cutting-edge tools.
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.