Artificial Intelligence Can't Replace Human Interaction

Automation within procurement systems have developed.

SIG University Certified Sourcing Professional (CSP) program graduate Katherine Smith shares how lessons in the CSP program informed her during her company’s digital transformation.


One of the many areas of the CSP program that I found to be of great relevance for my role as a Procurement Specialist at Fannie Mae was the Lesson on Artificial Intelligence. Being of an older generation, I can remember working as a manager when there were no computers. Inventories were taken manually and then extended using calculators or adding machines. It was a significant step forward when we could automate that process.

Gone are the days of spending long hours on the phone reading off SKU numbers and quantities needed when placing orders for products, such as the food and paper supply needs of a hospital foodservice department. 

Digital Transformation in Procurement

Similarly, I have seen the automation within procurement systems develop over the years. We now utilize a sourcing program that helps provide analysis of the responses to RFX’s and provide important comparison charts that we share with our business partners.  As we approach the end of a fiscal quarter, we are able to perform analyses such as Burn Reports and consolidated Pending Ends Reports to determine contracts that may need renewal through an actual amendment as opposed to simply extending them to the end of the projected spend.

There is a strong digital transformation initiative underway at Fannie Mae. I found that the information provided in SIG University’s curriculum helped solve  issues I discovered in sourcing for some of the digital initiatives. One key point that stood out was the following: “As digital-age services become more prevalent, companies need to be aware that traditional approaches to supplier selection do not fit digital-age services. Each new platform requires multiple integrations and the risk increases along the way.” 

Innovate to Collaborate

Instead of just sourcing for consulting firms to provide human resources to perform services, we now find the services may include integrating an accelerator, proprietary software or proprietary tool.  The contract now carries a greater level of risk, and legal questions come up regarding the ownership of deliverables created from that software or tool. In some earlier iterations, we allowed a supplier to host an application for us on their platform. But when there are service issues or product failures, it becomes increasingly hard to “divorce” from that supplier and still maintain that application. Our newer sourcing procedures look into those issues and involve risk and legal at the beginning of the sourcing process, instead of just looking for approval at the end.

Artificial Intelligence Fuels Innovation

 Artificial Intelligence as it relates to contracting was also of interest for me. For the first time this year, our department utilized an Artificial Intelligence program while we were refreshing our preferred vendor program. Instead of having our firm’s lawyers pore over the Professional Services Master Agreements, which were redlined by many of our potential suppliers and their lawyers, we allowed a machine to do a first-round review. As a result, similarities in certain areas could be noted as being more of a universal concern. Additionally, the computer program was able to rank the contracts into varying levels of “issues.”  From that point, we were able to input some of the universal corrections suggested by our lawyers, and only the very contentious contracts had to be sent for legal review.

As we move forward, we will be working with a supplier on a “contract authoring” project. This will be an exciting proposition and I look forward to being on the team that implements this process. I believe the information I learned from SIG University’s CSP program will benefit me in this initiative. But I also will keep in mind the admonition, “Artificial intelligence will never take away the need for human interaction.”  Thank you for all the knowledge I have gained, SIG University!


The Certified Sourcing Professional (CSP) Program is a 12-week course that focuses on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.

 

Katherine Smith, Sr. Contracts and Procurement Specialist, Fannie Mae

Katherine received a Bachelor degree in Hotel, Restaurant and Institutional Management from the Honors College of Michigan State University.  She had a Management career of 8 years in Restaurant Management, followed by 20 years in Institutional Foodservice.  Katherine chose to leave the Foodservice industry to specialize in one of the Business aspects she was familiar with in her management career.  After sampling opportunities in Accounts Receivable, Accounts Payable, and Payroll, Katherine found a rewarding second career in Procurement.  Katherine has worked in Procurement at Fannie Mae for 10 years.