Procurement Gamechangers To Watch in 2018

If the Bitcoin boom that swept the end of 2017 showed us anything, it’s that large groups of people can create tremendous value simply by deciding to do so at the same time. Rapid, irreversible change is only ever one tipping point away.

Whether or not crypto will displace global fiat currencies before 2030 irrelevant — the fact is that Bitcoin has dominated the news cycle, and compelled a huge number of people to take action in a short a window of time. Within a few mere months, those distributed actions created enormous financial value, minting crypto millionaires overnight and causing many a corporate executive to confront the question: what is my enterprise blockchain strategy going to be in 2018?

If you operate in an industry where decentralization, provenance and transaction history are important, you should be asking this question, too.

Crypto’s run in the financial markets demonstrates the explosive potential of technological disruption, as well as the fashion in which skeptics and naysayers tend to get stuck with sour grapes. Experts agree that numerous tectonic shifts in global enterprise commerce created by blockchain, the Internet of Things, AI/ML and robotics will rapidly accelerate in 2018.

Those who are preparing for these changes today stand to reap enormous profits tomorrow. Those hoping to survive without upgrading their enterprise technology stack may have their lunch eaten by a swarm of lean, bootstrapped, quickly iterating newcomers. Companies are either leveraging the probability of this technological change, or will be left at its mercy.

Last July, I surveyed a number of AI trends in the enterprise procurement space as part of a series for TechEmergence. After seeing some astonishing new platforms by entrepreneurs in Texas and the Midwest as well as Silicon Valley, I figured it couldn’t hurt to take the new year as an opportunity to make a three more detailed forecasts for the future of B2B commerce technology.

1. Voice Chatbots & Amazon Alexa for Business.

It’s perhaps obvious to say that Amazon is a “disruptor”, but as far as enterprise procurement goes we’re still very much at the tip of the iceberg. Amazon for Business, the B2B e-commerce interface for Amazon, only launched in 2015. That’s the same year that its famous voice-interfacing chatbot Alexa became available on the Amazon Echo, launched June 23, 2015. Only two year later, Amazon for Business boasts over 1 million enterprise customers, leveraging a user-friendly shopping interface that has become a benchmark for the e-commerce industry. This year at Re:Invent, Amazon announced the roll-out of Alexa for Business, along with a campaign to put an Alexa in every office so that corporate workers can place an order with vendors without even having to type an email. For business units that deal with a high volume of purchase orders, Alexa for Business represents a disruptive opportunity to leverage labor-saving technology to dramatically improve productivity and decrease drudgery. If the competition between enterprise procurement platforms like Procurify and NetSuite has come down to a contest of functional interfaces, Amazon/Alexa will force the B2B software market to answer the question: why shouldn’t you use the same e-commerce experience at your business that you use at home? The growing ubiquity of voice interfaces and the speed of order creation, placement and reconciliation means that soon Alexa will be able to perform all of the job functions once assigned to a Supply Chain Assistant.

netsuite_bid_management_procurement

(NetSuite Procurement interface, 2017)

 

Job Functions of Supply Chain Assistant — From SampleResume.com. From a business operations perspective, ask the question: Which of these functions does Amazon for Business not solve?

  • Execute supply chain assistant functions to move products from suppliers to retail outlets.
  • Reconcile physically all supply chain products with that of invoices and supply documents.
  • Prepare invoices and documentation of products to be supplied to retail outlets.
  • Perform physical stock checks in a warehouse or stockroom setting.
  • Check and examine quality of materials before arranging dispatches through supply chains.
  • Supply materials on time to meet production schedules and deadlines.
  • Troubleshoot and resolve customer issues relating to supply of products.
  • Check, inspect and manage material returns from customers and retail stores.
  • Document all materials return records to troubleshoot quality issues.
  • Implement best standards in supply chain activities.

2. Blockchain Distributed Ledgers For Supply Chain Professionals.

Perhaps also obvious, but any market that depends upon provenance, transaction history and decentralized coordination will likely have to reckon with blockchain. NB: I would distinguish supply chain (decisions about what physical goods/services will move where and how) from procurement (decisions about which vendors shall supply what goods/services, how they shall do so, and under what terms both parties shall measure success).

Why? Because supply chain decisionmaking is all about the data. For those curious, the below video from IBM explains exactly why blockchain massively changes the format, accessibility and utility of supply chain data:

procurement_negotiation_bid

(Amazon for Business interface, 2017)

3. Programmatic Buying & Auctions.

The most technologically sophisticated area of human commerce is, perhaps surprisingly, the market for digital advertising.

This is because the market for clicks, eyeballs, mindshare and coveted conversion rates has long been the purview of companies like Google, Facebook and Twitter who support a secondary market of “search engine optimization” and automated social media marketing providers, solutions that are constantly adapting to technological macroshifts in their commercial ecosystems.

In the digital advertising world, “…programmatic buying is similar to programmatic stock trading insofar as buying happens as the result of a computational proxy bidding on behalf of human masters.” (George John, CEO of Rocket Fuel). The application to procurement comes from applying predictive analytics to enterprise spend categories — if you can anticipate and extrapolate regular changes to order volume, then you can place orders earlier and even create standing orders for recurrent buys, making sure that the correct inventory is on hand.

One example of an innovative company that has mastered this technique in a very specific vertical is Bloodbuy, a marketplace software platform that connects hospitals with blood banks, enabling them to optimize their blood supply. By analyzing a hospital’s blood spend and then creating standing orders for times of high demand (such as the Fourth of July, New Years’ Eve, and so on), Bloodbuy offers massive savings for hospitals that would otherwise place stat or rush orders for blood when local banks cannot meet their needs.

Whether you think of programmatic procurement through the lens of IBM’s so-called “cognitive procurement” or simply as the robotic process automation of administrative tasks, procurement systems will soon be able to suggest what ought to be ordered and when, as well as suggest commonsense best practices for savings and performance improvements. These prompts can then easily be bid out to vendors to rapidly complete price negotiations, as well as automating the paperwork for every step of ordering, paying, recording and validating the procurement cycle.

The organizations that best leverage new technology in enterprise procurement will be able to do more with less, automating and accelerating the pace of savings.

As more and more new technologies enter the procurement stack, we must remember to not be too dismissive of hype/buzzwords on the one hand, or on the other extreme, allow ourselves to be seduced by brand marketing slogans that offer excessive promises with little substance or underlying improvements. Whenever I evaluate a new technology from the perspective of the strategic sourcing & procurement cycles, I always try to ask the following questions:

  • Does the technology allow me to save time assembling more data to reach an informed decision about which vendor or product is the best fit?
  • Does the technology allow me to save money either by negotiating better prices or aggregating more demand within a single vendor or coop contract?
  • Does the technology eliminate or shorten the number of administrative processes or consultative engagements that required during a strategic sourcing cycle, all without diminishing the likely quality of the outcome?

Hopefully these questions can provide some guidance as you encounter new procurement technologies and evaluate them for use within your own team. Happy 2018!

Edmund Zagorin is Founder/CEO of Bid Ops Inc. and a subject matter expert in supply chain benchmarking, eAuctions, sustainable sourcing, and procurement software. Please email him with any questions at edmund@bid-ops.com.