In yesterday’s post we noted that next year is the year of the pig, and that it could bring greed and obnoxiousness to Procurement, as per the western stigma, or it could bring wealth and good fortune, as per the eastern stigma, but that your fortunes all depend on whether or not you make the effort to acquire a next-generation best-of-breed system. If you acquire a next-generation best of breed system that uses analytics, optimization, advanced modelling, machine learning and/or AI, you can realize value and wealth. If you don’t, well …
So what should you look for? As per our upcoming series on AI in Procurement Tomorrow on Spend Matters Pro [membership required], there are a number of advanced functionalities coming your way that will add value. These include [but are not necessarily limited to]:
- Overspend Prevention
- Invisible Buying (of all types of MRO products and services)
- Automatic Buying (including basic sourcing)
- Automatic Opportunity Identification
- Automatic Category Analysis and Emergent Category Identification
- Procurement Method Identification
To convince you of the need for advanced (AI-based) applications to find the wealth you need to make Procurement profitable again, and the importance of reading the doctor‘s in-depth thought leadership pieces (if you have Spend Matters Pro membership), we’re going to give you a preview of the power of a platform with invisible buying capability.
While current systems can automatically re-order MRO and stock room items when minimum inventory levels and EOQs are defined, the reality is that MRO and stock room items change over time as old products are retired, new products are selected, and organizational needs change. And it can be a lot of work to maintain these items accurately over time.
But why should you have to? After all, the system can infer when a product is retired … as orders stopped being placed. The system can infer what product replaced it, as it’s not only in the same sub-category but ordered when the previously item would have been ordered by the same department and stocked at the same location in a similar quantity (under an appropriate metric). And so on.
But a modern Procurement platform, with augmented intelligence technology, can:
- Auto-detect regularly needed items through repeated orders
- Auto-compute usage schedules by tracking inventory levels and computing trends
- Auto-predict best order quantities based on projected trends, re-order times, shipping costs, and inventory costs
- Add the items to the MRO repository with minimum stock thresholds and projected EOQs
- Use the embedded assisted intelligence to re-order the MRO items on schedule
- And re-calculate the inventory levels and EOQs on a monthly basis using actual usage data to update the trends
And you don’t have to do tactical inventory review and re-ordering when that time can be better spent on value-generating strategic sourcing events.
So keep your eyes open for the doctor‘s upcoming series on AI in Procurement Tomorrow over on Spend Matters Pro [membership required] and, if you haven’t already, read the doctor‘s series on AI in Procurement Today (Part I and Part II) if you haven’t already.