The conversation around automation and artificial intelligence is constantly evolving. Today’s experts can easily find themselves relegated to the margins if they stop listening in and gathering new insights. For new procurement professionals, AI can seem like a topic too intimidating to approach.
However, the worst thing any professional can do is shut themselves off from the conversation. A new machine learning project might sound intimidating, but new technologies are no longer something for IT and data scientists alone to concern themselves with. If procurement professionals hope to reap the benefits of more advanced solutions, they’ve got to develop an understanding of them. Rather than cowering in fear at the thought of automation, they need to learn how automation can make them more effective and empower them to enhance procurement’s capabilities and elevate the function.
Artificial Intelligence : Broadly defined, artificial intelligence refers to a machine’s ability to carry out tasks that would normally require a human’s power of reasoning. It’s a subject that’s both thrilled and terrified us for over a century. Recent years have seen speculative narratives about robot overlords replaced by expert-supported studies about the encroachment of AI-powered solutions. Essentially, computers have gotten smart. So smart, in fact, that they’re threatening to replace huge swathes of the working population .
For procurement in particular, AI’s disruption presents a valuable opportunity. It’s already making it easier to carry out the tedious processes that have historically made procurement a tactical, administrative entity. In a book AI in Procurement written with my co-author Sammeli Sammalkorpi, we are emphasizing that with time, AI should provide the function’s most dynamic professionals with an opportunity to distinguish themselves as strategic, impactful, and altogether irreplaceable.
Robotic Process Automation (RPA) : RPA is one area where AI is already providing a clear, demonstrable ROI to procurement groups across all maturity levels. Between 2017 and 2018, the number of organizations identifying RPA as a “high impact” technology area nearly doubled. That’s because more and more organizations are trusting technology to perform manual purchasing tasks. With machines reviewing purchase orders, processing invoices, and renewing contracts, the most forward-thinking organizations are working to reskill their employees and prepare them for accepting new roles.
Machine Learning (ML) : ML refers to the process by which a machine collects data and teaches itself to make decisions. A true blank slate, the machine graduates from simply observing data and guessing at appropriate responses to collecting data, assessing it, and arriving at informed strategic decisions. Supervised Learning – This type of ML sees a machine react to a predefined set of data. Whoever is programming the machine knows precisely what sort of outcome they’re hoping to produce
Unsupervised Learning – Machines engaged in unsupervised learning are able to create distinctive groups within a set of data. Humans can trust these machines to identify groups based on similarities and differences.
Reinforcement Learning – The most collaborative type of ML, reinforcement learning trains a machine to make specific decisions based on trial and error. This is analogous to carrying out a complicated task like walking or winning a chess match.
Deep Learning (DL) : DL describes the process by which machines truly learn to mimic the human brain. They do this by virtue of neural networks that are loosely designed to mimic the behaviour of the actual human nervous system. Representing the vanguard of AI-powered technology, DL is currently employed for tasks like recognizing faces and piloting driverless vehicles.
Don’t Get Lazy
As mentioned above, AI’s talking points won’t stay consistent for ever. Solutions are changing and adapting every day. Your understanding of them must change and adapt as well. Consistent exposure to new tech-enabled initiatives and constant attention to emerging trends are the only thing that will ensure your relevance and success in procurement’s next era. Are you prepared?
Johan-Peter (JP) Teppala is the CEO of Sievo Inc. the leading procurement analytics software company. He holds a master’s degree in Industrial engineering and has helped procurement professionals reach their key targets for over 15 years.