Category Archives: Procurement Innovation

Buyers Are Not Process Operators!

In a LinkedIn post from a while back, Garry makes a very important point: many procurement operating models still treat buyers as process operators.

Run the event. Collect the bids. Populate the template. Push it through governance. Negotiate hard. Close the file. Move on.

Tech (which may include AI but doesn’t need to as you can do quite a lot with ARPA and do it better, faster, and cheaper than humans AND Gen-AI can do it) will make the traditional buyer role less central because all of this, except for the finer points of negotiation, can be done by the tech. (The brute force points, collecting all the data to defend your offer can be done by the tech.)

Once you adopt Busch-Lamoureux Exact Purchasing, it becomes easy to not only map your categories to the octants, but identify the processes you should use for sourcing and procuring those categories, as well as monitoring the procurement activities to determine if there is a situation where a human has to intervene.

It also becomes clear what you need to do at each step.

  • Sourcing: identify what needs to be sourced vs procured, what categories and items will be included in an event, what suppliers, what products, what requirements, etc. etc. etc. — all of the decisions you can’t risk automated (which can still only be automated from encoded knowledge from prior decisions)
  • CLM: key contract requirements and acceptance criteria; etc.
  • SXM: key (compliance) requirements, key risk mitigation clauses, need for no vs. internal vs. external review, etc.
  • Analysis: historical spend/volume/prices; current prices/volume requirements; predicted prices/volume requirements; opportunities for demand shaping/control; etc.
  • e-Pro: available channels and under what conditions; what gets in the catalogue; who can buy out-of-catalogue/non-preferred; processes for overrides (to budget limits; cost limits; etc.)
  • I2P: m-way match requirements and tolerances; ok-to-pay / auto-pay requirements; when early-payment discounts can be offered/applied; etc.

As Garry states, a buyer is not a buyer — a buyer is a decision architect and makes the decisions necessary for successful Procurement. A decision architect that designs how a decision should be made. An intelligent human who maps the organization’s categories to the pocket cube of Exact Purchasing, determines what can be automated, what systems will be used to automate, what qualifies as exceptions, how those exceptions will be monitored for, and how they will be alerted.

But a buyer is more than that — it’s a decision architect and relationship management. Procurement is about managing stakeholders and suppliers. Dumb systems cannot do that. Only HUMAN INTELLIGENCE can.

In an AI-Hype world, Procurement will be measured on its success, and that success will require Human Intelligence leading Procurement to glory. So acquire real pros if you want to not only survive, but thrive in, the Age of Retardation the AI-Hype is ushering in!

Are they 2026? Or 2016? Or 2006? Procurement Trends? Part II

Tom Mills recently posted a Top 10 Procurement Trends in 2026 post on LinkedIn that made me ask Really? Basically, I’ve been reading, and writing, about the majority of the “trends” for two decades. As per my recent 34-part series on you don’t need to read another state of procurement report for five years!, nothing has really changed in the last five years. In fact, not much has changed in the last ten, if not twenty, years. All that ever changes is the tech-du-jour, which particular risk is the most prominent, which particular process is the most recommended, and whether the trend is in-sourcing solutions, out-sourcing solutions, or hybrid models.

To make this oh-so-clear, we’re going to conclude Tom’s list and provide some colour commentary!

6️⃣ AI Becomes Core but our Readiness Lags

This is the only “sort of new” trend, except it has been the “sort of new” trend for three years now, but when you realize “AI” is the “tech-du-jour”, you realize that, again, nothing has changed for the past two-plus decades because the “tech-du-jour” is always the 10th trend. And for every
tech-du-jour that becomes core, our readiness lags. Over the past 25 years we’ve had these five tech-du-jours (that tend to last for around 5 years).

  • WWW
  • SaaS
  • The Fluffy Magic Cloud
  • Predictive Analytics
  • AI

7️⃣ Data Quality and Governance as a Prerequisite

For all advanced tech, data quality has ALWAYS been central and paramount. Ever since the introduction of optimization, and in our space, strategic sourcing decision optimization (SSDO), data quality was key. With traditional (MILP) optimization, one value in one million can tank an entire model (because if a decimal point error makes one product 50X cheaper, then the allocation will obviously go to the wrong supplier). Moreover, if there are capacity constraints, minimum allocations, maximum supplier counts, etc., this will result in cascading incorrect assignments and allotments across the entire model. Then came should cost modelling, and again, without good data quality and governance, it didn’t work. Then spend analysis, which needed proper market baselines. And now AI, which is garbage in, hazardous waste out. Even with perfect data you can still get hallucinations, so you definitely don’t want even the slightest error!

8️⃣ Orchestrated Procurement Ecosystems

In Procurement, which has NOT fundamentally changed since the first manual was written 139 years ago, the story remains the same — only the names have changed! AI may be the tech-du-jour, but orchestration is the term-du-jour. But it’s not new. The automated coordination, management, and sequencing of multiple distinct processes, systems, or components to achieve a unified, higher-level goal has been a goal of Procurement for decades — except back in the 2000s the term-du-jour was “metaprise”. (And Jon W. Hansen can also fill you in on the history here.)

9️⃣ Talent as the Transformation Multiplier

We’ve been talking about this for decades. I wrote a 7-part series 20 years ago when I first started SI. Talent is not only necessary, but it’s the way you truly succeed. Talent that designs better processes, selects better technologies, and, most importantly, makes better decisions that allows the organization to be more strategic and more effective is not only transformation, but a transformation multiplier.

🔟 Procurement as an Enterprise Value Driver

Ever since AMR first started covering the space in the early 2000s, we’ve been told that Procurement is the Enterprise Value Driver. That strategic sourcing, when utilizing the right technology (namely optimization and analytics) would consistently identify year-over-year savings of 12%. That m-way matching, which ensured the payment matched the invoice matched the PO matched the contract would prevent (often unrecoverable) overspend. That spend analysis can identify real value drivers. The whole space was defined as a value driver. Nothing has changed.

The GruntMaster 6000 was engineered for longevity and has a long memory. And his long memory tells him that the more things (are purported to) change, the more they stay the same!

Are they 2026? Or 2016? Or 2006? Procurement Trends? Part I

Tom Mills recently posted a Top 10 Procurement Trends in 2026 post on LinkedIn that made me ask Really? Basically, I’ve been reading, and writing, about the majority of the “trends” for two decades. As per my recent 34-part series on you don’t need to read another state of procurement report for five years!, nothing has really changed in the last five years. In fact, not much has changed in the last ten, if not twenty, years. All that ever changes is the tech-du-jour, which particular risk is the most prominent, which particular process is the most recommended, and whether the trend is in-sourcing solutions, out-sourcing solutions, or hybrid models.

To make this oh-so-clear, we’re going to review Tom’s list and provide some colour commentary!

1️⃣ The CPO as Enterprise Architect

Back in the first major age of responsible sourcing in the early 2000s, the message was that the CPO had to be an enterprise architect to be responsible. To make this abundantly clear, SI did a 12-part series on the “Responsible Sourcing Supplier Workbook” released by the John Lewis Partnership which was the best example of how Procurement could architect a responsible enterprise!

2️⃣ Procurement as Business Storyteller

I remember going to Ariba Live a decade ago, and they opened with the SAP Storyteller. The reason – their solution (which never fully integrated Procuri that they had bought almost a decade prior) was going on 15 years old (while Coupa was still revolutionizing its platform and telling its own tall tales and BravoSolution was acquiring like mad [just before it became Jaggaer]) and there was less and less reason to buy Ariba’s outdated tech … until they told the whole story of what was possible when Ariba was fully integrated in the SAP ecosystem (and what could be possible — forget reality, just believe and buy).

3️⃣ Strategic Supplier Partnerships over Transactional Buying

State-of-Flux (SoF) was founded 24 years ago because strategic supplier partnerships were the key to success! Aravo (US) and SoF (UK) were the first to recognize this and this message has been consistent for decades, coming into the forefront whenever significant supply disruptions occur due to natural, or man-made, disasters. This goes back to the 80s when the recession, plant fires, and the lingering after-effects of the 70s steel crisis led to part shortages and cost hikes that could (only) be mitigated with strategic supplier partnerships. This situation reared its ugly head again as the web, and SaaS, exploded, we had new semiconductor (and RAM) shortages due to demand (and plant fires), multiple man-made and natural disasters had global consequences (9/11 attacks, Indian Ocean Tsunami, Hurricane Katrina, etc.), and market losses surged (dot com bust, 2008 financial crisis), leading to the rise of SXM software as a key category in Procurement in the early 2000s.

4️⃣ Outcome-Based Procurement

That’s the whole point of GPOs. Outcomes is only the price model du jour because the AI vendors couldn’t sell their solutions using a SaaS model with true cloud computing costs being passed on to them by their hosting (and AI) providers! So they have to convince you to buy into their “outcome”-based model. (And that’s why, now, outcomes is a dirty word.)

5️⃣ Strategic Supplier Risk and Resilience Orchestration

Aravo was founded in 2000 to do this. I remember writing about them back in 2007, and Google was one of their early adopters.

To be continued …

Sourcing and Procurement Are NOT The Same

And they are definitely NOT interchangeable, as per a recent article by Paul Martyn (the Sourcing Optimization Grand Master) on LinkedIn.

As per his article,

  • sourcing is strategic
  • procurement is transactional

And this is why they are not only not the same, as per Paul’s article, but not interchangeable.

In the age of AI (Hype), this is distinction becomes doubly important!

As technology advances rapidly, humans become less and less important in Procurement as rapid advances in automation allow more and more of the tactical process to be completely automated (as ARPA allows exceptions to be learned and future manual intervention requirements to be eliminated) but more and more important in sourcing as Gen-AI repeatedly proves just how Astonishingly Inept modern Artificial Idiocy is.

Many will argue that sourcing is tactical because modern software can assemble RFXs from existing specs, automatically select suppliers from your SXM and/or ERP, automatically distribute them, automatically validate the returned RFXs, eliminate vendors who don’t meet absolute requirements, analyze the responses against market data for validity, build and execute multi-objective models, and recommend and award. And while that certainly sounds like sourcing, it’s not. It is sourcing execution. The tactical part that has to be done to support the strategic, but NOT the strategic.

The strategic is creating the specs, identifying the real organizational requirements, determining the requirements for supplier inclusion, validating the suppliers, determining the proper (multi-round) event type, validating the generated RFXs, analyzing the responses for hidden risks and traps and idiosyncrasies, defining the right trade-off models, selecting and modifying the right award scenario, overseeing the negotiation, etc. Every part of the process that requires an actual decision with Human Intelligence.

This is because, as Paul points out, a dumb machine doesn’t understand:

  • lowest cost vs resilience
  • incumbent vs challenger
  • standardization vs innovation
  • savings vs service
  • global leverage vs local agility

Or any other trade-off that can’t be completely quantified and captured in fail-safe rules.

Systems can, and should, support all tactical bit-pushing — especially since we were promised they would do so over 40 years ago when the big push was made for every person and business to adopt them — but, like IBM said in 1979, a computer should never (EVER) make a decision. And that most definitely includes Sourcing decisions!

Procurement Needs to be Sharper and Consequential …

… but will you force it that way with (Gen) AI or because of (Gen) AI and the ridiculous claims the hype around it is making?

We’re wrapping up our first Garry week (as there may be more to come, especially if we can lure Garry back from the world of Architectural Design to Procurement … after all, software offerings like Programa really need a good Procurement module and a good leader like Garry to help them build it) with his post on how AI will force Procurement to become smaller, sharper and more consequential.

Which is true, as long as you accept that consequential won’t always be a good thing if you blindly use (Gen) AI or blindly ignore (classic) AI and f*ck up royally. But let’s backup.

As Garry astutely notes, AI frees Procurement from administration the same way a gym membership frees you from being unfit. It depends on whether or not you use it, and how. And, if you use it, as Garry points out, it depends on whether or not Procurement uses any additional time gained to do more of the same, or redesign the profession. (There’s also the possibility you ban all AI, even classic AI proven to be good, dependable, and hallucination free.)

Garry argues Procurement will become smaller (even though Procurement is usually understaffed as it is) because most coordination work can now be done by technology (AI not needed, just reliable middleware 3.0, also known as orchestration). There will be no tolerance for statements that “we need three people to do this” when the organization sees peers apparently doing it with one. (Not necessarily done well, but done.) And attempts to defined headcount by creating (unnecessary) governance will fail, as people will just continue to route around as much governance as they can, like they have always done.

It will become sharper because, despite the fact that the key to success is good processes, process competence is not rewarded — only commercial judgement. Good Procurement organizations will focus on finding professionals that understand irreversibility and second (and third) order consequences, who know how deep they have to investigate before making a decision, will quickly research to that depth (and only that depth), and quickly give you a “yes”, “no”, or “this is complicated — I need this much time to give you a authoritative answer”.

And one way or the other, it will be more consequential because, as Garry implies, and I clarify — Procurement now sits dead center in organizational strategic risk. It chooses the supplier, the carrier, the route, the chain, and the contract. All of which are now major risks across all organizations. Every day, another decision made by Procurement is a Board-level risk … and if it’s made by AI, it can be a devastating one.

Garry argues that future procurement organizations, and leaders, will be different. Not just processes, but decision architects. Not just cost avoidance, but risk-and-trade-off masters. Not just gatekeepers (where the gate must be kept locked where regulatory compliance cannot be broken), but “standard-based enablers”.

But there won’t be as much divergence as Garry indicates there might be. Procurement will only reach this level of effectiveness if they put a proper end-to-end decision enablement (not making) system architecture in place that implements and orchestrates best-in-class technology that captures best-in-class processes and supports end-to-end automation potential wherever the risk is acceptable for the platform to do so — including not only the ability to automatically stop, raise an exception, and include a human with expert judgement in the loop, but the ability to “learn” from that decision, encode a new pattern, and ensure the same type situation is automatically handled the same way in the future so that every system interaction removes the need for a future system interaction, allowing people to focus on tasks only people can do. (i.e. Adaptive Robotic Process Automation, or ARPA. Not necessarily Gen-AI. Classic ML will do just fine!)

Everyone, even those focussed on negotiation and relationship management, will make heavy use of systems — the only difference is what systems a Procurement professional will use in the majority of their system interactions. Back office people will focus more on modern risk-aware and trade-off aware sourcing and procurement systems which support advanced analysis, optimization, multi-objective cost vs risk vs quality trade offs, etc. Relationship managers will focus on third party financial and risk ratings, regional and natural disaster risk, performance, and quality data, interpolations, and projections as well as (critical/impact) spend (level) and distribution to judge the supplier’s overall performance and spend their time in risk analysis and performance tracking systems with an occasional spend dashboard. And so on. Processes that ensure all critical data, risks, and compliance requirements are captured are key, and so are the systems (automated to the extent possible) that encode them. Procurement will depend on these systems. The difference is how much manual work they will be doing in the systems vs using the analysis and guidance that comes out of the systems to make good judgement based decisions.