Category Archives: Decision Optimization

AI CANNOT TELL YOU WHAT TO DO!

And I’m so glad I’m not the only one saying it!

The (Strategic Sourcing Decision Optimization [SSDO]) Grand Master himself Paul Martyn recently wrote a great post on LinkedIn that made this exceptionally clear and how the real problem is knowing what to do.

Paul starts off with three critical statements:

  1. AI can tell you what’s happening
  2. AI can’t tell you what to do
  3. In sourcing (procurement) the hard part isn’t visibility, it’s choice.

More specifically, it’s making a decision when every decision has tradeoffs, constraints, and (sometimes dire) consequences.

Unless you have an operating model to make those decisions, powered by technology that can actually help you adhere to the constraints, make the tradeoffs, and understand the consequences, the best case with AI is you get overwhelmed with the complexity of what’s happening.

So if you want to be buried in data and complexity and pretend you know what you are doing, there are dozens of BS AI players ready to help you.

But if you want the ability to make good decision, understand tradeoffs, restrict your inquiries to scenarios that adhere to constraints, and model the potential consequences when things go wrong, you need decision optimization with multi-objective capability. That’s Coupa (Trade Extensions). Or Jaggaer (Bravo Solution). Or Keelvar (just Keelvar). Not some BS AI startup offering nothing more than a clod or chat, j’ai pété LLM wrapper.

And if you want to know how to build the right operating model backed up by the right multi-objective optimization model(s) (and save millions while reducing risk and increasing quality), you contact Paul Martyn. He’s saved Billions. (Whereas in 94% of companies, AI has effectively saved 0.)

Now for those who don’t know, not only am I one of the last original (independent) analysts standing in our space (20 years doing SI next month), but I am likely the last original strategic sourcing decision optimization model builder left standing too. (Mindflow [acquired by Emptoris], 2000. First multi-line item model. Before CombineNet [acquired by SciQuest, renamed Jaggaer]. Before Emptoris [acquired by IBM and sunset]. Before all of them. Twelve years before Keelvar. First model to do more: Trade Extensions, acquired by Coupa.)

So unless Thomas Sandholm or Arne Andersson want to come out of retirement and recommend someone better — it’s Paul Martyn. No one still active in our space goes as far back or has worked with as many platforms as he has. (And I helped a PM/Consultant who worked at 2 different optimization providers get hired at 3 others over the past 20 years, and even that doesn’t match Paul’s resume!)

Why Do You Need Frameworks and Systems for Sourcing Excellence?

I’m going to call out a comment made by the Sourcing (Optimization) Grand Master himself, Paul Martyn, to a recent post I made echoing Matthew Buckingham‘s statement that today’s procurement leaders aren’t enough for tomorrow:

“If tomorrow’s environment demands creativity and crusading, how do you see procurement leaders operationalizing that without it devolving into noise?

More specifically:

What does “creative” procurement look like in a measurable, repeatable way

And how does a “crusader” avoid becoming a blocker instead of an enabler when pushing the C-suite to abandon comfortable models?

Feels like the gap isn’t mindset, it is translation into decision systems that actually move outcomes.”

You need

3) outcomes

2) created by decision systems

1) that support your sourcing and procurement needs

This requires

1) Sourcing Excellence in execution

2) BIC multi-objective optimization and analytics that fit into

3) a proper category framework for your organization, like the Busch-Lamoureux Exact Purchasing Framework, that helps you understand the systems and processes you need to employ in each category

Links

AI Doesn’t Drive Savings, Innovation, or Performance. Sourcing Excellence Does.

And Sourcing Excellence requires (Strategic Sourcing) Decision Optimization.

As the Sourcing Optimization Grand Master Paul Martyn has clearly stated in his post on how Procurement is at an Inflection Point:

  • AI won’t fix Procurement.
  • Dashboards won’t fix Procurement.
  • Better Data won’t even fix Procurement.

ONLY structured, modelled decision making that gets executed in the practice of true Sourcing Excellence will.

And that structured decision making will be based on true multi-objective sourcing optimization that takes costs, risks, and goals into account to help you, the intelligent human, make the right decision that a dumb machine will never see.

And if you want to find out how that’s done, reach out to the Sourcing Optimization Grand Master himself who has saved Billions in his career WITHOUT increasing risk, liability, or complexity and find out how your organization could be the next to save millions (upon millions) while making less risky and more valuable decisions.

Sourcing Excellence Is Predictability in Tough Times

Sourcing Mediocrity, or worse, Bad Buying, leads to chaos.

Your costs are up.

Your delivery predictability is gone.

Your energy supply is intermittent and brown outs are becoming normal while those costs go up too.

Your taps are running dry.

Your workforce benefit costs are going up as healthcare costs skyrocket.

Your AI costs are going up as compute and consulting skyrockets and more consultant time is needed to deal with the results of bad, bad, hallucinations, that have gone beyond wrong orders, 3-way mismatches, and fraudulent payments to bad customer advice and legal claims that have put you in legal jeopardy.

This isn’t inflation. This is bad buying.

With good buying and sourcing excellence:

Your costs are stable — because you didn’t select risky suppliers, squeeze their margins to dangerously low levels, or make ridiculous asks that only add cost and not value.

Your deliveries are predictable as you’ve selected carriers that can support multiple routes and have re-routing plans in place if a route gets shut down due to a port strike, border closing, or “Geopolitical conflict” (i.e. war).

Your energy supply is regular as you were sure to build where the grid could support your energy needs, select providers (where you had a choice) that could guarantee the supply, and installed backup generators for key functions (and batteries for minimal lights and on-site computing requirements).

Your water pressure is through the roof as you ensured there was adequate supply and put contracts in place to guarantee it.

You manage your benefit negotiations carefully, put long term contracts in place, and work with the provider to prevent fraud (which makes you a customer of choice).

You don’t buy Gen-AI just because every brain-fried consultant and their favourite cognitively atrophied analyst is telling you to. You buy classic AI that works hallucination and error free at a fraction of the compute and cost.

In other words, you apply sourcing excellence end-to-end.

And you make good use of (strategic sourcing) decision optimization.

And you realize savings twice the savings of your peers.

But don’t take my word for it. Take the word of Paul Martyn, one of the original Sourcing Optimization Grand Masters who has sourced over 20 Billion dollars, and seen consistent results doing so over the past two decades.

And saved oodles of cash. To find out how much, check out this post on how you’re seeing your sourcing decisions repriced from bad buying. Then do the math on how much you could be saving (and, of course, reach out to Paul if you’d like someone to help you put a plan in place to save that money).

P.S. If you haven’t figured it out yet, if you were using Busch-Lamoureux Exact Purchasing you’d not only know that you should already be using optimization, but where, why, and would have already reached out to Paul to help you define the program.