Category management and strategic sourcing are about to be brought fully into the digital procurement transformation fold thanks to new ‘Cognitive Sourcing’ technology, an expert has predicted.
US-based strategic sourcing specialist, Jim Baehr, explains that in the early days of strategic sourcing (the proactive and systematic search for optimally priced goods and services to fashion purchasing strategies for longer-term business requirements), identifying all the relevant data was, to put it mildly, a challenging task for procurement professionals.
The same was true of category management.
It was extraordinarily difficult to put sufficiently comprehensive and accurate data in place to make informed determinations about actual, real-world costs and potential risks.
Many hours were poured into these difficult tasks – procurement pros scoured industry journals, searched painstakingly through what was then a clunky and slow internet, and pored through business registers.
However, new self-learning (i.e. artificial intelligence-powered) technology is fast approaching, and this will take the backache out of this laborious process: enter Cognitive Sourcing.
Still, at an introductory stage, the technology promises to yield major advances in both category management and strategic sourcing.
It has the capacity to plough through all relevant, publicly available web-based data points at lightning speed, providing procurement pros with key information about opportunities and also risks to be avoided.
It ranks incoming data according to its various impacts, and converts it into actionable information based on that ranking.
This kind of data is invaluable, helping procurement practitioners to go beyond merely asking for pricing and get stuck into well-informed negotiations with vendors and enhancing supplier relationship management.
Because of its inherent difficulty, some observers have proclaimed that strategic sourcing is dead.
However, according to Baehr, this is a premature verdict: “It’s been in a lull waiting for technology to catch-up.”
With the coming rise of Cognitive Sourcing, that day of technological catch-up is fast approaching.
It’s likely to be confined to discrete manufacturing and new product introduction to start with, but its reach is certain to extend very soon.