Insight: A Software Engineer at a Procurement Conference
Mark Perera, our CEO and founder of Vizibl, was recently invited to be a speaker to the Sveriges Inköps och Logistiksförbund (“SILF”) conference, held in Stockholm. This translates to Sweden’s Procurement and Logistics Association. Procurement, in broad terms, is the gruelling process of finding, agreeing terms and acquiring goods, services or works from a third party source, outside of the company.
SILF is an event held every year gathering over 300 people from a diverse range of industries. This includes speakers who have worked with procurement in their capacity as engineers, CFOs, professors and researchers. These speakers all gathered to brainstorm exciting ideas as to how to best solve the current logistical and administrative issues holding back the industry.
A trivial factoid about me: while I hold a British passport, I was born and raised in Sweden. I’m currently working as a Quality Assurance Engineer at Old St Labs in London. So, when Mark was kind enough to invite me to this event in my home country, I enthusiastically accepted.
An Optimistic Vision on Technology
The common theme that united the speakers booked for the morning of the conference was that of optimism. I was particularly struck by Peter Siljerud, Futurologist and CEO at Futurewise, whose speech detailed the incredible speed at which technology is developing. Hardware capabilities, in the form of processing power, bandwidth and storage are steadily rising while prices for such capacity are declining at a much faster rate than had been previously predicted by experts in the field.
This development is taking place in tandem with software capabilities increasing. The progress in this field can be much harder to quantify. But despite this, there is no mistaking that progress is taking place within software. Peter Siljerud, spoke of an example taken from his own learned experience. Ten years ago, he was given the assignment to set up an online shop with an operational payment system. At the time, with the technology accessible to him, the arduous task took him three months to complete. Three years ago, he found himself faced with the same challenge. This time it took him less than three weeks. A few months before the conference took place, Peter was once again asked to set up a payment system for an online shop. This time, it took him barely 30 minutes with virtually no coding involved. The only work that was required of him was to configure the website to best suit the intended user’s preference.
What I took away from this, was that we are constantly re-using and building upon previous solutions. Problems that were hard to solve just a decade ago, now seem trivial. Imagine where technology will take us a few years from now if we allow it to.
Embrace AI and Automation
Delivery and the handling of goods and services make up a large part of procurement. Many speakers emphasised the importance of the integration of AI and digital data within the field. AI is already analysing data gathered throughout supply chains in all industries, enabling companies to optimise their operations. Even if you don’t have the capabilities to analyse your data today, it’s imperative that you gather and store it. Having your data available for tomorrow is vital for every business.
As you may already be aware, AI and automation are infiltrating every level of the logistic supply chain. Self-driving cars are no longer just a concept in science fiction. In fact, beyond personal vehicles, the market will soon be seeing the arrival of self-driving trucks, trains and ships to take over the delivery of goods. Additionally, these goods are being sorted and handled in increasingly automated shipping yards. These technologies will become an industry standard, and it will come crashing into the existing infrastructure and force the industry to change. These changes will be more cost-effective, be easier to track and produce bigger profit margins, all while allowing less room for human error. Old companies that are too slow to adapt or are resistant to change will be inched out of the market. Executives who embrace new technology will replace them.
On paper, this sounded straightforward enough. One would imagine that companies would be in an arms race to embrace technology that would make their businesses more competitive and efficient. Unfortunately, this is not the case.
Too many companies are only interested in cost-savings for the imminent financial quarter. Jonathan O’Brien, CEO at Positive Purchasing, stated that what stands in the way is old-fashioned mindsets. There is a strong pattern across companies to opt to fix legacy systems instead of upgrading them. This means filling gaps instead of rebuilding, buying bolt on’s and digitalising outdated processes. Most companies’ digital strategy is completely misaligned with how people work day to day.
Many speakers of the day, criticised the fact that too many companies had cost-savings as their primary (if not sole defining) Key Performance Indicator. Meeting current saving targets might momentarily look good on a company’s financial accounts but is not reflective of a company’s long-term financial health. This kind of behaviour can also have a knock-on effect that can tank entire projects or destroy relationships with suppliers. Actions that lead to a company’s eventual financial ruin is hardly Merriam-Webster’s dictionary’s definition of cost-effective.
Many speakers repeated concern that it is becoming apparent that in the future, we won’t find ourselves with a technology problem, what we will have is a people problem. Specifically, it is the difficulty in getting people to adopt technology across an organisation. In sum, inflexible management might be the only thing standing in the way of innovation and progress.
Change and Development in Practice
There were some fantastic speakers throughout the morning with inspirational tales of what we can achieve with today’s technology and all its untapped potential. But as the day progressed, it occurred to me that I had not heard one concrete example where these practices and technologies had been applied successfully on a macro-level. There were some everyday examples of success on a microeconomic scale for teams or for one link in a large supply chain. But there were no success stories that impacted a company’s entire supply chain. I’m not a businessman, but this absence of proof of concepts was starting to make me nervous. We, engineers, are very practical in our problem-solving. We identify the problem and the desired outcome, search for the best solutions, gauge what has been tried and tested, and then we implement it. No buts (only a couple of if-statements). The fact that nobody had offered a success story troubled me; something was obstructing the implementation phase.
Enter Niklas Hedin, Managing Director at Centiro, who succinctly stated what was subtly hinted at throughout the day, “The landscape is changing and management, both upper and middle, is failing to adapt”. For the longest time human society was founded upon the notion of scarcity and we worried about running out of necessities such as food and raw resources. Now, with the help of technology, we’re entering an era of abundance. However, it comes with its issues. Fast-paced development means fast-paced changes without predictability.
Take solar panels as an example. Just a decade ago, solar panel was not even a remote threat to the dominant oil industry. The technology was too expensive and prohibitive to companies. Now it’s cheaper than oil, and many companies are scrapping their oil commitments and switching completely to solar energy.
However, instead of embracing these new technologies, far too many businesses are simply backing away from long-term plans and investments. Many have cut down long-term contracts from 5 years to 1 year. This is because their businesses are motivated by fear. Specifically, they’re uncertain that what they’re investing in today will be relevant in 5 years. The landscape is changing too fast for them.
Their concerns are valid, but business practices motivated by fear is never the winning approach. Committing to outdated technology and antiquated business practices out of fear that new technologies will be replaced by an improved one is not going to keep your business ahead of the curve. Niklas Hedin summarised it like this “the challenge is to change or go under”.
Integrated Technology is the Way Ahead
As our own Mark Perera took the stage, he posed a question to the audience. Were they comfortable in their industry?
In particular, did they feel that the claims that everything was great resonated with their own experience in the field? There seemed to be a consensus from the audience that while they enjoyed their work, it was apparent that there were challenges facing the industry.
Despite, the guests’ enthusiasm for their field, it seemed they were not enthusiastic about the software technologies used by their industry. When asked if they liked working with SAP or Ariba systems, to my surprise, not one hand was raised in the large crowd. Instead, there were only muffled murmurs and the shaking of heads, signalling frustration. There was a consensus in the crowd that these technologies were not working with its users. As Mark posited that Supplier Relationship Management (“SRM”) was broken and that management is failing to adapt to the industry, the audience agreed.
So what seemed to be the issue with the current technologies used by companies?
Today, companies in procurement are commonly buying and using technology such as:
• P2P;
• Esourcing;
• Market insights;
• Event management;
• Project Management;
• Category Management;
• Spend Analytics; and
• SRM.
However, these technologies are silo technologies. A term used to signify that none of them are connected. None of these technologies are currently communicating with each other to give the user an overview of their supply chain as a whole. This leads to delays, inefficiency, higher costs and duplication of work. Vizibl is trying to address precisely these issues. We want to bring these tools and aspects onto a common platform accessible by both the customer and supplier, making all the data throughout the supply chain visible to everyone. Digitalisation is only a tool. Real change comes from human interaction with technology.
As a final note, I’d like to thank Mark for letting me take part of this event. Beyond getting the opportunity to listen to the accomplished speakers in this field, I was grateful for getting to munch on tasty cupcakes and good food offered at the conference 😊
