Procurement People: Live Long and Prosper!

By Bertrand Maltaverne

Space: the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.

Despite the fact that it was destroyed several times, the USS Entreprise, a.k.a. NCC-1701, like the phoenix, survived the trickiest and most dangerous situations. The starship went through several versions. The mission stayed the same. It is no surprise that the version with the longest lifespan is the one that had Kirk as Captain and Spock as second in command.

And there is a lot to learn from this iconic duo for the future of work (in Procurement)…

The future of Procurement work

The idea for this post (and the link to Star Trek) comes from two recent articles. They both raise important questions about the future of work in Procurement.

Kelly Barner from Buyers Meeting Point asks if real humans can be good at Procurement. In this guest post (the author is Ovidiu Slimac), the focus is on “allowing our ‘humanness’ into the procurement process”.

Without allowing our ‘humanness’ into the procurement process, I think we will be too focused on technical procedures. In order to be drivers of change we must see the similarities and differences between what we do when we shop for ourselves and when we are simply following the procedures outlined by CPOs.

Michael Lamoureux, a.k.a. the doctor, asks what does modern sourcing need. His answer, in a nutshell, is that the future is not artificial intelligence:

This year, there is a big push towards AI (Artificial Intelligence) and not just predictive, but prescriptive analytics. Apparently, the Sourcing (and Procurement) of the future will be managed by computers, and not by experts. This is not only unnecessary, but a bit scary..

I believe that Procurement (and any other function) is facing new challenges introduced by new technologies and it has to boldly go where no man has gone before. And, to do so, it has to find the right balance between its human and its vulcan sides. In other words, find the way to use new technologies that will enhance Procurement people:

AI vs. Machine Learning

It is important, first, to understand the capabilities that new technologies introduce and to get the terminology right. For that, I will quote from this article: AI is from Venus, Machine Learning is from Mars.

Artificial Intelligence (AI) develops conceptual models of the world that are underpinned by set theory and natural language. In this context, every noun or noun phrase represents a set. Every predicate implicates that set in other sets. If all human beings are mortal, and you are a human being, then you are mortal. It’s an exercise in Venn diagrams. By extending these diagrams through syntax, semantics, and analogy, human beings build up conceptual models of the world that enable us to develop strategies for living. AI seeks to emulate this capability in expert systems.

Machine learning (ML) is (or at least it appears to be at the present time) unlike AI which seeks to understand the world through conceptual models, machine learning has no such interest. It does not understand anything at all, nor does it want to. That’s because it does not seek emulate human intelligence, it seeks to simulate it. It does so through sheer brute mathematical force. Basically, any digital thing you present to a machine learning engine — say, a photographic image or a body of text — is converted into a string of integers, and everything that happens after that is some type of mathematical manipulation of that string. In the world of machine learning you and I really are just numbers.

Another way to put it:

  • AI = humans program machines to think logically by using conceptual models.
  • ML = machines are programmed to learn and only to learn. Humans teach them a certain task. The machine performs the task. It needs confirmation on the results. The more it performs the task, the better it does it.

The definitions of both, AI & ML, are important because of the place of humans in the future of work.

“People will continue to have advantages over even the smartest machines. They are better able to interpret unstructured data — for example, the meaning of a poem or whether an image is of a good neighborhood or a bad one. They have the cognitive breadth to simultaneously do a lot of different things well. The judgment and flexibility that come with these basic advantages will continue to be the basis of any enterprise’s ability to innovate, delight customers, and prevail in competitive markets — where, soon enough, cognitive technologies will be ubiquitous.“ Just How Smart Are Smart Machines?, MIT Sloan Management Review, March 2016

And, as mentioned in Kelly’s and Michael’s articles, many Procurement activities need a human touch. Just like the Enterprise: a human captain and a Vulcan second in command. The challenge is about the balance and the chain of command.

“If we can get the task allocation right, the humans of the future won’t be fighting with robots to shovel dirt, find landmines or drive mining equipment. Rather, humans will be caring for people and having interesting conversations about how to make the world a better place. They should be doing whatever they love and spending time with whomever they love — which will hopefully not be a robot.” — Techcrunch, The assimilation of robots into the workforce as peers, not replacements , July 2016

People + Technology, not People vs. Technology

I am a true believer of “people first”, especially in Procurement (see here). I also believe in “people + technology”, by opposition to “people vs. technology”. And, this is an area where Procurement still has a long way to go as it must be more technology savvy.

Also, new technologies are already here. So, it is important to understand what they are and what they bring, to define how to get the best out of it. This is important for the profession and this is important for the next generations of workers. No doubt that automation is changing work. And the the thing is: it is just the beginning!

”[AI] is still early days, and there are still several challenges: Most breakthroughs are in “narrow” applications and use supervised methods that require big labeled data sets (which are often expensive to create), most algorithms (still) achieve (just) sub-human performance, training requires considerable computing resources and most approaches are based on heuristics with lack of theoretical frameworks.” — Techcrunch, The AI disruption wave , Oct. 2016

Applications for Procurement

Without going into too many details (I am working on dedicated posts on that), the future of Procurement work can be described as “Cognitive Procurement”. It can be defined as:

  • Using systems and approaches that are able to learn behavior through education
  • Managing structured and unstructured data
  • Supporting forms of expression that are more natural for human interaction
  • Continuing to evolve as computers experience new information, new scenarios and new responses
  • Unlocking new insights and enabling optimized outcomes

The definition above has tremendous implications for the Procurement world and as, Supply Management puts it, “‘Cognitive procurement’ will drive [the Procurement] profession forward”and early adopters will definitely have a competitive advantage.

“In the future, adopters of […] “cognitive procurement” will be the ones driving the profession forward. […] Essentially, what this amounts to is agility. Something Chris Sawchuk, principal & global procurement advisory practice leader at The Hackett Group advocates if the sector is to flourish. According to Sawchuk, 74% of procurement professionals say agility is important, yet only 36% say they know how to improve it. “Agility is there, it’s just not systemic,” said Sawchuk.” — Supply Management, April 2016

Some of the applications illustrating the “tech. + people” (or Human + Vulcan) idea revolve around the concept of an assistant.

The role of the technology being to guide and recommend. The final decisions being left to people.

”The world of cognitive assistants for businesses is a brave new one, and few organizations have detailed experience with it. There are sure to be some surprises and disappointments. But we are confident that the technology holds considerable promise for improving human interactions with businesses. Before long, we may even see that humans actually prefer to talk with machines because of their vast knowledge, ability to take detailed contextual factors into account, and inability to become upset or befuddled.” — Deloite, The rise of cognitive agents, Aug. 2016

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Thoughts On Procurement & Procurement Technology; by Bertrand Maltaverne

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