AI and Automation in Procurement

What is the role of digital in procurement transformation?

At WNS we provide technology, strategy, and execution services to procurement organizations globally to help augment the procurement ecosystem and make it more robust.

I've been with WNS Denali (now WNS Procurement, Powered by The Smart Cube) since the launch of Denali Sourcing Services about 15 years ago, and it's been a journey. If I go back to how I got into procurement, it was through digital innovation with a company called FreeMarkets, where the concept of reverse auctions was pioneered. The Internet was up and coming at that point, and leveraging its power to conduct transparent, real-time negotiations was quite a disruptive idea. Online sourcing had a big impact on procurement in those early days, and it continues to be an important best practice across industries and categories of spend.

Both then and now, when we look at procurement as a function, we look at it in three layers:

• Transactional procurement, which is basically the core work every organization must do to remain up and running;

• Tactical or operational procurement, which is more project-based, such as running RFPs, negotiating contracts, and managing suppliers; and

• Strategic procurement, which includes category management, creating a procurement roadmap, and truly looking across the full end-to-end ecosystem.

Over the years, there’s been a lot of innovation around procurement technology at the transactional and/or operational levels, as we all attempt to increase efficiency and remove friction from our day-to-day processes.

However, there's been very little focus on applying the power of technology to strategic procurement, of answering the question of how to use these innovations to make procurement more effective as well as more efficient. And that’s an area that WNS Procurement has been spending a lot of time on.

How can we optimize the procurement ecosystem using AI and digital innovation?

Let’s first talk about the concept of the procurement ecosystem. To me, that’s a very important lens to use, because when we look at how we maximize the value of procurement, we can’t just isolate one part of the function. Everything works together. Everything is interdependent. It’s a dance. Procurement value is not just about how you source more effectively and efficiently, or how seamlessly you onboard your suppliers, contract with them, or pay them. Myriad elements must work together in synchrony to optimize a procurement program. I call it Connecting the Dots!

Data is a big dot. There’s so much of it at our fingertips, and the amount of information we process seems to grow exponentially every year. This is especially the case over the last ten years, as digital platforms have become more common enablers. Data is a big piece of the ecosystem, and it’s a mission-critical element to optimize. This is a very opportunistic place for the application of technology.

People are a critical dot as well. Within a single procurement ecosystem, you have suppliers, sourcing managers, category managers, legal, finance, lines of business, and other entities, all moving forward their workstreams and agendas at once. How do these different players in the ecosystem feed off each other in the most productive way for the organization? Digital innovation has an important role in connecting these different players, and that alignment is pivotal for success. So you see, connecting the dots across data, insights, and decisions among multiple stakeholders will help make the ecosystem more robust and well-functioning.

What are the challenges around implementing AI, especially with regard to category management?

We’ve been on a journey for the last ten years to make category management more effective overall. And that journey starts with people, with skillsets, and with the mindset of thinking like the CEO of your own category!

Today’s category leader needs to have a plan and a vision, to fully align with stakeholders, and importantly, to understand the perspective of the supplier. At the same time, there’s the constant drumbeat of risk management, cost reduction, and efficiency to address.

What is the role of AI and technology in enabling all of this? Again, it's about connecting the dots. If I'm a category manager, what do I need to be more effective in my work? Does AI replace humans? Will it replace category management?

The answer is no.

I think AI makes humans more effective. We still need human intelligence to drive and own the decisions and the strategy and the execution of category management, but technology can make us much more effective. AI empowers category managers; it doesn’t replace them.

I'll give you an example.

As a category manager, let’s say I have a platform that can look at my historical patterns, whether that’s the rate at which I’m adding new suppliers, an analysis of my buying patterns, my contract terms with various suppliers, or other inputs. That technology then connects the dots for me and marries those inputs with insights of what’s happening in the market. The result is predictive insights, which can be a huge benefit to me in my work.

I can then bring those insights into discussions with my stakeholders, which will help me to better understand where they're going and how I can develop a procurement strategy that best aligns with their objectives.

There are other ways that AI and machine learning can support stakeholder relationships as well. For example, wouldn’t it be great if I as a category manager could see at a glance my interactions, projects, results, and other key touchpoints with the business, as well as access recommendations for future project streams? That way, I would improve my relationships and collaborate with my business stakeholders in the most meaningful ways.

These are the things that we've been working on for the last several years with our enabling technology.

A platform called CategoryTRAC essentially pulls together the key elements that make the category manager more effective — insights from data, knowledge and intelligence, stakeholder management, pipeline, and savings management—into one cohesive whole.

We add to that a product called PIA, a Procurement Intelligent Assistant that helps to remove friction from the category manager’s day-to-day work. A category manager can ask PIA something like this, for example:

“Hey PIA, what have I spent in XYZ category over the last 12 months?” Or” Hey PIA, when was the last time I engaged with XYZ supplier?” Or even, “Hey PIA, what were the results of Project XYZ?”

PIA sources information from ProjecTRAC (our end-to-end project tracking and portfolio management solution) and InsighTRAC (our holistic analytics platform) and provides that info to the category manager on demand. And I think that's the vision–to remove friction and make enabling technology much more effective.

And let’s not forget that concept of effectiveness, of enabling the category manager to advance the strategic elements of their work. That’s where KnowledgeTRAC comes in, helping category managers to transform their procurement knowledge into a strategic asset through curated market intelligence derived from AI. What you get is a more holistic perspective on the category, and therefore a clearer path to making better strategic decisions for it.

One of the biggest challenges we have in our business today is around the talent market.

Is there a role that AI and Digital Enablement play there?

Nobody would dispute that there’s certainly a talent crunch and scarcity in the market right now. I think that, at the root of it, people want to do more meaningful work. To me, that’s another way that technology can enable positive change.

By using digital enablement to add efficiency, transparency, insight, and automation to the function, we free up strategic category managers to be just that---strategic. And again, we create the capability and capacity for those professionals to look across the whole ecosystem and create change. That’s crucial, because, at the end of the day, it’s those ideas and innovations that will shape the future of the function.