Mary Zampino's blog

How AI Will Transform Procurement

procurement transformation with ai

Procurement is entering a new era of increasing complexities in which traditional measures of success such as cost savings are no longer the sole focus.

Instead, and as reported in the Deloitte 2021 CPO Survey, "changing business dynamics and increasing layers of complexity" and corresponding "expectations" are transforming the way the industry thinks and acts.

For example, new and more challenging areas such as "climate change, geopolitical stability," and "increasing societal expectations" are now part of the new equation.

The introduction of these emerging variables is causing organizations to re-examine their digital transformation strategies, including how Artificial Intelligence (AI) can help them address the industry's challenges.

The SIG Survey

In 2021 SIG surveyed 100 procurement professionals from Fortune 500 and Global 1000 organizations on digital transformation and AI in procurement.

Based on the results, it is clear that those responding to the survey believe that "procurement's priorities lie with how AI technology can streamline the roles and processes to deliver meaningful and sustainable results."

Unfortunately, and despite the opportunity for more significant gains, the survey reports that "several obstacles" make it difficult for organizations to "bridge the divide" between the promise of digital AI and the realization of its optimal benefits.

Crossing the Divide

Understanding the importance of AI and identifying the challenges with realizing its potential to redefine and empower procurement to achieve critical objectives is the first step to crossing the aforementioned divide.

Mary Zampino, Vice President – Content, Research & Analytics

Trending in the SIG Resource Center – February 2021

In early December 2020, Google published its trends for 2020, listing the top searched terms, people, news stories and more. It is no great surprise that "Coronavirus" was the top searched term and news story. Nor that Tom Hanks, Kobe Bryant or Kamala Harris were high on the list. What I found remarkable is that these trends were not reflected in the top searched terms for SIG's website in 2020. In fact, it was business as usual on our website. Sure "COVID" and "resiliency" and "remote work policies" made the list. Website traffic and searches increased in volume, but our visitors were searching for the same topics and downloading some of our best case studies for help.

Here's just a short snapshot of some of the trending searches in 2020:

Category Management

Most sourcing professionals know what category management is and a critical mass of our members practice category management at varying levels of maturity. This SIG blog summarizes our resources in one location and is one of our most visited pages. Members frequently download our Template for Building a Business Case for Category Management.

Mary Zampino, Vice President – Content, Research & Analytics

7 Reasons to Respond to that Survey

SIG is hosting a survey to find out what matters most to SIG members.

Every day, my inbox is bombarded with requests for feedback. Most requests I honor because I am a data nerd and I know there's some fellow data nerd behind the scenes who really needs the insight for their business case. Also because my husband is a PhD and we spent several years of our marriage dedicated to quantitative assessments - I have seen tears spilled over empty questionnaires.

Many survey requests I archive for later because I want to see how our partners and competitors collect data and use it to shape their programs. But mostly, I just think it is incredibly important to share your opinion when asked. (I could write a whole different blog on when NOT express your opinion, mostly from first-hand experience.)

This is a list of the top 7 reasons why I think people should respond to SIG surveys in particular and surveys in general.

SIG Member Input Drives Content Creation

As sourcing professionals, you are really good at understanding the value of your partnerships and ensuring you realize that value -- that is why we have strategic sourcing, negotiations, performance measurement and things like vested sourcing. Providing your input to SIG about what you need from our partnership is critical to us delivering the content, the speakers, the tools, the connections and the awareness you expect from us. You are paying for it, so let us know how we can serve you!

Expressing Your Opinion Is Good for Mental Health

Get it off your chest, share your concerns and join a community of people who are facing the same problems as you. We know your leadership, your customers and your team are all leaning on you to make 2021 successful. Telling someone about this can be extremely helpful, because it means someone is in your corner listening.

Mary Zampino, Vice President – Content, Research & Analytics

Resources for Supplier Diversity Programs

The benefits of a supplier diversity program can have lasting impacts on your community and your organization.

For those who work in any area of the supply chain, diversity is a word that comes up often. Supplier diversity or diversity in contracting are programs that can be either mandatory (i.e., requirement to fulfill state or federal contracts) or voluntary (i.e., procurement/social responsibility strategy).   

Whether your organization chooses diverse suppliers for advocacy and social responsibility reasons, to comply with state or federal regulations, or to simply meet your stated requirements and work scope, the benefits of supplier diversity can have lasting impacts on your community and your organization. 

Starting a Supplier Diversity Program (SD Program) in your organization requires input and collaboration from various stakeholders at all levels. The SIG Resource Center has a wealth of information to help you begin the process to implement an SD Program, including how to make the business case to internal stakeholders, best practices and benchmarking studies from your peers.  

Mary Zampino, Senior Director of Global Sourcing Intelligence

COVID-19 Resources for Sourcing, Procurement and Workforce Management

Covid-19 resources

SIG is always asking our event attendees, current and future members, and readers about their current issues and concerns. I have been tracking and analyzing their responses for almost 10 years now. While cost savings and value-add remain consistent and strong priorities, there's no doubt many are very concerned about meeting pandemic-related needs.

We are blessed to have a community of thought leaders and generous, experienced professionals who are willing to share their experiences and describe their wins.

We offer the following resources in your quest for COVID-19 related items specific to sourcing, procurement, and workforce management. SIG members can continue to search for related articles here.

In the resources listed here, you can learn how to set up crow's nest and a war chest, hear how Sprint/T-Mobile are managing the crisis using AI for their spend analytics, specific procurement best practices for today's market, how technology enhances continuity in your workforce and what happens if and when this is "all over." Plus, so much more.

Checklist: 6 Steps for Navigating Through the COVID-19 Storm

Covid-19 has transformed from a short-term hiccup to a perfect storm at an unprecedented pace. It is normal to feel disoriented and to feel like you're running in eight directions at once.

>>Read More

Mary Zampino, Vice President – Content, Research & Analytics

Sustainability in Sourcing Part II: Sourcing's Role

An image of a glass globe in the forest.

In previous blogs, SIG has covered the basic concept of sustainability, including an overview of its various dimensions. In this post, I will touch on the role that sourcing professionals can have in meeting corporate sustainability goals.

Why should sourcing have a role?

Sourcing is uniquely positioned to contribute to meeting a corporation's sustainability goals because sourcing typically has expertise in:

  • Creating alignment to corporate goals
  • Building frameworks to measure success
  • Researching market conditions and supplier capabilities
  • Conducting strategic negotiations 
  • Designing innovative methods for value creation
  • Ranking the priorities of stakeholders with supplier offerings   
  • Identifying risk and mitigating responsibly

The reduction in costs after implementing a sustainability program can exceed the costs of implementation – in other words, you’re spending money up front but in the long run, you save more than you spend. For example, if an organization were to target the spend category of corporate services and facilities management (FM), capital may be invested in working with a supplier to install a new system that reduces energy consumption at the company's North American headquarters, but in the long run, the reduction in energy costs saves the company money – which of course, can then be reinvested.

In this example, procurement and sourcing are uniquely positioned to make this happen. Most likely Sourcing negotiated the original FM contract, understands the innovative capabilities of suppliers, has heard many recent pitches on new products, and is adept at performing the analysis that proves an investment can have a significant return in hard costs, and even soft costs.

Mary Zampino, Vice President – Content, Research & Analytics

7 Sourcing Business Models to Improve Sourcing Effectiveness

Sourcing Business Models

Very few companies operate today without external support from third parties. Whether they are providing services, such as catering or cleaning, or specific parts necessary to manufacture products, most companies rely on outside suppliers in some capacity. For years, many organizations treated suppliers like nameless, paper-based transactions, designed to get the best price and little else. Over the past decade or more, much research has been done that supports a fundamentally different approach, one that embraces the idea that more can be gained from suppliers if the agreements are collaborative and based on output or outcomes – if they are seen as “relationships” and not “transactions.”

This article outlines seven sourcing business models that organizations should consider to improve their sourcing effectiveness and get the best results from supplier relationships.

Key Concepts to Improve Sourcing Effectiveness

Nobel prize winner Dr. Oliver Williamson laid some of the groundwork for the business models with 10 key lessons that contribute to more effective sourcing agreements.

1. Look at sourcing as a continuum, not a final destination
2. Develop contracts that create mutual advantage
3. Identify all costs, including transaction costs and their impact on risk and price
4. Understand that the greater the bilateral dependencies, the greater the need for preserving continuity
5. Use a contract as a flexible framework, not a legal weapon
6. Develop safeguards to prevent defection
7. Minimize transaction costs with shared visions and predicted alignments
8. Be credible – your contracting “style” matters (read: don’t strong arm your suppliers)
9. Build trust – leaving money on the table will come back to you in spades
10. Keep it simple

Mary Zampino, Vice President - Content, Research and Analytics

Best Practices and Resources for Presenting at Industry Events

A man gives an industry presentation to an audience.

Presenting at an industry event is an important step in any professional's career. It is also an excellent opportunity to promote, showcase and reward a team for a job well-done. But most importantly, it is a critical factor in keeping an industry relevant, competitive and strong. Every professional worth their salt should consider it their duty to share their successes and failures.

Of course, in order to present at an industry event, you must first submit a proposal in the form of a session abstract. Sourcing professionals are well versed in writing business cases and category strategies, and we have all read our fair share of good and bad proposals. However, when it comes to writing a speaking proposal, many sourcing professionals don’t give it the time or energy it deserves. These abstracts are often used as written to describe your session, and if the goal is to share your thought leadership, you will want to make sure your abstract gets your audience’s attention. Consider the following five tips to write a compelling proposal for your next industry event.

Why present?

To write a good proposal, first define your objective for presenting to help drive the format and content. You may decide to present to showcase you or your team's achievements and thereby gain recognition. Or you may use the opportunity to establish yourself as a thought leader on a particular subject. Presenting in a room of peers or potential clients can also help you better understand the trends in your industry and the needs of your customers.

Mary Zampino, Senior Director of Global Sourcing Intelligence

What Does Augmented Reality Mean for the Sourcing Organization?

Augmented reality (AR), or mixed reality, is a technology every sourcing professional should understand. It may seem tangential, but forward-thinking executives will take heed as AR will become more and more prevalent in the sourcing industry. AR differs from virtual reality in that virtual reality is a total replacement of your current reality. Augmented reality can be thought of as a digital addition, or supplement, to your current reality. A perfect example is the Snapchat face filters - which overlay illustrations on digital images, specifically faces. My Snapchat buddies send me pictures of their faces with doggie ears attached and so on. Another example is the app Pokémon Go, in which participants found digital creatures in the everyday settings of their reality - places like the park, campus, restaurants and so on. Augmented reality is a technology that can provide packaged experiences that feel real. There are two major types of applications of AR in the market today, consumer and business/industrial.

You are probably familiar with Snapchat filters and Pokémon Go, but what about the augmented reality app that helps you decide where you might place new furniture in an existing room like Ikea offers? Or how about an AR app that allows you to point your device to the night sky and interact with the stars? Or an app that helps healthcare workers find the most appropriate place to insert an IV?

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

Getting Started with RPA

The Hackett Group, in conjunction with Symphony Ventures, recently published a whitepaper regarding Robotics Process Automation (RPA). (You may recall that Symphony Ventures conducted an excellent RPA proof of concept at the SIG 2017 Spring Summit with American Honda.) In this whitepaper, the authors provide a blueprint for selecting sourcing opportunities appropriate for RPA. Any sourcing professional worth their salt, should be considering RPA as a viable strategy after reading this statement, "Individual tasks of such processes may be fully automated with RPA, eliminating 100% of labor and up to 90% of cost. The total efficiency improvement achievable through holistic transformation using RPA across end-to-end transactional process can add up to 50% to 75% of baseline cost."

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

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