Last weekend we informed you of the organized assault on a Gatwick train in the UK.
Sorry to say that we totally missed the covertly captured training video earlier this summer that signaled something was coming … something bigger than just knocking out power substations! (That poor groundhog!)
I would say that you approach them with caution
You should not let them overwhelm you with cheer
Pays to know what you’ll find
To understand their kind
’round here
Drawing their lines,
they look so radical
Tracking their curves
I get so lacrimal
Something deep down reveals they’re tragical
I think I’ve had enough …
It’s a strange alphabet
That’s what I know
But it’s a strange alphabet
We’ve got to follow …
Seventeen years ago I explained the whole numbers. Steve Martin explained the alphabet (but not the Procurement alphabet), and who better to explain the whole numbers than a trained mathematician.
But lately I’m seeing a lot of glossaries and “complete sourcing/procurement guides” that are anything but … so I thought I’d fill in a few basics for you …
A is for Analyst, who pretends to understand
B is for Buyer, with cash in hand
C is for Contractor, lost in Legal land
D is for DEI, now on the witness stand
E is for Equity, where can it be found
F is for Finance, who pay by the pound
G is for Goods, which make the supply chain go round
H is for Hedge, on currencies sound
I is for Insight, desperately needed
J is for Jazz, the hope has been seeded
K is for Kanban, its use exceeded
L is for Legal, its advice unheeded
M is for MRP, technology ancient
N is for Negotiate, done in plainchant
O is for Onboard, suppliers aplenty
P is for Purchase, multiples of twenty
Q is for Quality, often absent-ee
R is for RFX, created by cognoscenti
S is for Supply, critical to success
T is for Tariff, always assessed
U is for UNSPSC, classification coalesced
V is for Vendor, marketing obsessed
W is for Warranty, never enough
X is for Xennial, weary and gruff
Y is for Yardmaster, full of chuff
Z is for Zealotry, Procurement tough
… just to make it clear that the depth and breadth of the space is well beyond what a short glossary or guide can ever hope to address. The Procurement alphabet is not a character alphabet, or even a phonetic or syllabic writing system, it’s a logographic one. One that takes years, if not decades to fully master with all of its global dialects.
But that doesn’t mean you shouldn’t try.
Back in late 2018 and early 2019, before the GENizah Artificial Idiocy craze began, the doctor did a sequence of AI Series (totalling 22 articles) on Spend Matters on AI in X Today, Tomorrow, and The Day After Tomorrow for Procurement, Sourcing, Sourcing Optimization, Supplier Discovery, and Supplier Management. All of which was implemented, about to be implemented, capable of being implemented, and most definitely not doable with, Gen-AI.
To make it abundantly clear that you don’t need Gen-AI for any advanced enterprise back-office (fin)tech application, and that, in fact, you should never even consider it for advanced tech in these categories (because it cannot reason, cannot guarantee consistency, and confidence on the quality of its outputs can’t even be measured), we’re going to talk about all the advanced features enabled by Assisted and Augmented Intelligence (as we don’t really have true appercipient [cognitive] intelligence or autonomous intelligence, and we’d need at least autonomous intelligence to really call a system artificially intelligent — the doctor described the levels in a 2020 Spend Matters article on how Artificial intelligence levels show AI is not created equal. Do you know what the vendor is selling?) that have been available for years (if you looked for, and found, the right best-of-breed systems [many of which are the hidden gems in the Mega Map]). And we’re going to continue with Sourcing. (Find our series on Advanced Procurement — No Gen-AI Needed! Yesterday, Today, and Tomorrow at the following links.)
Unlike prior series, we’re going to mention some of the traditional, sound, ML/AI technologies that are, or can, be used to implement the advanced capabilities that are currently found, or will soon be found, in Source-to-Pay technologies that are truly AI-enhanced. (Which, FYI, might not match one-to-one with what the doctor chronicled five years ago because, like time, tech marches on.)
Today we start with AI-Enhanced Sourcing that was available yesterday (and, in fact, for at least the past 5 years if you go back and read the doctor‘s original series, which will provide a lot more detail on each capability we’re discussing. (This article sort of corresponds with AI in Sourcing Today that was published in January, 2019 on Spend Matters.)
Workflow / Project Automation
Once a sourcing project is defined, which typically consists of identifying the required products and demand, the critical requirements of the supplier pool, the RFI, the RFP/Q, the evaluation criteria and weightings, the award rules, and the initial award offers, the entire project is easily automated using rules-based automation. Best-of-breed platforms will integrate fuzzy matching to identify additional suppliers who provide similar SKUs, RFI/P/Q templates which will automatically be pulled in and modified based upon the particular items in the category and organizational risk/compliance rules using semantic characteristic matching (traditional NLP will be fine), and built in “cherry-pick” algorithms that will compute standard award scenarios (lowest price, max 3 suppliers, geo-split, etc.) and create a default recommendation — which only requires math and traditional analytics.
Auto-Fill
For the better part of the past decade, the best platform auto-fills not just successive rounds, but auto-fills / pre-populates all of the supplier, item, and RFI data based on available information in all integrated systems — be it from past events, the supplier master, the forecasting platform, or market(place) data (for products).
This just requires rules-based automation and workflow with reg-ex pattern matching, and simple trend analysis and market data matching for price / demand population. Easy peasy on the tech ladder.
Outlier Identification
As we wrote years ago, it only takes one bad data element to make a good sourcing process go bad. Just one. One bid too low that takes a buyer down the wrong path. One risk rating too high that steers a buyer away from what would be their best supplier. One demand error that steers the best supplier away. But all of these “outliers” can be easily detected with traditional mathematical clustering algorithms used as the back-bone of machine learning — k-means, nearest neighbour, etc. — and identifying any values too far off the norm and then alerting the buyer to (have the supplier) correct them.
Rule-Based Auto-Award Identification
For simple scenarios where it’s always lowest cost, simple mathematical calculations can identify the supplier-item awards, and these can be limited to a max # of suppliers as then it’s just computing some combinations. No “AI” required.
SUMMARY
Now, we realize this was very brief, but again, that’s because this is not new tech, that was available long before Gen-AI, which should be native in the majority (if not the entirety) to any true best-of-breed Sourcing platform, that is easy to understand — and that was described in detail in the doctor‘s 2019 article for those who wish to dive deeper. The whole point was to explain how traditional ML methods enable all of this, with ease, it just takes human intelligence (HI!) to define and code it.
DEI is going a lot of blowback. Much of it deservedly so since
But ripping it out without a plan or even a thought about the blowback is not a good idea.
First of all,
Secondly, just because you’re doing it wrong, doesn’t mean everyone is. As pointed out in this recent opinion article on Supply Chain Dive on how Harley-Davidson’s DEI rollback is a procurement mistake, Harley Davidson’s removal of their support for supplier diversity could be seen as going too far.
And it could be. Ripping out or killing a program that doesn’t work, and then publicly stating that you’re instead going to focus on complying with all state and federal equal opportunity legislation, especially if that’s what customers want is definitely a good thing. (If you’re not convinced, read Jason Busch’s article on why Harley Davidson Dumping Supplier Diversity is more-or-less a good thing.
But you want supplier diversity to the extent there are diverse suppliers that can support your business. It may be your right to buy from who you want, when you want, where you want, and how you want, but if it upsets your supplier base, that’s a problem. Especially if your best suppliers walk away, or, even worse, walk away and sue you. Just like you need happy customers, you need happy suppliers. Plus, a good policy encourages diversity, it doesn’t mandate it when one supplier is inferior to another.
Moreover, even if the DEI program is not working, killing it too fast can also result in customer blowback who might think that you are not about equal opportunity and diversity. It’s a tricky situation, and any action needs to be well thought out, including any potential blowback and how you respond to it in a matter that dispels it before it snowballs.
The Mandarin (Yes, The Mandarin) recently posted a great article on why you should stop wasting your time with contract management
As the author clearly states, every department, state and federal, in which I have worked has a set of policies and directives on contracting and contract management. Almost every contract has a contract management plan. Yet we continue to get it badly wrong.
He quotes a recent review of Home Affairs which got a shellacking about their utter inability to reasonably prepare for the end of a contract (as well as other Procurement issues). It’s as he says, when it comes to preparation for contract termination, which should be part of a well formed contract management plan, it’s almost always “too little, too late”.
Contract Management isn’t working, and more importantly, neither are contract management platforms. (Making a colleague of mine who poo-poo’d them almost two decades ago as not worth your time, because they didn’t do any more than what a high schooler could do with some scripting and an access database, a visionary genius.)
So why do we get it so wrong? The author starts off by saying we think about contracts the wrong way, which we do (and there’ll be more on that later), especially since many approach it as a matter of performance and punishment since the contractor or vendor just needs to do what they promised and whatever performance or punishment framework included in the contract will encourage the contractor or vendor to deliver on time.
And, at the end of the day, most organizations just see it as a reporting and control framework, driven by compliance. When, as the author points out, it is supposed to be about outcomes, and, even more importantly, as the author points out, it should be a tool for managing the value chain.
The author then recommends that you fix things by:
Which is all good advice, but not going to fix the fundamental problems. The fundamental problem is that it’s not contract management, it’s project fulfillment (even if you are just buying stuff).
This means that before you can do a contract you have to:
It’s project and relationship management at the end of the day, the rest is just document management, making CMS something that you can do with a high school student and an Access database, since its not where the contract is or how its indexed, but how it’s accessed and used on a daily basis, which should be through the project management system.
And that’s why Project Assurance is so critically important.
Don’t know what that is? Read my original and current series on Project Assurance: