How will Technology shake up Procurement? Ajay Patel – Director Of Purchasing Teresa Holcomb – Manager IT & Scientific Purchasing

Agenda Major technology changes in procurement What do they mean? What does this mean to Procurement? How will this impact you What are your next steps? Questions?

background Many technologies will change how we do business Change procurement’s value proposition Change our staffing plans Presentation focuses on portions of Artificial Intelligence

background

Artificial Intelligence I propose the question : Can machines think? (Alan Turing)

Artificial Intelligence Self-driving cars rely on deep learning for visual tasks like understanding road signs, detecting lanes, and recognizing obstacles

Terminology Artificial Intelligence (AI)- machines imitating human intelligence. Machine Learning – the capability of a machine to learn and improve it’s own performance. Deep Learning – is capable of learning unsupervised from data that is unstructured or unlabeled, e.g.; self-driving vehicles. Bots - A bot (short for "robot") is an automated program that runs over the Internet, e.g.; virtual assistant, a chatbot.

Machine Learning

Terminology

Procurement process Descriptive analytics – What happened? Diagnostic analytics – Why did it happen? Backwards looking Descriptive analytics to turn data into information .    What happened? Who spent how much with whom on what? Diagnostic analytics info backward-looking insights. Higher Prices Why, ML root causes.

Procurement process Predictive analytics – Where’s my risk/need? Prescriptive analytics – What’s my strategy? Forward looking Predictive analytics - turn information into forward-looking insights.  Forecast Prices. Supplier? Prescriptive analytics to turn insights into action. What should my RFI questions be? Best strategy to source? Market basket? How do I minimize risk and savings tradeoffs? Weather Football Game Final Weeks

Machine learning Machines need data to learn…

It’s all about the data Internal Data Supplier Provided Data Spend Analytics Supplier Performance Supplier Provided Data Subscription Data Aggregators Consumer Price Indexes Weather services Public Data Artificial intelligence systems are only as good as the data they consume

Applications to Procurement Greater automation of menial procurement tasks Speech recognition/virtual assistant for requisition and approval process. Image of the item to purchase. Automate low dollar, high transaction purchases, Take a picture of the item, identifies and process for approvals, order placed.

What does AI mean to Procurement? Detecting Patterns Cost/price discrepancies Unusual order quantities/frequencies. Top-Performing suppliers Detect and predict purchasing patterns

People IN Procurement New Processes Require New Skills Buyers need more technical expertise for the software, data and process flow. Buyers assess risk. Provide counsel AI provides; Documents w/ AI flags.  Contracting standards. How to debate & structure clauses.

Action Items Learn - Get up to speed on AI procurement tools. Add Technology expertise to procurement qualifications. Develop Data Organize data Catalog and analyze types of procurements. Identify new data sources Automate Menial tasks Low dollar, high transaction purchases Learn attending conferences, studying best practices, and engaging with industry leaders and AI tool vendors.

Empowering Procurement Financial Benefits – identify opportunities for Bottom line impact. Higher efficiency Data – price changes, ordering pattern, supplier information. Automation Negotiations are data driven. Cultural Benefits Changing the conversation w/ stakeholders & leadership. Employee satisfaction = data driven Smarter faster decisions. data driven, Price movements, consumption volumes, supplier performance, competition Predictive

The Future Of Procurement In A Word: Intelligent Artificial intelligence and Machine learning are here. Digital technologies drive simplicity and automation. Intelligent platforms exist to provide data insights Artificial Intelligence brings facts from unstructured procurement data with predictive insights for a more intelligent source-to-settle process. The world has gone digital. Menial tasks, low dollar transactions are automated. smarter, faster decisions

Poll

Questions?