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The AI revolution in procurement. Why saying "No" to machines might well be the hallmark of tomorrow’s best CPOs

Experience tells us the current level of personal engagement that comes through the sourcing beauty parade really helps whittle out some suppliers and allows others to shine

Beauty Parades, sycophants and Artificial Intelligence. Drayton reflect on how procurement people might work best with AI.

The age of the yes-man is over. In the future, we believe, only no-men and no-women will have the perfect skillset necessary to work productively with AI. In Deloitte’s recent Global Chief Procurement Officer survey, 45% of CPOs said they were using or planning to use it. The subject-matter experts at Drayton believe this level of take-up of the technology will, over time, start to recalibrate - if not transform - the skill-set needed by key managers working in Procurement. For us, a Raconteur report we read recently underlined this point. In it, Raconteur detail five specific areas in which AI might revolutionise procurement – ‘purchase to pay, sourcing, contract management, risk management, and innovation.’ All, of course, key current areas of responsibility for any CPO.

But, when it comes to AI changing the necessary skill base, three of them really stand out. The first of these is ‘Innovation.’ As Raconteur says: “Supply markets are potentially huge sources of ideas and competitive advantage, often more important or productive than internal innovation or product research,” and, they continue, “AI-powered search capability will help organisations define and then identify the suppliers that are most likely to bring these advantages.”

This kind of strategic insight though will be useless unless a CPO possesses the level of self-awareness and, to an extent, the level of humility which allows them to believe they can actually learn something from a small challenger company.

Secondly, the ability to develop real clarity of vision when managing risk. When it comes to risk management, AI will, Raconteur says, help pinpoint “What is relevant for each organisation, putting the right information in front of the right people as quickly as possible, and ensuring that data is turned into actionable intelligence.” Again, this will impact CPOs. As both they, and, crucially, other senior managers, will find it a lot easier to see the proverbial wood from the trees.

The CPO of tomorrow, then, will not just, as now, simply need the ability to make the right decisions. But also enough belief in them to stand up and defend those decisions internally whilst everyone else on the Board shares the same clinical AI-powered data analysis. Incorrect data analysis will be much more difficult to hide.

Finally, ‘Sourcing.’ Raconteur points out that, in this key area of supply chain management, under conventional ‘request for proposal’(RFP) or ‘invitation to tender’ processes, “AI-driven tools will suggest which suppliers should be invited to participate in the exercise.”

But, how long will it take before the AI ‘suggestion’ becomes the ‘decision’? And, the perception that machines ‘can’t get it wrong’ starts to minimise human oversight in the decision-making process. That will be a huge call for all future CPOs: do they continue to make a decision or simply stand aside whilst the machines, to all intents and purposes, make the final call.

We see this last issue as a harbinger of possible internal corporate conflict. Something which will challenge even the very best talent; CPOs will need to have the absolute self-belief necessary to say ‘No’ to Artificial Intelligence. And, then, have the confidence to defend those decisions to people in their organisation – and every company will have them – who, thanks to unthinking compliance, have already made a god of AI.

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