Adopting New Technologies for Effective Procurement

Written by Ma Hwee Na, MISPMM

by Ma Hwee Na, MSIPMM

Adopting New Technologies for Effective Procurement

Written by Ma Hwee Na, MISPMM

by Ma Hwee Na, MSIPMM

by Ma Hwee Na, MSIPMM

There is a lot of talk regarding latest industrial trend where digital technologies, such as the Artificial Intelligence, Internet of Things, 4D Printing, Mixed Reality and Robotics Process Automation. We believe that new technologies will significantly change the way we work, and will transform the procurement. Procurement is one of the most obvious functions that could harness this emerging technologies and reap the obvious cost and time saving benefits. Here are some example of how emerging technologies influence in procurement task.

AI robots

The diagram above shows A.I, robots and smart things promise an intelligent procurement in all facets of industry around the world.

Mixed Reality

Virtual Reality and Augmented Reality are terms relatively known in the simulation world. Mixed reality is the third term which is increasingly becoming popular and it refers to the merging or combination of virtual environments and real environments where both worlds can exist together. In other quarters, mixed reality is also known as “Hybrid Reality.

Sharing real world virtual spaces through mixed reality can be beneficial for procurement members with suppliers when design a new product, or product development.. For instance, representatives of buyer can carry along mixed reality devices to an appointment with suppliers. The representative and suppliers can then both wear the devices and see a new model as explained by the representative. Through this, they can then visualize the product and also simulate it. Through such a shared experience, the representative will not only build deeper connections with the suppliers, but also offer a more detailed explanation on the product.

MR device a sample maker room

The diagram above show a team uses MR device a sample maker room, collaborating in mixed reality.

Procurement team usually ordering new goods from online catalogues, with clear product images full descriptions and specification will always occur mis-ordering issue. imagine if buyers could see goods, able to virtually pick up items, spin them around, see details like stitching up close and make changes faster. They can exploring all products in detail before making any buying decision, but remotely from their desk. Mixed Reality is reduce returns by removing the initial guesswork. Procurement teams want to know what they’re purchasing and mixed reality is helping customers become more confident in their buying decisions while providing quantifiable differences for online merchants. This can reduce time wasted on chasing returns and refunds. This maybe can give a great help if order products from oversea.

Products packed in carton

The diagram above show the products packed in carton are arranging onto pallet for delivery.

Robotic Process Automation

Robotic Process Automation is a feature of intelligent process automation that describes logic driven robots executing programmed rules on mostly structured data. Robotic Process Automation takes productivity optimization to the next level by redefining work and re-assigning employees to execute higher-value activities. Process bots are capable of independently performing simple human-like functions such as interpreting, deciding, acting and learning.

Robotics Process Automation

The diagram above show the capabilities of Robotics Process Automation.

Application RPA to Procurement

Procurement teams spend too much time on administrative tasks. They would rather spend more time on growth-enhancing activities. Robotic Process Automation can help to multitude of processes across multiple functions and realize value quickly.

1. Help in supplier sourcing, selection monitoring and manage performance of suppliers. Could handling cold calls, paper works and payments, and also analyze suppliers at once and make recommendations about which suppliers to approach. With the right data, bot can compress sourcing timescales and purchasing processes.

2. Manage supplier relationships better, ensuring that invoices are ready to be pay on time, based on their specific payment terms. Bots can be used, based on previous data patterns and set parameters, to ‘supervise’ how actions are carried out, ensuring they’re done so in line with organizations buying policies and guidelines, minimizing errors within the purchasing cycle and subsequent non-payments risks.

3. Inform buyer and start the conversation with the supplier for a change in pricing. In fact, all pricing for certain products could be handled by bots running e-auctions on a regular basis with little or no human interaction.

Blockchain

Blockchain could apply in invoice and payment management, as fraud prevention solution. Any invoice and payment transaction would have to be checked and approved by all participants. Any change to the invoice made by any individual, for whatever reason, would need to be re-submitted (as a new block) and validated by all the users within the network.

Blockchain could also help protect against unauthorised access or hidden changes to information, in areas of contract management and supplier information management. As business expand to other countries around the world, their growing supplier network and payment operations will inevitably put them at greater risk of fraudulent activity. Here blockchain could help, especially if they are starting to operate in territories more culturally prone to corrupt practices.

Blockchain opens up a new approach to deal with the problem, and we’re starting to see procurement leaders and the suppliers that using blockchain gain benefit procurement security in transactional and operational. Blockchain tracking system is operating in manufacturing nowadays, one day in the future, blockchain technology may apply on drone package delivery, combination of this two technologies not only bring a great impact to logistic, also procurement and retailers.

Blockchain works in payment transaction

The diagram above show how blockchain works in payment transaction.

Stockbot

Except Drone, Stockbot is one of the robot able to take autonomous inventory in warehouses and retails stores. Warehouses which do primarily Cross-docking, Break packs are not suitable for drone operations, as the inventory is mostly in ground locations.

Stockbot provides an fully control of products and its location in the store. It also avoids human error. It can work 7/24 without supervision, automatically adapting itself to any change in the warehouse without needing to reconfigure it.

One of the example is aisle-roaming robots used by Wal-Mart. The nondescript robots include a base with an attached tower equipped with cameras that scan aisles for any of the above mentioned inconsistencies. It is fitted with sensors to record the state of the store’s stock, with the compiled data sent to the cloud for processing and analysis.

Other on-board sensors stop it bashing into shelves and customers. An instructional report is automatically produced from the collected data, allowing staff to see which items need replacing or tidying up. It’ll also point out misplaced products and could even include specific recommendations aimed at improving the store’s performance. Robot comes with a charging dock to which it can autonomously navigate between scans, enabling pretty much non-stop operation.

The diagram below show the Stockbot to help in out-of-stock issues in Wal-Mart.

Stockbot

Overcome the challenges of Digital Transformation

The most common issues we’re facing were due to internal factors. Every journey requires preparation to overcome the challenges.

1. Handling employees push back during digital transformation
Employee may feel uncomfortable when routines work are changed. Digital transformation may make employees feel discomfort and threatened. Being consistent and transparent. Keep employees informed and involved through the whole process. Empower them a future they can all work towards.

2. Develop a company-wide digital transformation strategy
Organizations need to clarify a vision, set goals to reach it, and give whole team a purpose. Whole company need working toward the common goal. Think about who, what and why to do in the digital transformation.

3. Expertise to lead digitization initiatives
Talent and technology are needed to go through digital transformation. Train employees and help them build the skills needed for innovation.

4. Don’t let organizational structure dictate digital future
Digital transformation may change employee’s daily task. This mean changing role, changing department or organization structure. Changes allow employees experience new functions in their current roles.

5. Managing your budget through the digital transformation
Prepare for budget constraints that may limit any part digital transformation journey. Checking budget when building strategy to see how much company can handle. Develop a plan that involves several phases over several years if required. Build a strong foundation that drives a broad set of outcomes for company, customers and employees.

Conclusion

In recent years, new technologies have changed the way organizations operate. The digitization of procurement give an opportunity for man and machine to work together in a way that impacts an entire organization functions. Procurement is, after all, one of the departments in an organization that can add strategic value to all lines of the business and operations, gain a welcome competitive advantage.


References:

Ann Stromberg. (2017) “RPA: What Does It Mean for Procurement and Finance?”.
Retrieved from: https://www.basware.com, accessed 01/12/2017.

Erich Hoch. (2017) “Digital Transformation Challenges”.
Retrieved from: https://www.jabil.com, accessed 03/12/2017.

IDG Connect. (2017) “What does Blockchain Technology mean for the Procurement Industry?”. Retrieved from: http://www.idgconnect.com, accessed 02/12/2017.

Oliver Wyman. (2017) “Digital Procurement.”
Retrieved from : http://www.oliverwyman.com, accessed 01/12/2017.

Paul Smith. (2016) “Payments to Smart Contracts, 8 Ways that Blockchain will disrupt the world of Procurement as we know it.”
Retrieved from: http://medium.com, accessed 30/11/2017.

Richard Bell. (2017) “Robotic Process Automation and the Future of Procurement”. Retrieved from: https://sourcingsolved.com, accessed 02/12/2017.

Thomas Macaulay. (2016) “Augmented Reality for the people. WaveOptics co-founder explains his journey.” Retrieved from: https://www.techworld.com, accessed 09/12/2017.

About the Author: Ma Hwee Na has substantive years of purchasing experience in the manufacturing and garments industry. She is a member of the Singapore Institute of Purchasing and Materials Management (MSIPMM). She completed the Diploma in Procurement and Supply Management (DPSM) in December 2017 at SIPMM Academy.

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