The possibilities supply chain technology brings to simplifying, protecting, and optimizing global supply chain operations are immense. Just parsing emerging tools and trends to decide what should be part of a digital transformation can be overwhelming.
The emergence of tools like AI, IoT, and data analytics has been revolutionary, but balancing the benefits they bring with the value they provide requires scrutiny. We’ve been helping customers with PO management for more than a decade, and during that time, we’ve come to understand that the technology itself isn’t nearly as important as how you use it. This is our approach to AI/ML, and we are implementing it to address known and previously hidden risks proactively and much earlier in a PO’s lifecycle.
This blog discusses the importance of knowing your challenges before jumping into a solution. This may seem like a no-brainer, but procurement teams are under so much pressure to do more with less that it can be tempting to invest in flashy platforms or shaky tools without really understanding their needs.
It’s no surprise that organizations are highly focused on data, and for good reason. Effective data utilization unlocks enormous business opportunities ranging from the mundane (better inventory tracking) to the revolutionary (PO transparency and real-time risk management). This preoccupation with data is a natural complement to the high interest in new technology implementation. Harnessing the benefits of big data, connectivity, AI, and other emerging technologies can’t be separated from practical implementation. All of this adds to executive headaches from trying to manage the speed and complexity of adopting the technologies with a clear understanding and realistic expectation of what they can deliver.
AI Will Not Be the Last Technology to Take the World by Storm
There’s little doubt that the promise of AI/ML and the hype surrounding its potential is unlike anything the industry has ever seen. Through predictive insights and real-time data analysis, AI/ML can identify and mitigate procurement risks, automate decision-making processes, and enhance the accuracy of demand forecasting. And largely because of this potential, virtually every digital product is boasting AI/ML functionality. It’s like when you say a word over and over until it loses its meaning. But with the rush to incorporate these innovations into products that might not really benefit from it or that might not really help solve real customer problems, we’re unintentionally undermining what it means to have legitimate AI functionality.
SourceDay is taking a different approach and making AI/ML a central part of its direct procurement risk management solution. Our platform, powered by patent-pending AI/ML technology and more than a decade of real-world supply chain management data, has managed $60 billion in direct spend. This makes our data set, the foundation for effective AI, untouchable for providing users with actionable insights and recommendations to remediate any issues. By identifying potential problems early, you have more options to address them before they lead to disruptions. For instance, imagine being alerted to a risk when a purchase order is created. This early insight allows you to collaborate with suppliers and make necessary changes before the issue escalates.
Essential for any new tool, but maybe particularly important for AI, is how organizations build consensus within the executive ranks. A buying decision has to start with a clear problem you are trying to solve and clear evidence that your proposed solution will deliver.
Managing the Expectations of New Supply Chain Technology
When it comes to adopting new tools or technology, we are looking at whether or not it makes our jobs easier. If the answer is yes, we then balance how much easier it is against things like budget, cost of implementation, and other considerations that go into adoption. This is a little bit of a mindset shift for the supply chain, which has traditionally been thought of as late adopters. The idea that if something works, leave it alone, has served this industry for a long time. But with the onset of tools that seem practically irresistible, we seem a little more willing to buy into the hype. One way to navigate the consideration of new technology is to look for areas where the organization itself might be doing something new. A new capability or service could be an opportunity to try something new where there’s less historical precedent to contend with. This can open up room to experiment free of expectations and give the new tools a chance to show their value without built-in expectations from past projects.
This balance between trying what’s new and what has always worked is familiar to procurement teams. Change management is practically part of the job description. Getting suppliers or vendors to come along for the ride on any new process is always a delicate challenge, so bringing in tools that make onboarding as easy as possible can help the transition. This is foundational to the SourceDay platform because we understand that every buyer/supplier partnership is unique. We bring flexibility to these relationships by offering three distinct ways to use SourceDay: interactive email workflows, the SourceDay platform, and EDI. The best business outcomes result from collaboration and cutting out as much unnecessary complexity as possible. Our tool features an easy-to-use supplier dashboard so everyone always knows what needs to happen and when. In fact, at the beginning of this year, we introduced SourceDay Supplier Engagement and have seen engagement increase from 58% to 75% and on-time delivery (OTD) increase from 54% to 94%.
We’re proud of these results, and for us, they represent just a tiny sample of what the right technology applied to the right problem can do. Naturally, when a tool has a proven track record with real-world customers, high expectations are something we’re comfortable with.
Whatever comes next in the unending train of new tools, technologies, and techniques, having a solid understanding of the problem you are trying to solve will help you fight through the hype, integrate the right tools, and set realistic expectations.
