Will Robots Replace Procurement?

Many people are preoccupied by the prospect of robots replacing procurement. But experts like Marcell Vollmer, chief digital officer for SAP Ariba, and Shivani Govil, vice president of Artificial Intelligence and Cognitive Solutions for SAP Ariba, say they will just be helping humans do things differently.

The acronym AI usually refers to artificial intelligence, but for Shivani, it’s about assisted or augmented intelligence. “Technology should augment a person’s ability to do his or her job by providing better options for making decisions,” she says. “AI should help people be more efficient and accurate, so they can be more focused on adding value.”

But what does adding value really mean? In the world of business, it means providing customers with a quality product at a reasonable price in a sustainable manner — and here’s where efficient procurement and supply chain practices can have a deep impact.

Technology Changes How We Think

Technology has been evolving continuously from the days of the cavemen to the more recent web and internet technologies. For thousands of years it has been making life a lot easier, changing the nature of work every step of the way. It also changes how we think.

“Humans are uniquely capable of thinking. We can figure out things like how to replace manual processes, so we can spend more time thinking,” Shivani points out during a discussion about the future of procurement at the recent SAP Ariba Live event in Amsterdam.

She goes on to explain that AI is not about eliminating work. It’s about eliminating mundane tasks and changing the type of work we do.

For example, AI and machine learning are fundamentally changing how we purchase goods and services. A laptop knows when it needs maintenance, and it can order updates when it needs them. No human interaction is needed for such a task, nor much intelligence, for that matter.

Emerging technology impacts all elements of software, and has a broad, sweeping impact.  These technologies are still new and being defined, but in the future, they will be part and parcel of what happens.

“The number of jobs AI will introduce will far outnumber the jobs it will eliminate, and not all of them will be heavy duty data science type tasks. Take Siri and Alexa. Voice recognition means you don’t need to lift a finger to get things done at home. Just say what you want and your TV is turned on and your shopping list is done. It will be the same at work,” she predicts.

Be Prepared

A good procurement department has two secret weapons for surviving automation: its people and an overview of the business. Machines will always be limited when it comes to understanding the culture and knowing what works well and what doesn’t.

And they certainly can’t build trusted relationships. Buying and selling has always been a social function driven by people. Technology will make business more personal, contextual, intelligent and efficient in the years ahead. In the process, procurement will become less tactical and more strategic.

But most enterprises are woefully unprepared.

During the discussion, Marcell Vollmer shared the results of the CPO 2018 survey conducted by SAP Ariba and the University of Applied Sciences, Würzburg-Schweinfurt, “The Next Big Thing In Procurement.”

While 83 percent of companies surveyed believe digital transformation will be impactful, only five percent have highly automated processes. Analytics and data management along with budget restrictions are the key roadblocks to achieving functional efficiency. At the same time, thirty percent recognize the importance of talent management to drive change, but 63 percent don’t have a strategy to address the topic of people.

People and Purpose

There is some good news: eighty-eight percent of respondents have defined purpose objectives for procurement and see the value of purpose driven management, with corruption and child labor posing the greatest risks.

Obviously, companies will not be employing robots to solve such sweeping problems. People will still be doing those things. Right now the challenge is training. People don’t really know how to best utilize technology, because it’s not intuitive enough.

“Companies need to get better at giving their employees guidance and knowledge on how to use data more effectively. Let’s take an example of forced labor,” says the AI expert. “By understanding the regions, commodities and characteristics of the task, AI can help companies identify the areas of potentially higher risk of forced labor in their supply chain, and take action appropriately. Today companies only see the top two or three tiers of the supply chain, but these technologies can help them delve even deeper. At the end of the day, it’s not about software, but interaction between people and the outcomes that are desired.”