Towards Intelligent Procurement in the "Age of AI" - Intro
A meteoric impact and catalyst for change
66 million years ago, a meteoric impact changed the course of Earth's history, wiping out the dominance of dinosaurs in an instant.
Up to that moment these reptiles thrived for millions of years adapting to changing conditions and evolving into a multifold of variations covering the most specialised niches only to be overtaken by mammals who had quietly sat in their shadow waiting for their opportunity to race ahead.
67 years after the Dartmouth workshop, where Artificial Intelligence as a concept was defined, and 1 year since the launch of OpenAI’s groundbreaking ChatGPT, AI may represent another turning point according to experts for businesses and society alike.
The age of AI may present a transformative catalyst , much like the meteor strike wiping out the dinosaurs.
An opportunity that surfaces roughly every 20 years to reshape how businesses operate, innovate, and modernise work.
For functions like Procurement who are challenged on multiple fronts to adapt their model, and provide seamless processes supported by predictive solutions, AI may represent an opportunity to shed the old ways of working and reinvent itself in the long-term.
Balancing Evolution and Revolution at Work
But that is not going to happen in one big leap or a strike alike the meteor strike.
Businesses need to balance between incremental changes and the sustenance of stable operations whilst modernising through sprints of radical transformation.
In analogy to the meteor example, AI may be a catalyst and enabler to power a future function with new possibilities to transform but is not an outcome in itself.
The pressure to change may be driven by external factors such as changing customer demands and technological progress demanding a strategic adaptation.
In practice though, change is an evolution and for Procurement this could mean a transition in 3 phases to transform:
1.) Traditional Procurement covering rudimentary procurement practices and focusing on expanding Source to Pay goals and digitising manual activities to accumulate sufficient data. The emphasis of most organisations at this stage is to serve business units with tactical support and transactional work with little to no standardisation of data.
This is where some organisations are still stuck.
2.) Blending to a Hybrid transitioning through experimentation and integration of new practices, partially leveraging Automation at scale and building first AI pilots. This is a period of preparation and learning to adjust ways of working and mixing old and new learnings with a an aim to gain agility and start moulding the culture to new values and mindsets.
This is where most organisations are currently focused on.
3.) Intelligent Procurement (driven by people/powered by AI) building a changed business model centred around an intelligence hub for stakeholders and suppliers to engage and supported by seamless and predictive tools powered by AI. It represents a human-centric, adaptive organisation measured on outcomes and innovation, utilising a mature ecosystem of Digital solutions for better work and smarter decisions.
This is where businesses may attempt to evolve towards
Striking a balanced transition of both incremental change and radical transformation is imperative to allow for it to land and ensure that organisation can evolve in tandem with the maturity of the function and its capabilities.
These phases representing evolutionary steps allow Procurement to solidify their Processes, Technologies and Data in light of a journey towards achieving Intelligent Procurement powered by AI, but ultimately driven by its people.
A set to move out of a Jurassic World to Intelligent Procurement
In my experience working with a biopharmaceutical company, I witnessed the transformative power of incorporating agility into the company's core principles and clarifying why AI build a critical component to achieve this.
While the company's values do not explicitly mention AI, there is a strong emphasis on using the benefits of emerging technologies to augment human intelligence to its fullest potential.
This is achieved through agile processes, cross-team collaboration, and the strategic adoption of emerging technologies, viewing them as means to an end rather than the end themselves.
It's important to recognize that Procurement cannot evolve in isolation.
Instead, it necessitates a comprehensive, enterprise-wide effort that extends beyond its own boundaries.
This effort included in that biopharmaceutical:
Committing to Critical Skills of the Future including AI Literacy
Developing a clear vision and purpose for change, accompanied by enterprise-wide programs and reconfirming the necessary cultural elements and mindsets needed.
Encouraging experimentation through open access to safely set up (Generative) AI, creating tangible experiences.
Blending strategic innovation themes with bottom-up inputs to drive engagement.
Conducting discovery programs to identify process improvements through digital efficiencies.
Respecting human intelligence and authority, especially in decision-making processes where it aligns with regulatory requirements.
It's crucial to recognise that AI is just one component of the broader transformative equation.
Ultimately, creating an Intelligent Procurement framework demands clarity of purpose, a supportive culture, and a holistic approach that embraces the potential of AI alongside other critical elements.
A thoughtful approach is needed
To successfully embrace Intelligent Procurement, organisations must adopt a thoughtful approach that encompasses several key elements:
A Framework of Change: structured and strategic, focusing on people, processes, technology, and data.
Whilst AI matters a holistic approach transitioning organisational structures, enabling people with the right skills, increasing process maturity and enabling an integrated ecosystem of Digital solutions with a strong data backbone is crucial.
Cultural Shift & Clarity of Purpose: A change in mindset and culture valuing experimentation, and encouraging cross-team cooperation with a clear vision as a backdrop bought in by all stakeholders as a purpose for change.
Collaboration & Agility: Embrace collaboration between teams, departments, and stakeholders removing barriers to advance beyond incremental improvements and adapt to changing circumstances
Transition Roadmap guiding the change as per the 3 phases mentioned and paying notice to adoption of change in line with the companies ability to absorb it and the technology maturing over time
Letting go of the Jurassic World of Procurement and the Procurement Dinosaurs may be a daunting task but necessary.
Conclusions
The journey towards Intelligent Procurement in the age of AI is a remarkable opportunity but will require an evolutionary approach and time to prepare for to have the right fundament in place to take advantage of different types of Artificial Intelligence as they mature and increase accuracy and safety.
We need to acknowledge that to shed "Jurassic" ways of working, AI alone won't create the necessary evolution to Intelligent Procurement. It will require a well-thought-out approach that encompasses every aspect of the procurement function beyond the definition of Digital Procurement.
Why is now a good time to start thinking ahead?
Because we owe the Procurement Stakeholders, Suppliers and ultimately the Procurement Professionals better results, smarter decisions and a workplace and culture where humans can shed their reptiles for a more Intelligent Procurement delivering best outcomes.
This blog post sets the introduction to a series of articles under the theme of “Intelligent Procurement: Towards the Age of AI”, outlining the concept of Intelligent Procurement, reviewing the critical success factors, opportunities and learnings to advance towards an Intelligent Procurement function, enabled by AI but at it’s core driven by it’s people and a thoughtful approach to change.
What is your experience with driving change in Procurement - is it an evolution or a revolution?
How do you see AI’s role as a catalyst for change, is it a long-term game?
Looking forward to an exchange with you all in the comments here or on my post in Linkedin linked here.
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