Can procurement keep it human? Keeping it human in a high-tech world through the power of people in procurement and supply chain. Today, we’re surrounded by tech marvels – from talking to Alexa in our living rooms and cars that drive themselves, to benefiting without even knowing it from intelligent connectivity through the Internet of Things (IoT).

Artificial Intelligence (AI) is everywhere, working around the clock without getting tired or making mistakes. But there’s one thing AI still can’t do – and that is to bring the human touch.

When we look at the procurement function or deep into the supply chain operation, it’s clear that technology innovation and the AI movement, is making an ever bigger impact with every day that goes by. But what’s also making a welcome impression, perhaps we could say a welcome comeback, are the human skills – the kind of stuff we’ve often overlooked or frankly didn’t think were that important, certainly not in a procurement setting. Let’s take a look at some of procurements shaping influences.

Purist Procurement is a cost based function

Let’s call it out! It’s getting better, but procurement has until recently (let’s say the last 4 years) mostly fulfilled a purist function, that being to focus largely on the reduction of cost. Important of course but driven by an increasingly analogue and somewhat unsophisticated lack of appreciation for the fact that cost is very rarely the price ultimately paid.

Supply chain the demode overhead

For many decades supply chain was by and large viewed as an overhead – a cost centre; and as is the case with most overheads and cost centres, the emphasis tends to be on driving down cost. A nice little two-step for procurement and supply chain professionals who were at the time busy mastering their moves; those spend saving approaches to contract and supplier management.

That’s not to say there’ve been no pioneers of change. But early attempts to practice a more nuanced approach to contract and supplier management tended to descend into adversarial stand offs. Here’s one such pioneer, and that wonderful 1983 HBR article, in which McKinsey consultant Peter Kraljic wrote and suggested that corporate buyers needed to be more sophisticated in their efforts to improve performance through supply management activities. The original HBR piece from 1983 is right here

To be candid, the failure to spot value inherent in cost has long been a missed opportunity to harness what has always been there. By adopting a more holistic and strategic approach to supplier relationship management (SRM), as advocated by Suppeco, our award winning procurement 4.0 offering, businesses can harness the full potential of their supplier engagements, transforming costs into investments that drive mutual growth and innovation. Ok so that was a bit salesy, but we are a software company at the end of the day! 

AIs pincer movement on procurement’s lower grounds

Here we are in the midst of the Procurement 4.0 revolution, where AI and next-generation technology is now doing a heck of a lot more than just pecking at the heels of those procurement laggards and their mission to keep a clinch on spend avoidance. AI and smart tech continues veraciously to mop up the lower grounds, consuming like Packman many of the more traditionally manual procurement disciplines into its lightning fast e-neural networks.

This is the era of Industry 4.0. Technology automates tasks – Fact

It starts with those considered lower value or more routine. Not just in procurement and supply chain but across all industries and sectors. We in procurement are not unique. The trend reflects a broad brush principle in tech innovation where automation and digital tools first target processes that are manual, repetitive, and time-consuming. The benefits are clear. The goal generally to increase efficiency, reduce errors, and here’s the kicker for us humans, it’s meant to free up us workers for more complex, strategic, or creative tasks.

Does the “Value Imperative” have our back? 

Firstly let’s clarify what we mean by “value imperative”. The term refers to a context that goes beyond binary spend management, through perhaps a more strategic lens to harness broader, multifaceted skill sets, attributes, and contributions. This more sophisticated and nuanced perspective transcends a traditional more purist focus on spend efficiency to include elements such as innovation, quality, sustainability, and resilience, as well as stakeholder collaboration and satisfaction; whilst crucially where appropriate, deliberating to creating and maximise value across an entire supply chain or business ecosystem.

The value imperative is a place. One concentrated with higher value disciplines. And it’s flourishing, principally a few rungs further up the value ladder. A place to which Procurement is now steadily ascending to avoid being eaten by a smart tech Packman (That’s a poor metaphor). Machines are smart, but they don’t do empathy – that feeling of understanding, of sensing nuance, and actually caring about others. Empathy is super important when it comes to working with and mastering people. It helps us figure out what’s working and what’s not, and to negotiate and finesse the inner workings of our business relationships across every aspect, of the value imperative.

Is imperfection the one thing that makes us irreplaceable? 

Think about the human brain – incredibly complex and built for learning, not just from books or data, but from real-life subtle signals and experiences, from other people, and from everything around us. We use these ques and learnings to navigate our work and life environments. For example, deliberating on arduous decisions may force us to confront our own limitations, sometimes leading us to feel as though the proverbial mountain to climb lay ahead. This is precisely where we put a brains together, with other amazing and diverse minds, to collaborate and find solutions together. Yes, the human brain is inherently fallible – the secret sauce if you will, in the domain of the value imperative. This view is entirely grounded on the fact that human judgment, with its capacity for empathy, ethical reasoning, and creative problem solving, adds a unique and irreplaceable dimension to decision making.

Human fallibility, or the recognition of our limitations and potential for error, is a bona fide strength. It encourages diversity of thought, resilience, and adaptability. By acknowledging and embracing our imperfections, companies can foster a culture of continuous learning and improvement, where diversity is valued, and where innovative solutions are pursued. This human-centric approach is particularly beneficial when dealing with complex, multifaceted issues that require a balance of technical efficiency and moral judgment, such as sustainability practices, social responsibility, and ethical governance.

Humans and machines and lines of engagement 

As we said in the opening, with every passing day, AI makes huge strides forward. And yes that includes areas that were once thought to be exclusively for us human beings. Developments in machine learning, natural language processing, and robotics have enabled AI to perform tasks that do indeed require a certain level of decision making, and learning – and even creativity. We’ve listed some here:

1. Decision-Making: AI systems can now make complex decisions based on vast datasets that would be unmanageable for humans. In finance, AI algorithms execute trades at speeds and volumes far beyond human capability. In healthcare, AI assists in diagnosing diseases by analysing medical images with precision that matches or exceeds that of human eyes.
2. Learning and Adaptation: Machine learning algorithms excel at identifying patterns and learning from data without being explicitly programmed for specific tasks. This capability allows them to adapt to new data and improve over time. For example, recommendation systems (like those used by streaming and e-commerce platforms) continuously refining their suggestions to align with user preferences.
3. Creativity: There are instances where AI has demonstrated a form of creativity, such as generating art, music, or writing. AI tools like generative adversarial networks (GANs) can produce original artworks, and large language models are averse at writing coherent and innovative texts.
4. Emotional Intelligence: Efforts are well underway to develop AI with emotional intelligence. For instance, chatbots and virtual assistants are increasingly able to recognise and respond to human emotions in a way that feels more natural and empathetic.

However, as we’ve been pointing out, despite these amazing advancements, there are still limitations to what AI can achieve compared to the depth and breadth of our human capabilities:

• Ethical and Moral Judgments: AI’s ability to make decisions involving complex ethical considerations remains limited. Human oversight is crucial, especially in contexts where decisions have significant moral implications.
• Understanding Context: AI often struggles with understanding context in the way humans do. This can be critical in decision-making processes where the nuances of cultural, social, or situational contexts matter.
• Creativity and Innovation: While AI can generate new content, its creativity is derived from patterns in existing data. Human creativity, capable of true innovation and thinking outside existing frameworks, remains distinct and valuable.
• Interpersonal Relationships: AI cannot fully replicate the depth of human relationships and the nuances of interpersonal dynamics. Leadership, motivation, and emotional support are areas where humans excel.

Tech & Touch: The Next Wave in Procurement Evolution

Navigating the evolution of Procurement 4.0 and beyond, the symbiotic AI and human relationship stands as a beacon of both innovation and efficiency in the supply chain. A blend of AI’s superior data processing capabilities and the irreplaceable human faculties of ethical judgment, creativity, and empathy, promises to redefine the essence of value creation.

As we see this future, AI will not replace human insight, and neither could it, but it will augment it, enabling a deeper focus on strategic decision making and sustainable practices. Together, humans and AI will navigate the complexities of a modern and turbulent world, ensuring that procurement evolves not just in service of economic efficiency, but as a force for positive impact on society and the environment. This collaboration heralds a new era of procurement, where technology and humanity converge to unlock unprecedented possibilities for value, innovation, and resilience.

If you’re ready to chat and find out more about the Suppeco digital relationship layer, contact us now to arrange a personalised demo.