Future of Sourcing - Artificial Intelligence (AI) https://futureofsourcing.com/tags/artificial-intelligence-ai en Attention Robots and Humans: Can We All Just Get Along? https://futureofsourcing.com/attention-robots-and-humans-can-we-all-just-get-along <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/The-Future-of-Work.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/The-Future-of-Work.jpg" title="With organizations facing the Great Resignation, many are realizing that human influence and ingenuity are still very vital components to the world of work as we know it." class="colorbox" rel="gallery-node-2210-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/The-Future-of-Work.jpg?itok=3O7u2xkq" width="624" height="325" alt="With organizations facing the Great Resignation, many are realizing that human influence and ingenuity are still very vital components to the world of work as we know it." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>With organizations facing the Great Resignation, many are realizing that human influence and ingenuity are still very vital components to the world of work as we know it say Christian Bason, Ph.D and Martin Skibsted in their new book Expand: Stretching the Future by Design. With these dynamics, they argue, some industry and design innovation experts are now saying that societies, workplaces and businesses of all types will now have to start to embrace strategies that will allow both the bots and humans to actually get along, and work together to build a more sustainable workplace for our future.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/taking-the-mystery-out-of-ai">Taking The Mystery Out Of AI</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Global population forecasts say the world&rsquo;s population will reach almost 8.5 billion by 2030. With the speed at which AI, computational processing power and robotics are developing, it is safe to predict that the global workforce and demands will change markedly in the near future. Job functions will transform rapidly following the pace of technology, so a priority should be to have a workforce that is educated and adaptable, ready to adjust to changing competency demands.</p> <p>As we argue in our book, &ldquo;<a href="https://expandthefuture.com/" target="_blank">Expand: Stretching the Future by Design</a>,&rdquo; these demands will be shaped by how work processes between man and machine are designed. Will the machine&rsquo;s analytical power replace human power? Will the human presence in some job functions become obsolete? Those questions are framed mistakenly. It&rsquo;s not a question about replacing one or the other; it&rsquo;s about how machines and humans supplement each other.&nbsp;</p> <h1>Can Bots and Human Get Along?</h1> <p>Pioneering designers and industry players are talking about how humans and machines can work together for the greatest benefit. The smartest questions aren&rsquo;t designing the fastest CPU or the strongest robot. AI and robotic development will be about developing the best teams, processes and user experiences.</p> <p>Designers will be looking at solutions where humans and machines complement each other to democratize the potential of both. Computational power should not be reserved only for the brightest specialists, but for everyone. We will increasingly live and work with robots built for collaboration.</p> <p>As Andrew Maynard, a professor at Arizona State University has pointed out, there is much we can learn about the future of human-machine interaction and the real dilemmas involved in science fiction movies. Take the first Pacific Rim movie from 2013 as an example. In the movie, we follow the unlikely hero Raleigh and his brother Yancy. Raleigh describes the pair &ldquo;...you wouldn&rsquo;t have been picked by my brother Yancy and I for heroes&hellip; No chance. We were never starring athletes, never at the head of the class, but we could hold our own in a fight. And it turned out we had a unique skill: we were drifting compatible.&rdquo;</p> <p>Being &ldquo;drift compatible&rdquo; means that the two brothers are able to work as a team while neurally linked to control a giant killer robot, the Gipsy Danger. The brothers are neither bright nor strongest but still form a great team. Compared to the other killer robots and monsters in the movie, Gipsy Danger is also neither the strongest nor best-equipped, but nonetheless, it is the most successful. Why? Because the brothers and their robot form a formidable team.</p> <h2>Are Human-Robot Teams Possible?</h2> <p>A key question becomes this: What does it take to create human-robot teams that don&rsquo;t just get along but are formidable? Recently, researchers at Aalborg University in Denmark have explored this question by focusing on trust: What does it take for people to trust robots? And what happens if people trust robots too much? Too much trust in self-driving cars might get the driver killed, as this happened to a Tesla Model S driver in a 2016 Florida accident. At the workplace, trusting a large industrial robot beyond what is warranted can lead to equally dangerous situations (a person can be knocked to the floor, or worse if an XL-size robot hits it accidentally).</p> <p>In the former case of too little trust, workers will simply choose not to work with the robot and the firm&rsquo;s investment in the technology will lose value. To explore how trust is affected by robot behavior, the researchers at Aalborg University have tried speeding up a collaborative robot in unpredictable ways while measuring workers&rsquo; physical responses. After the experiment, people indicated they were less likely to trust the robot due to their erratic behavior. Next up: Real-time experiments where humans and their robot collaborators will work on advanced carbon fiber weaving tasks &ndash; some of the more complex processes in auto manufacturing.</p> <p>We should approach the future of robotic design in the context of humans and machines working together forming the best teams. A survey of a thousand companies working with AI published in Harvard Business Review stated in 2018 that &ldquo;... Most activities at the human-machine interface require people to do new and different things (such as train a chatbot) and to do things differently (use that chatbot to provide better customer service). So far, however, only a small number of the companies we&rsquo;ve surveyed have begun to reimagine their business processes to optimize collaborative intelligence.&rdquo;</p> <p>Collaboration between man and machine will be the key to how innovation in the field of <a href="https://futureofsourcing.com/manage-suppliers-with-ai-powered-negotiations">AI and robotics</a> will grow in the near future. The best designers will know that product development will not be about replacing humans, but rather seeing how the interaction between humans and machines across various fields can be optimized and simplified.</p> <p>How do machines and humans complement each other? How can they interact smoothly and successfully? Garry Kasparov, the world&rsquo;s last human chess world champion, wasn&rsquo;t the only one to reach that conclusion after his games against IBM&rsquo;s Deep Blue AI. His &ldquo;opponent&rdquo; IBM is actively working to ensure that design thinking is applied in all aspects of the business. Today, at least 110,000 of the company&rsquo;s 388,000 employees are applying design thinking methods to develop the company&rsquo;s business domains such as AI and CPUs. IBM is iterating and experimenting with how they can improve the user&rsquo;s experience of working with computational power. This is because we need more than humans and robots just getting along. We need them to create value together that neither man nor machine could realize on their own.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Attention Robots and Humans: Can We All Just Get Along? - Future of Sourcing" addthis:url="https://futureofsourcing.com/attention-robots-and-humans-can-we-all-just-get-along"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 01 Aug 2022 02:00:00 +0000 Christian Bason 2210 at https://futureofsourcing.com https://futureofsourcing.com/attention-robots-and-humans-can-we-all-just-get-along#comments Taking The Mystery Out Of AI https://futureofsourcing.com/taking-the-mystery-out-of-ai <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Taking%20The%20Mystery%20Out%20Of%20AI.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Taking%20The%20Mystery%20Out%20Of%20AI.jpg" title="Artificial intelligence is significantly impacting the world, yet there’s still a great amount of mystery and misconceptions about it." class="colorbox" rel="gallery-node-2152-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Taking%20The%20Mystery%20Out%20Of%20AI.jpg?itok=ZYxvV5JW" width="624" height="325" alt="Artificial intelligence is significantly impacting the world, yet there’s still a great amount of mystery and misconceptions about it." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Artificial intelligence is significantly impacting the world, yet there&rsquo;s still a great amount of mystery and misconceptions about it, says Rajeev Ronanki,&nbsp;President of Digital Platforms at Anthem Inc., and the ForbesBooks author of You and AI: A Citizen&rsquo;s Guide to AI, Blockchain, and Puzzling Together the Future of Healthcare. He explains four primary business applications for&nbsp;applied AI and how they can create value for businesses in all industries.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/advantages-of-artificial-intelligence-in-enterprise-contract-review-and-analysis">Advantages of Artificial Intelligence in Enterprise Contract Review and Analysis</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The public&rsquo;s imagination has been heavily shaped by science fiction, with the term AI evoking images of robots like WALL-E, C3PO from <em>Star Wars</em> and David from Stephen Spielberg&rsquo;s movie <em>A.I. </em>Scientists and technologists refer to this kind of humanlike AI as &ldquo;general artificial intelligence.&rdquo; General AI attempts to mimic the kind of abstract thought and typical problem-solving skills seen in humans.&nbsp;</p> <p>I say<em> attempts </em>because there is currently no existing general AI system even approaching the sophistication of the human brain. The technology is nowhere close to creating a system capable of abstract thought or general intelligence. But &ldquo;applied AI&rdquo; is rapidly becoming a <a href="http://link.mediaoutreach.meltwater.com/ls/click?upn=lN1I7MfuMHV1d4ruZ-2FGjwjMT4GVfc6uvJp5Jk0Mm3mdRXBxVAgKUEGEKT42-2F8JuxwmXVz2s2DiMbwtksW2-2BlhIMMY5HUUCJogaMS2TFFt6DsHkMpKVUcUK2bqM2mwOLsnCkVSb059GjaDg77zCWGBg-3D-3Di35V_YT-2BgtM2gIoe0GzKRNjnJVzj7sj22bKtG8cmZQQtsz48UAv3hErg6ydD9CD5X4Jlg-2FVQePByZwecdpzrE-2Bq-2BNMB3Qar0urytc-2BZCyxfHHbn71T0ZoabmejYF2AH2HDpgudNi7Exq-2FwjuXgRmuORVSEd67E-2FRdCITtvBziAcfb2HGEyLGQEOwZg-2FGSqOkOHgthtHqDQWwm4IyJ7n796NG2mwWpaw8GzmcmQ7ZFJfqJp2BJC0sWtTVQUppo3Gd2Hf1aEwkV8eO0AQtNgLVEaqHT7nNcYFfuOeg1J-2Be4zaGWpb-2F-2Bov1y23hLX5eC1s8guraH5zKgZ8v5OvcX37-2BaPEbQ3GK8WHvpAEA55qtdxuwNm8EPEO0RN6megy3kMyL3pRKFd78eRAem0sa060TbHolH1A-3D-3D" target="_blank" title="http://link.mediaoutreach.meltwater.com/ls/click?upn=lN1I7MfuMHV1d4ruZ-2FGjwjMT4GVfc6uvJp5Jk0Mm3mdRXBxVAgKUEGEKT42-2F8JuxwmXVz2s2DiMbwtksW2-2BlhIMMY5HUUCJogaMS2TFFt6DsHkMpKVUcUK2bqM2mwOLsnCkVSb059GjaDg77zCWGBg-3D-3Di35V_YT-2BgtM2gIoe0GzKRNjnJVzj7sj22bKtG8">mainstream technology</a>, improving the efficiency and profitability of businesses in many industries.</p> <h2>Why Applied AI is Faster but Not Yet Smarter Than Us&nbsp;</h2> <p>Current AI systems, for all their computational ability, do not have the ability to understand and analyze context the way human brains do. For example, we can see a barking dog and instantly determine the threat level. Sufficiently advanced AI can recognize the dog but may be unable to determine the breed, its physical agility, and whether it has been encountered before. Unlike humans, AI cannot connect dots and judge context to solve problems creatively.&nbsp;</p> <p>But AI systems can make decisions faster and more accurately than humans. The strengths and limitations of the current generation of artificial intelligence make it most applicable for solving fit-for-purpose business problems. (Fit-for-purpose is the concept in which a product or service is adequate for the purpose for which the consumer selected it.) AI systems are designed to handle a specific task while operating within imposed contextual constraints. These fit-for-purpose systems and tools are known as applied AI.</p> <p>There are four primary business applications of applied AI in industry. Here is a look at each and how they create efficiencies and value.</p> <h3>1. Automation</h3> <p>Automation saves countless man hours and resources, as computers can process data in a fraction of the time it takes humans. Some of these processes require decision-making. This is where AI comes into play.</p> <p>Most business processes involve a structured set of inputs and decisions are made based on defined policies and guidelines. The variables in the equations are well known and operate within a narrow context. Algorithms can make these decisions rapidly and accurately.</p> <p>These algorithms allow much of the workload that companies do to be offloaded onto automated systems. That advancement provides conveniences for consumers in the age of online shopping.</p> <p>Banks use AI to automate the loan process. Relevant financial records are collected automatically, validated and analyzed. The system can give a recommendation on the loan before a lender ever sees the application.</p> <p>This may sound frightening and impersonal, but these systems actually assess loans more accurately and fairly than humans. They look at a borrower&rsquo;s credit history, credibility, liabilities and other factors to make an impartial decision. Quite often, these individual metrics are also calculated by AI. Credit scores, for example, are calculated automatically.&nbsp;</p> <h3>2.&nbsp;Insights</h3> <p>The data produced by automated business processes holds valuable insights. These insights can be about almost anything; they may reveal something about a business process, unlock untapped opportunities or even allow companies to make predictions about the future.&nbsp;</p> <p>The data analysis that leads to insights is mostly automated. Given the volume of data that companies now work with, we need these automated AI systems to find the signal in the noise. AI looks for patterns and makes decisions based on training and defined guidelines. The exponential power of these systems can be seen in machine learning.&nbsp;</p> <p>IBM Watson, for example, can predict when an elevator is going to fail. AI systems are able to return insights about insights into their own operation, and this allows them to improve their data sets and algorithms. As a result, AI systems draw insights that the designers may not have ever considered or been looking for.&nbsp;</p> <h3>3. Personalization</h3> <p>Insights have many applications, but one that is rapidly transforming industries is personalization of user engagement. The insights drawn from consumers, users and other stakeholders can be used to improve their experiences by engaging with them in a personalized manner.&nbsp;</p> <p>There are many ways companies can use data to personalize the experience for the stakeholders they serve. Google maps knows through habits a driver&rsquo;s route and daily schedule and will give them an outlook for the day based on the current data.</p> <p>Retail companies have their websites feature inventory designed to appeal to the specific viewer. Online ads are micro-targeted at individuals based on insights into their specific consumer behavior. Social media platforms also customize news feeds to increase user engagement.</p> <p>Search engines provide results that are tailored to the user&rsquo;s location, demographics, search habits, online shopping history and other data.</p> <h3>4. Sensing</h3> <p>Sensing produces a kind of insight that deserves special mention due to its revolutionary potential. The exponential explosion in data and computing power now allows us to better recognize patterns as they are forming and predict how they will develop, which in turn allows us to actually sense trends as they form and develop.&nbsp;</p> <p>This ability has huge business applications. Consider the sudden rise and success of TikTok. ByteDance, the Beijing-based parent company that developed the app, hit it big by filling an emerging niche for teens who could use a platform for recording and sharing short videos.</p> <p>TikTok noticed the trend among teens, built a dedicated app and marketed it to the emerging user base as the trend developed. TikTok is now worth billions of dollars and is changing the social media landscape.</p> <p>Many companies using applied AI have built fortunes and improved the world for billions of people. They did so by leveraging exponential technology and riding the development curve. We can likely achieve higher levels of AI-powered efficiency and improvement in all industries.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/applied-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Applied AI</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Taking The Mystery Out Of AI - Future of Sourcing" addthis:url="https://futureofsourcing.com/taking-the-mystery-out-of-ai"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 24 Jul 2022 17:00:00 +0000 Rajeev Ronanki 2152 at https://futureofsourcing.com https://futureofsourcing.com/taking-the-mystery-out-of-ai#comments Manage Suppliers With AI-Powered Negotiations https://futureofsourcing.com/manage-suppliers-with-ai-powered-negotiations <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/AI-Powered-Negotiations.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/AI-Powered-Negotiations.jpg" title="Learn how a new category of enterprise technology known as autonomous negotiations can be used to automate negotiations and mitigate supply chain, inflation and COVID-19 pressures." class="colorbox" rel="gallery-node-2156-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/AI-Powered-Negotiations.jpg?itok=o2sQbdMM" width="624" height="325" alt="Learn how a new category of enterprise technology known as autonomous negotiations can be used to automate negotiations and mitigate supply chain, inflation and COVID-19 pressures." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Bad contracts, inefficient supplier relationship management and poor negotiation strategies are costing companies millions of dollars, says Martin Rand, Co-Founder of Pactum. He shares how a new category of enterprise technology known as autonomous negotiations can be used to automate negotiations and mitigate supply chain and inflation pressures.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/tracking-the-evolution-of-procurement-and-where-its-going-next">Tracking the Evolution of Procurement and Where It’s Going Next</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Continued pressures from supply chain disruptions, COVID-19 outbreaks and rising inflation are forcing business leaders to re-think their operations to cut costs. Business negotiations are an untapped source of value that can help Fortune 500 companies optimize their business processes while driving bottom-line value.</p> <h1>Why Current Negotiating Strategies Are Lacking</h1> <p>Recent data from KPMG shows that <a href="https://home.kpmg/au/en/home/insights/2017/03/supply-chain-capacity-management.html" target="_blank">17% to 40% of the value</a> of supplier deals is lost due to inefficient contract negotiations.</p> <p>Autonomous negotiation is an entirely new category of enterprise technology that enables Fortune 500 businesses and their suppliers to reach optimal, mutually beneficial deals at scale by leveraging AI and negotiation science. Humans have been the primary negotiators throughout history, but in fact, humans create inefficient outcomes when they negotiate. 80% of companies rely on the varying skills and biases of their managers rather than using a formal negotiation process.</p> <p>On average, enterprises have millions of dollars locked in inefficient agreements and unlocking such value is difficult. Global enterprises have thousands of suppliers and they can only actively manage 20% of them (their strategic suppliers). The other <a href="https://sig.org/managing-%E2%80%9Clong-tail%E2%80%9D-how-focusing-tail-spend-management-can-directly-impact-firm%E2%80%99s-bottom-line" target="_blank">80% are left unmanaged</a> because it would require too much manpower and be too complex to negotiate these thousands of contracts.</p> <h2>The Benefits of AI-Powered Negotiations</h2> <p>Autonomous negotiation technology provides global enterprises the ability to understand the needs of their suppliers and make offers, receive counteroffers and ultimately reach better agreements without human interaction. It also has several practical use cases for procurement teams:</p> <ul> <li>Negotiating better rates and payment terms to lower costs</li> <li>Securing shipping and freight capacity in the spot bidding market, decreasing the time for cargo to reach their end destination</li> <li>Negotiating and contracting thousands of deals in parallel to ensure supply continuity and strengthen supplier commitments</li> </ul> <p>AI has revolutionized enterprise negotiations. When combined with autonomous negotiation technology, hundreds of thousands of possible agreements can be evaluated &ndash; including every possible assumption about each party based on a combination of previous answers, external information, and learnings of earlier negotiations &ndash; to result in an agreement that benefits both parties. It is impossible for humans to comprehend this level of data, never mind having enough time to process it.</p> <p>AI automation does not replace people in the negotiation equation but rather augments the procurement team&#39;s capabilities. Autonomous negotiation technology empowers procurement leaders to focus on critical, strategic initiatives that drive their business forward instead of spending time on repetitive, low-value tasks and processes.</p> <p>Top companies worldwide, spanning industrial manufacturing, financial services, retail, consumer packaged goods, automotive and other industries utilize autonomous negotiations to unlock millions of dollars in new business value. The average Fortune 500 company has <a href="https://fortune.com/2021/04/27/a-i-startup-pactum-negotiating-software-saving-walmart-money/" target="_blank">$240 million locked in inefficient deals</a> that people can&rsquo;t renegotiate. As a baseline, autonomous negotiations can create from $2M to $11M of new value per $100 million of tail spend.</p> <p>Autonomous negotiations have revealed a new stage of development where business processes are not only conducted but also directed by a machine. Take smart cars for example. The term most often used is &ldquo;autonomous vehicle&rdquo; not &ldquo;automated vehicle.&rdquo; While every car is automated, an autonomous car can make the necessary decisions that get it to its destination.</p> <h2>The Future of Negotiations</h2> <p>As the global economy continues to be disrupted by COVID-19, inflation and the supply chain, autonomous negotiations are making enterprises nimbler. They can react quickly to market changes and employees are allowed to focus on strategy while the machines focus on implementation. People are worried that AI would take jobs in the future, but the reality is much more positive &ndash; AI helps humans do their jobs more efficiently, especially when it comes to negotiations.</p> <p>This is just the beginning of the journey. The technology can be deployed in other areas in the future, such as employment contracts, licensing or rental agreements. It also yields the potential to help people reach agreements on major challenges, especially where global cooperation is required.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract-negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relationship-management-srm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relationship Management (SRM)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/pactum" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Pactum</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Manage Suppliers With AI-Powered Negotiations - Future of Sourcing" addthis:url="https://futureofsourcing.com/manage-suppliers-with-ai-powered-negotiations"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 19 Jun 2022 17:00:00 +0000 Martin Rand 2156 at https://futureofsourcing.com https://futureofsourcing.com/manage-suppliers-with-ai-powered-negotiations#comments Insights on the Evolving Role of Supply Management https://futureofsourcing.com/insights-on-the-evolving-role-of-supply-management <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Insights%20on%20the%20Evolving%20Role%20of%20Supply%20Management.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Insights%20on%20the%20Evolving%20Role%20of%20Supply%20Management.png" title="Insights on the Evolving Role of Supply Management" class="colorbox" rel="gallery-node-2065-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Insights%20on%20the%20Evolving%20Role%20of%20Supply%20Management.png?itok=GWXZEAyl" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Insights on the Evolving Role of Supply Management</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-three-pillars-of-successful-supply-chain-risk-management">The Three Pillars of Successful Supply Chain Risk Management</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The global COVID-19 pandemic put supply chain management and procurement in a very bright and positive spotlight for keeping life moving as normal as possible during all the shutdowns, disruption and general uncertainty.</p> <p>It also highlighted that business and supply chain disruption are ongoing facts of life &ndash; such as ongoing extreme weather events globally and a megaship blocking the Suez Canal for weeks, to name just two. And the impacts created a snowball effect on other industries:</p> <ul> <li>Automakers don&rsquo;t have enough chips to build cars, leading to shutdowns</li> <li>Construction companies don&rsquo;t have enough wood to build homes, and the prices are skyrocketing</li> <li>Cargo is sitting waiting to be unloaded at ports around the world, creating shortages</li> </ul> <p>There are many factors at work behind these and other situations the world finds itself in right now, and will continue to find itself in the years ahead. But one thing is for sure, the role that supply management plays will have to adapt to meet a fast-changing future.</p> <p>A recent article on the Institute for Supply Management explored the shifting and evolving discipline of supply management and the professionals in it, and what the future may/can/will/should hold for the function and job roles. Here we take a look at some of those roles more closely.</p> <h2>The Role of Technology</h2> <p>The <em>Gartner Predicts 2021: Supply Chain Technology</em> report highlights a very revealing key finding: &ldquo;While the pace of change in supply chain accelerates, only 42% of supply chain organizations have adopted agile methodologies, breaking projects into smaller increments and allowing quicker realization of failures and reallocation of efforts.&rdquo;</p> <p>That shows a real lag in SCM digital transformation efforts, in everything from visibility to data analysis and predictive forecasting. Those aspects are mutually critical, because as supply management professionals and Procurement get better at leveraging tech and data, there will be increased demands on suppliers for transparency. This will impact relationships and collaboration &ndash; see more on that below.</p> <p>Technology adoption is mandatory to effectively leverage all the massive data that is increasingly inundating companies from multiple sources, and to better inform strategy and decision-making. As Procurement gets better access to data and better tools to leverage it, more day-to-day activities will center around the insights it provides that are not possible today.</p> <p>In the case of supply management, these include outside sources like weather, global news, supplier financial health, etc., to gauge how global changes will influence spend/supplier relationships.</p> <p>With the continuing advancements in the areas of <a href="https://futureofsourcing.com/how-organizations-are-driving-value-from-procurement-with-ai">Artificial Intelligenc</a><a href="https://futureofsourcing.com/how-organizations-are-driving-value-from-procurement-with-ai" target="_blank">e</a> (AI), Robotic Process Automation (RPA), block chain, IoT, and so forth, the role of technology in supply management will become even more useful for predictive analytics, forecasting, compliance, agility and other areas.</p> <p>This reliance on technology doesn&rsquo;t mean that Procurement and SCM practitioners need to become data scientists, but those who are the most familiar and capable with the tools are going to have the most advantages. This is something to bear in mind as supply management recruits new (and probably younger) teams.</p> <h2>The Role of People&nbsp;&nbsp;</h2> <p>As supply management itself morphs and changes, so too will the role of people within it. In the years ahead it&rsquo;s easy to see that, in addition to the tech skills mentioned above, that SCM professionals will need an increased focus and broader perspective on disaster recovery and supply chain risk, especially for Tier 2 and 3 direct materials, as well as indirect commodities that have the ability to shut down supply (such as N95 masks and cleaning products). Everyone in the field now has been living this since the start of the COVID-19 pandemic (and probably earlier, if not to the same degree).</p> <p>The increased need for diverse skillsets goes together with digital transformation if organizations are to achieve the highest levels of agility in staying ahead of natural shifts in demands, as well as during disruption. With that comes the need for improved business cases for technology investment.</p> <p>There will be a greater institutionalization of knowledge and management of key categories, as well as a renewed emphasis on supplier relationship management, especially multi-supplier cooperation. Whether or not current roles expand to encompass a broader skillset, or new roles need to be created remains to be seen. Most likely, some combination of the two as supply management attains greater importance (and value) within organizations.</p> <h2>The Role of Relationships + Collaboration</h2> <p>As mentioned, one of the key &ldquo;benefits&rdquo; for Procurement and supply management teams during the pandemic was the increase in perceived value they bring to an organization (and the public). It became blindingly obvious that without Procurement and the supply chains they manage, businesses, societies and economies come to a standstill.</p> <p>A lot of the success in keeping things moving has to be attributed to managing relationships with suppliers, and what that process actually entails. These relationships are gaining in importance and are (or should be) becoming much more collaborative. Getting beyond the traditional buyer/supplier dynamic certainly has its challenges, but a shift toward mutual success and reliance (for innovation, time-to-market, agility) is going to provide enormous advantages to both sides.</p> <p>Procurement and supply management teams will also need to have an increased focus on internal stakeholder education and collaboration. This naturally includes the C-suite, which is critical for not only strategic planning, but for nuts-and-bolts support in terms of digital transformation/IT budgets and human resource needs.</p> <p>Improving information sharing and collaboration across business silos and systems and working more closely with stakeholders at all levels in the organization puts Procurement in a position to achieve greater agility/flexibility collectively, rather than trying to drive it independently.</p> <p>It will also facilitate other goals like diversity and sustainable sourcing. This is akin to internal marketing of Procurement, which all Procurement groups need to be good at, but also will need to be a priority for Procurement managers and leaders to increase influence.</p> <h2>The Role of Risk</h2> <p>In the same way that &ldquo;leadership&rdquo; means &ldquo;technology leadership&rdquo; today, &ldquo;supply management&rdquo; means &ldquo;risk management.&rdquo; As disruption becomes a way of life, staying ahead of the risk curve will involve a real focus on everything from geopolitical threats and natural disasters to the increasing problem of global cybersecurity. Ironically enough, this is a direct result of the expanding reliance on technology.</p> <p>Since every industry, business, department and location increasingly leverages technology, this exposes enterprises to more vulnerabilities from more sources. Internally, there is greater opportunity to try and control these cybersecurity risks, but external control is going to take a more concerted and creative effort.</p> <p>Procurement and supply managers specifically need to be better educated in vetting suppliers (and <em>their</em> suppliers) during the sourcing process, as more and more projects will involve some technology touchpoint with the suppliers if the buy doesn&rsquo;t include technology itself. This goes back to the role of people in the future, as this will involve training, <a href="https://sig.org/sig-university/about">certifications</a> or increased role specialization.</p> <h2>Where Does Supply Management Go From Here</h2> <p>As ISM concluded in their research, &ldquo;Mobility, improved data sets and a focus on supply risk for both direct and indirect materials will evolve today&rsquo;s supply chain professionals into tomorrow&rsquo;s operational business leaders.&rdquo;</p> <p>Procurement and supply chain management are better placed than most other functions within organizations to have visibility of and control over spend, costs, savings and risk. With the adoption of advanced Procure-to-Pay and data/spend analytics solutions that integrate AI and other advantages, teams will be able to achieve greater proactivity, agility, and be more analytical and business focused in order to do their job effectively to bring more value to the enterprise.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relationship-management-srm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relationship Management (SRM)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/corcentric" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Corcentric</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Insights on the Evolving Role of Supply Management - Future of Sourcing" addthis:url="https://futureofsourcing.com/insights-on-the-evolving-role-of-supply-management"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 26 May 2022 17:00:00 +0000 Joe Payne 2065 at https://futureofsourcing.com https://futureofsourcing.com/insights-on-the-evolving-role-of-supply-management#comments Procurement Gets Competitive With AI Technology https://futureofsourcing.com/procurement-gets-competitive-with-ai-technology <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Procurement-Gets-Competitive-With-AI-Technology.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Procurement-Gets-Competitive-With-AI-Technology.jpg" title="Here&#039;s how forward-looking companies are exploring AI and automated technologies to go beyond merely surviving to position themselves to thrive for the long-term." class="colorbox" rel="gallery-node-2180-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Procurement-Gets-Competitive-With-AI-Technology.jpg?itok=LolupmNJ" width="624" height="325" alt="Here&#039;s how forward-looking companies are exploring AI and automated technologies to go beyond merely surviving to position themselves to thrive for the long-term." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>The Covid-19 pandemic and the ongoing labor shortage created by the &ldquo;great resignation&rdquo; has dramatically changed workforce dynamics says Keith Hausmann, Chief Revenue Officer at Globality. He shares how forward-looking companies are exploring AI and automated technologies to go beyond merely surviving to position themselves to thrive for the long-term.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/leading-procurements-digital-transformation-three-steps-to-success">Leading Procurement’s Digital Transformation: Three Steps to Success</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Global businesses have now spent nearly two years navigating the various challenges of the pandemic. Although some of the fallout was predictable, the dramatic impact we have witnessed on the global employment market was more unexpected. Companies that were already adjusting to new ways of working now find themselves in the middle of arguably the worst employment crisis in modern history&mdash;a phenomenon known as the Great Resignation.</p> <p>In the United States alone, four million people quit their jobs in August last year. An additional 2.5 million people retired during the pandemic. This left companies scrambling to keep their operations running smoothly&mdash;a complicated and complex challenge made all the more difficult by the prevailing supply shortages and the specter of further shutdowns caused by the pandemic, as well as the ongoing changes we have seen in the workforce over recent years.</p> <h1>Embracing Technology to Reimagine Operating Models</h1> <p>Although the current situation is causing further uncertainty for businesses, it&rsquo;s worth remembering that every crisis is also an opportunity to reassess and transform processes and practices for the better.</p> <p>The COVID-19 pandemic mercilessly exposed flaws in global value chains, calling into question how organizations sourced, where they sourced from and where their risks were. Companies had to look hard at their operating models and consequently identified a clear need to utilize new technology to build greater resilience and adaptability in their procurement processes.</p> <p>Cumbersome and disconnected legacy systems that were already struggling to cope before the pandemic were unable to supply the right type and volume of information to support informed decision-making. Companies scrambled to confirm whether their current suppliers were able to provide the goods and services they needed. In many cases, they had to quickly find alternative, qualified businesses to take the place of trusted providers.</p> <p>Now, as the global economy stabilizes and organizations start to focus on growth again, <a href="https://futureofsourcing.com/real-time-risk-intelligence-the-antidote-to-supply-chain-disruptions" target="_blank">businesses are using these innovative technologies and digital solutions</a> that enabled them to survive the early days of the pandemic to build their future operating models. The need to weather the storm remains pressing, but so does the requirement for companies to focus on tomorrow.</p> <h2>Dealing With the Labor Crisis</h2> <p>For businesses caught up in the Great Resignation, this new technology also offers hope. The ongoing labor shortage is creating a real sense of urgency, forcing many global enterprises to increasingly rely on outside vendors for what were previously core business services. As the workforce of the future continues to evolve, this trend is unlikely to stop. And without a strategy in place, companies are finding it increasingly difficult to find the right people.</p> <p>Innovative digital technology solves this problem, enabling companies to scale quickly and take advantage of fast-changing markets without having to recruit large numbers of new employees. At the same time, cutting-edge platforms and solutions can also help attract today&rsquo;s workforce, which expects a seamless, consumer-like experience in their professional as well as personal life.</p> <p>Similarly, using AI and automation to digitize outdated analog processes frees up time for the workforce to focus on more human tasks such as problem-solving, supplier collaboration and product innovation.</p> <p>And with today&rsquo;s workforce increasingly reassessing what they look for in a job, there is more emphasis on corporate purpose. The way a company spends its money <a href="https://futureofsourcing.com/esg-risk-assurance-an-opportunity-for-transparency-and-trust">can impact its ESG strategy</a> more than anything else, and this creates a unique opportunity for companies to employ cutting-edge digital technologies that both drive their profitability and help build a fairer, more sustainable global economy.</p> <h2>Surviving and Then Thriving</h2> <p>As a function, procurement&rsquo;s core responsibilities have traditionally included optimizing costs, delivering value and creating strong networks. Previously, the use of AI and automation has been limited to product-based spend categories or simple transactions. Yet with advances in AI, it is now possible for procurement to tackle more complex processes and categories of spend. Areas such as consulting, marketing, tech and professional services are often ambiguous, and they present challenges because their outcomes are qualitative, outcome-based and often evolving.</p> <p>Procurement has a critical, tangible impact on company performance, and adopting innovative digital technologies can help guide organizations through current workforce challenges, such as the Great Resignation and unprecedented shortage of talent, and then build long-term agility and resilience into their operating models and processes.</p> <p>Using these uncertain times as a catalyst for innovation and <a href="https://futureofsourcing.com/is-digital-transformation-procurements-secret-weapon-to-boosting-business-agility" target="_blank">digital transformation</a> will position businesses to successfully navigate future disruption while accelerating growth and long-term value.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/globality" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Globality</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/talent-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Procurement Gets Competitive With AI Technology - Future of Sourcing" addthis:url="https://futureofsourcing.com/procurement-gets-competitive-with-ai-technology"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 25 May 2022 02:00:00 +0000 Keith Hausmann 2180 at https://futureofsourcing.com https://futureofsourcing.com/procurement-gets-competitive-with-ai-technology#comments The Future of the Supply Chain is Data Driven https://futureofsourcing.com/the-future-of-the-supply-chain-is-data-driven <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/The-Future-Supply-Chain-Data-Driven.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/The-Future-Supply-Chain-Data-Driven.jpg" title="Learn how big data and analytics can help organizations at every level of the supply chain to increase efficiency, productivity, resource management and spending." class="colorbox" rel="gallery-node-2155-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/The-Future-Supply-Chain-Data-Driven.jpg?itok=2TeFiK8k" width="624" height="325" alt="Learn how big data and analytics can help organizations at every level of the supply chain to increase efficiency, productivity, resource management and spending." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Today&rsquo;s global supply chain is faced with unprecedented challenges and data-driven innovation may be the only way forward, says Emily Newton, Editor-in-Chief of <a href="https://revolutionized.com/" target="_blank">Revolutionized</a>.&nbsp; She shares how big data and analytics can help organizations at every level of the supply chain to increase efficiency, productivity, resource management and spending.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-importance-of-building-and-maintaining-a-visible-sustainable-supply-chain">The Importance of Building and Maintaining a Visible, Sustainable Supply Chain</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>What Does a Data Driven Supply Chain Look Like?</h1> <p>The key to improving any system is information. A data-driven supply chain is built around this concept, leveraging big data and analytics to improve processes at every level of the supply chain. A wide range of technologies contribute to this, from interconnected IoT sensors to warehouse robots and everything in between.</p> <p>A data-driven warehouse, for example, uses real performance data to identify exactly where and how to integrate a robot into its operations. Similarly, a data-driven trucking company uses real-world traffic, weather, and road data to optimize routes and maximize fuel and time efficiency. Data-driven solutions like these are exactly what today&rsquo;s supply chain needs.</p> <h2>Solving Today&rsquo;s Supply Chain Issues With Tech</h2> <p>The supply chain crisis has made it clear that the supply chain needs to evolve to meet today&rsquo;s challenges. Technology is the only way of accomplishing that. At the heart of the supply chain&rsquo;s technological transformation is data. Only through big data and analytics can we pinpoint the roots of the supply chain&rsquo;s issues and resolve them.</p> <p>For example, one of <a href="https://www.nytimes.com/interactive/2021/12/05/business/economy/supply-chain.html" target="_blank">the initial driving factors</a> behind the supply chain crisis was skewed supply and demand predictions from manufacturers and retailers. Demand for many products was underestimated, causing supply to be insufficient. Data-driven demand forecasting could help prevent this situation from occurring again. The same technology could be applied throughout the supply chain, from shipping to last-mile traffic.</p> <p>Data has also become critical in the warehousing industry. In the midst of a severe shortage in warehouse real estate, warehouse owners and managers need to leverage data to maximize the value of the space they do have. Data-driven warehouses can operate more efficiently, maximize the usage of every square foot and optimize inventory management.</p> <p>Arguably the most challenging issue in the supply chain today is <a href="https://www.bloomberg.com/graphics/2021-congestion-at-americas-busiest-port-strains-global-supply-chain/" target="_blank">congestion at international ports</a>. Data-driven ports could work with shipping companies to manage traffic and minimize waiting times. On the domestic end of things, trucking companies could use data to maximize the efficiency of their operations, which would help reduce ports&rsquo; container traffic.</p> <h2>Innovating the Data Driven Supply Chain</h2> <p>Data will completely change the way organizations throughout the supply chain operate. Collecting and analyzing data to find solutions is only the first step, though. Data will continue to drive innovation in the next-generation supply chain, building resilience and improving sustainability at every level.</p> <p>For example, with extensive data, manufacturers can reduce waste through improved forecasting and optimized, automated production. AI and robotics will improve the quality control process, which will help collect even more data for manufacturers to use for further improvements. Similarly, warehouses and shipping companies can reduce waste by automating the picking and packing process, which will also boost efficiency.</p> <p>Collaboration and transparency will be critical to improving the state of the supply chain in the years ahead. Manufacturers, retailers, and shipping companies need to be able to coordinate effectively and in real-time, with cutting edge logistics. This is already leading many organizations to work with 3PL logistics providers. Logistics specialists will be critical to the future of the data-driven supply chain, <a href="https://expressitdelivery.com/blog/a-guide-to-choosing-a-3pl/" target="_blank">asset-based and non-asset-based</a> alike.</p> <p>Coordination in logistics ensures that the various links of the supply chain are operating together as effectively as possible, with all of the data available. Logistics is especially important in warehousing. With so many individual objects to manage, it is easy for warehouses to operate inefficiently without the problem becoming noticeable. Experts have pointed out that data-driven logistics would drastically <a href="https://www.mckinsey.com/business-functions/operations/our-insights/big-data-and-the-supply-chain-the-big-supply-chain-analytics-landscape-part-1" target="_blank">increase visibility within warehouses</a>. This opens the door to optimization for inventory organization, employee management and automated warehousing.</p> <h2>The Role of IoT, AI and Robotics</h2> <p>Robotics, artificial intelligence (AI) and the Internet of Things (IoT) are transforming virtually every industry already. These technologies will be a critical part of the data-driven supply chain, helping to both collect and apply big data.</p> <h3>Robots</h3> <p>Robotics have been on the rise in the supply chain for years. Experts have long been in agreement that <a href="https://revolutionized.com/the-future-of-your-supply-chain-involves-robotics/" target="_blank">robots will become a natural part</a> of the supply chain&rsquo;s workforce in the years ahead. From robotic arms to roving courier robots, these machines are filling the gaps in the supply chain&rsquo;s labor shortage. They are giving warehouses an edge over competitors through next-gen efficiency and productivity, and they are helping employees work safer and smarter.</p> <h3>Artificial Intelligence</h3> <p>Physical robots are backed by software and data that is no less important, though. Artificial intelligence is the key to moving robots beyond simple machines. It is also crucial to creating fully automated warehouses and manufacturing facilities, which will help reduce delays in the supply chain.</p> <p>Artificial intelligence can help sort and analyze large quantities of data, faster and with more accuracy than people often can. This allows for detailed, realistic logistics simulations and forecasting as well as maximum optimization in operations. In fact, AI can even be used to automate customer service, which will help retailers and shipping companies stay on top of things during high-traffic times.</p> <h3>Internet of Things</h3> <p>If robotics is the hands of an automated supply chain and AI is the brain, IoT is the senses. IoT devices form a vast interconnected web of real-time data collection tools. A few IoT sensors around a manufacturing facility can spark numerous invaluable benefits, such as cost reduction and greater efficiency. With the extensive data collected by IoT devices, the supply chain can be continuously fine-tuned.</p> <p>What differentiates IoT sensors and devices from non-IoT connected devices is communication. Not only do these devices collect accurate data, they can communicate that information in real-time, relaying it to other devices. This gives supply chain organizations a live overview of exactly how their facility or asset is performing, from trucks to assembly lines and everything in between. A great example of <a href="https://www.businessinsider.com/iot-supply-chain-management-logistics" target="_blank">IoT in action is RFID tracking</a> for robots and inventory around warehouses, which has become popular over the past couple of years.</p> <h2>Advancing the Supply Chain Today</h2> <p>The global supply chain is in the midst of unprecedented challenges. The situation will take time to repair and improve, but technology can help. The supply chain is already in the process of evolving and adapting, becoming data-driven in order to survive and thrive. Data will enable recovery and long-term growth at every level of the supply chain. This widespread digital transformation will create benefits for manufacturers, retailers, suppliers, shipping companies, employees and customers alike.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/big-data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Big Data</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/internet-of-things-iot" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Internet of Things (IoT)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="The Future of the Supply Chain is Data Driven - Future of Sourcing" addthis:url="https://futureofsourcing.com/the-future-of-the-supply-chain-is-data-driven"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 25 Mar 2022 02:00:00 +0000 Emily Newton 2155 at https://futureofsourcing.com https://futureofsourcing.com/the-future-of-the-supply-chain-is-data-driven#comments Strategies to Manage Supply Chain Labor Shortages and Chaos https://futureofsourcing.com/strategies-to-manage-supply-chain-labor-shortages-and-chaos <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Strategies%20to%20Manage%20Supply%20Chain%20Labor%20Shortages%20and%20Chaos.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Strategies%20to%20Manage%20Supply%20Chain%20Labor%20Shortages%20and%20Chaos.jpg" title="The best way to survive the labor shortages is to ensure top talent is happy." class="colorbox" rel="gallery-node-2111-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Strategies%20to%20Manage%20Supply%20Chain%20Labor%20Shortages%20and%20Chaos.jpg?itok=l9i2hJH6" width="624" height="325" alt="The best way to survive the labor shortages is to ensure top talent is happy." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>The best way to survive the labor shortages is to ensure top talent is happy, says SIG CEO and President Dawn Tiura, CSP, CSMP, C3PRMP, CIAP.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-mindset-required-for-sustainable-supply-chains">The Mindset Required for Sustainable Supply Chains</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Supply chain disruptions continue to drive up prices and lead to a growing shortage of goods&nbsp;across the U.S. and abroad. The Biden Administration has taken many steps over the last few months to address these issues and strengthen the country&rsquo;s supply chain operations &ndash; e.g., creating the<a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/" target="_blank">&nbsp;supply chain disruptions task force,</a>&nbsp;calling on&nbsp;<a href="https://www.cnn.com/2021/10/21/politics/supply-chain-national-guard-trucking-joe-biden/index.html" target="_blank">the National Guard&nbsp;</a>to help ease the stress of disruptions, and&nbsp;<a href="https://www.nytimes.com/2021/10/18/us/port-of-los-angeles-supply-chain.html" target="_blank">extending port hours</a>&nbsp;at the Port of Los Angeles.</p> <p>But these proposed solutions, as well-intended as they are, may not be enough to ease the backlog on their own.</p> <p>The real issue isn&rsquo;t just the delay in dockings and unloading containers. The truck driver labor shortage&nbsp;is having a serious impact on the supply chains&rsquo; ability to operate properly.&nbsp; Over half of all freight shipped in the U.S.&nbsp;&nbsp;travels over the highways. A shortage of drivers leads to shipping delays, extended lead times, and problematic overhead. &nbsp; And it doesn&rsquo;t appear the issue is going away any time soon. According to the American Trucking Association, the U.S. needs to recruit nearly 1 million truck drivers to replace retiring ones and keep up with high freight demand over the next decade.&nbsp; &nbsp; &nbsp;</p> <p>It&rsquo;s not only truckers. The Labor Department in July reported that the warehouse industry&nbsp;had a record 490,000 job openings. Companies such as Walmart, Target and Amazon are going to great lengths to attract warehouse workers with benefits, including free college tuition.</p> <h3>Looking Past Hiring</h3> <p>But hiring is just half the battle. Once hired, companies need to retain their workers.&nbsp;Many warehouse employees worked in industries designated as essential during the pandemic. They felt pressured to work despite an environment they felt was unsafe. As a result, the warehouse industry has cycled through millions of workers, some of whom have sworn off warehouse jobs altogether.</p> <p>And even if warehouses are lucky enough to hire new workers,&nbsp;<a href="https://www.forbes.com/sites/stevebanker/2021/10/12/warehouse-labor-woes-are-worse-than-ever/?sh=b1d3508aaf69" target="_blank">ARC Advisory Group research</a>&nbsp;shows only 29% of warehouses can bring a new worker up to speed in less than a month (i.e., able to work at the average speed of all employees at that site).&nbsp;This timeline doesn&rsquo;t help alleviate logistical nightmares with the busy holiday season.</p> <p>Moreover, workers are using this crisis to demand raises and to negotiate better terms. Forty percent of all port traffic comes in through the west coast. Union dockworkers there are set to renegotiate their labor agreement&nbsp;in July of 2022, which is bound to create a work stoppage that further strangles port traffic. The contracts apply to about 15,000 ILWU members, including longshore workers, marine clerks, and foremen employed at 29 west coast ports, from Washington state&rsquo;s northernmost port of Bellingham to San Diego (near the border with Mexico).</p> <p>One constant remains amid all the uncertainty: Supply chain disruptions are going to continue well into 2022. Consider these strategies to help alleviate some of the pressures that continue to plague the industry.</p> <h3>Prioritize Talent</h3> <p>Supply chains need professionals in procurement organizations to traverse these murky waters. The best way to survive the labor shortages is to ensure top talent is happy. Companies need to use this urgency to digitize their operations with sophisticated tools. Technologies like AI don&rsquo;t replace workers. Rather, it frees workers from wasting valuable time and resources on monotonous tasks that can be automated and empowers them to do more strategic, fulfilling work. Workers will jump at the opportunity to do challenging work. And if they&rsquo;re not being challenged enough at their current workplaces, they will leave to pursue the opportunity elsewhere.</p> <h3>Become the &ldquo;Customer-of-Choice&rdquo;</h3> <p>To add some resiliency to supply chains, companies need to become the &ldquo;customer-of-choice&rdquo;. This means working with their suppliers to really understand their supply chain issues. For example, don&rsquo;t penalize a supplier for missing a KPI (like on-time delivery, order fill rates, etc.). Instead, collaborate and come together with mutual trust and support for one another. By doing so, &ldquo;customer-of-choice&rdquo; companies are better positioned to keep their supply flowing.</p> <h3>Rethink Inventory Channels</h3> <p>Near zero inventory level and just-in-time delivery is not going to work. Although the cost of capital is still low, treasury departments don&rsquo;t want to carry the cost of inventory. Companies must accept that inventory on-hand is a stopgap to carry them through current supply chain disruptions.</p> <p>In the meantime, companies can solidify their relationships with each other. For example, the CPO at The University of California, San Francisco recounted how trust in partnerships helped his staff immensely when they were short on PPE during the early days of the pandemic. Salesforce oversaw that the university got the PPE they needed through its own network and delivered it directly via airplane from the manufacturers. This kept the medical and hospital systems running during a time of high uncertainty.</p> <h3>Invest in Infrastructure</h3> <p>Any long-term supply chain solution requires investment in the national infrastructure. For example, the government should consider implementing a COVID transportation law that is consistent across all 50 states. The Department of Transportation sets rules at a national level, but then individual states add nuances that make trucking even more complicated. This means that every time a trucker moves into a new city or state, new rules apply to them. For example, can they leave the vehicle; can they unload their own vehicle, or do they have to remain inside at loading docks; do they need masks and/or vaccinations; how long can they drive? The list goes on. A national law would standardize these rules and regulations for all states, eliminating guesswork and confusion from a trucker&rsquo;s daily job.</p> <h3>Reframe Global Regulations</h3> <p>Global regulations are needed to protect both a company&rsquo;s ability to import as well as to export. For example, ships should not be allowed to bypass being reloaded once empty. They should not be allowed to miss pickup deadlines so they can secure a good spot in line for advantageous fees. These issues and more need to be coordinated. Rules need to be rewritten. But it is going to take a number of countries and private businesses to align on common goals, standards and practices. And they have good reason to: Profits will be impacted, prices will be impacted, warehouses will be built, and goods will be transported once again in a timely manner.</p> <p>Supply chain chaos will inevitably continue as we enter 2022. But the industry is no stranger to disruptions. The worker shortage won&rsquo;t last forever, and the industry will align to operate on a global scale to better navigate challenges as they arise.</p> <p><em>This article was first published in <a href="https://www.mhlnews.com/labor-management/article/21182335/strategies-to-withstand-ongoing-supply-chain-labor-shortages-chaos">MH&amp;L</a>.</em></p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/talent-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/labor-shortage" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Labor Shortage</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Strategies to Manage Supply Chain Labor Shortages and Chaos - Future of Sourcing" addthis:url="https://futureofsourcing.com/strategies-to-manage-supply-chain-labor-shortages-and-chaos"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 14 Jan 2022 02:00:00 +0000 Dawn Tiura 2111 at https://futureofsourcing.com https://futureofsourcing.com/strategies-to-manage-supply-chain-labor-shortages-and-chaos#comments Is It Time to Add AI to Your Commodity Insights? https://futureofsourcing.com/is-it-time-to-add-ai-to-your-commodity-insights <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Is%20It%20Time%20to%20Add%20AI%20to%20Your%20Commodity%20Insights%3F.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Is%20It%20Time%20to%20Add%20AI%20to%20Your%20Commodity%20Insights%3F.png" title="Is It Time to Add AI to Your Commodity Insights?" class="colorbox" rel="gallery-node-2087-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Is%20It%20Time%20to%20Add%20AI%20to%20Your%20Commodity%20Insights%3F.png?itok=sLdMZpQd" width="624" height="325" alt="Is It Time to Add AI to Your Commodity Insights?" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Is It Time to Add AI to Your Commodity Insights?</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/using-procurement-analytics-to-become-an-agent-of-change">Using Procurement Analytics to Become an Agent of Change</a></div><div class="field-item odd"><a href="/the-role-of-a-procurement-center-of-excellence">The Role of a Procurement Center of Excellence</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Over the last few years, we&rsquo;ve seen artificial intelligence (AI) being used for a host of procurement applications, from spend analysis to supplier risk monitoring. Now, the same technology is increasingly being applied to commodity forecasting.</p> <p>In the right situation, this can provide invaluable insights. AI makes it possible to look at larger, more complicated data sets over a longer period of time, helping to improve the accuracy of predictions and supercharge decision-making, near real-time.</p> <p>While commodity producers and traders are both investing heavily in this technology, commodity buyers are lagging behind.</p> <p>In this article, we look at what AI commodity forecasting involves, who&rsquo;s using it and who isn&rsquo;t, and how you can tell whether or not it&rsquo;s the right investment for you.</p> <h2>The Two Technologies Behind AI Forecasting</h2> <p>AI forecasting in commodities normally involves the use of natural language processing and machine learning to automatically break down structured and unstructured data and create models that predict commodity prices with minimal human intervention.</p> <p>In doing so, things that otherwise wouldn&rsquo;t be apparent to the human eye can be brought to the fore, making it easy for producers to predict production, traders to forecast pricing and buyers to plan more strategic sourcing.</p> <p>Natural language processing uses rendered algorithms to interpret written data, fueling techniques like sentiment analysis to garner insights from news articles, emails and social media posts. It&rsquo;s often used by traders to analyze current events and anticipate changes in markets.</p> <p>Machine learning, on the other hand, involves algorithms that can be trained over time to act and think like humans with the goal of improving forecasting. A &ldquo;supervised learning&rdquo; approach means that as these algorithms are exposed to more sources, specialists training the models can ensure their continual improvement.</p> <p>For example, at The Smart Cube, we use a combination of supervised learning algorithms and techniques, namely random forests, support-vector machines and boosting algorithms to forecast commodity prices.</p> <h2>Producers, Traders and Buyers: Who&rsquo;s Leading the AI Race?</h2> <p>There are three main audiences when it comes to AI solutions in commodities: producers, traders and buyers. For the purposes of this article, we are focusing on the procurement function, so we&rsquo;re leaving investment funds out of the picture for now.</p> <p>Today, commodity producers are increasingly adopting AI to improve decision-making and forecast output. For instance, large farming corporations are incorporating things like Geospatial AI, soil analysis data and weather data (satellites) to better predict crop yields. Similarly, oil companies are using satellite data to gain a real-time view of tanker locations and storage capacity, and how that will impact supply in the immediate future.</p> <p>Elsewhere, traders are using their existing experience with high-frequency algorithmic trading in their commodity assessments, adopting natural language processing and machine learning to make faster and more accurate decisions based on market shifts, traded volumes, market sentiment (chatter) and intraday price movements.</p> <p>In April 2020, we saw these speculative algo-trading systems cause the WTI crude market to trade at negative $37/bbl. We&rsquo;ve seen similar commodity price upsets, more recently with the negative FX sentiment (from COVID-19) pushing sell-offs in agri-commodities when supply data indicates otherwise.</p> <p>For companies with the right financial resources, these AI investments have provided vital insights. But, the end-consumers of commodities&mdash;manufacturing companies, for instance&mdash;are a bit behind the curve when it comes to AI adoption for commodity forecasting. And this can mean that a certain percentage of their price risk is subject to the whims of the market.</p> <p>For this reason, your inbox is probably overflowing with AI companies offering their services in this area. But rushing to the latest tech might not always be the best approach.</p> <h2>Three Questions to Ask Before You Invest in AI</h2> <p>AI can be a powerful tool for commodity forecasting. It can be the key to making better, faster purchasing decisions, budgeting more accurately, predicting risks and opportunities and controlling costs. But there&rsquo;s still a place for traditional methods, too. In fact, in some circumstances traditional modelling may provide a greater advantage than a knee-jerk investment in AI.</p> <p>The question then, is how do you know whether AI provides the right capabilities for your forecasting needs, or if you should continue with the proven processes you know?</p> <p>Before you make any decisions, you should ask yourself a few important questions. Firstly, what is your remit for commodity risk management and how much control do you have to manage your commodity-linked exposure?</p> <p>If you&rsquo;re only reviewing commodity information every six months to a year and are locked into long contracts, then an AI investment won&rsquo;t provide much benefit.</p> <p>However, if you have shorter buying cycles, or contracts that can be updated in line with commodity information, then it could provide the perfect ammunition for better negotiations. In fact, you may even choose to change your buying cycles if you decide that AI could provide enough timely information to make that worthwhile.&nbsp;</p> <p>The other thing to think about is whether you&rsquo;re considering the use of AI for budgeting or hedging. If you&rsquo;re only interested in gaining insights into set price direction, then multi-linear regression modelling (and other traditional forecasting methods) will still prove incredibly effective.&nbsp;</p> <p>Finally, it&rsquo;s important to look at what data is available to support any AI investments you might make. The more data you can feed an AI algorithm, the more effective it will be. So, is there enough data available about your commodities to make investments in AI worthwhile? And do you have access to the right external sources? Or would you be investing in an engine you don&rsquo;t have the fuel to power?</p> <p>For example, an AI forecasting model of Brent crude oil will map historical crude futures with +200 cost drivers (macro-economic data, FX, bond yields, equities, exchange traded volume, other asset classes, derivative demand, supply and demand, etc.) and will be complemented with daily sentiment analysis (geopolitics, natural disasters, social media, etc.) to predict a price move. But not all commodities have globally recognized benchmarks and traded contracts, or even fundamental data/news, which means AI can&rsquo;t be applied in all cases.</p> <h2>The Future of AI in Commodity Management</h2> <p>With greater volatility and uncertainty affecting commodities, and more data sources available to support decision-making, one thing is clear: AI will play a huge role in the future of commodity intelligence. And that&rsquo;s why there is currently no end to organizations offering AI solutions for commodity managers.</p> <p>However, we also know that chasing after the latest tech isn&rsquo;t always the right thing &ndash; adoption, applicability and ROI come into play &ndash; and hence traditional approaches to commodity management still provide a huge amount of value.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/machine-learning" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Machine Learning</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/the-smart-cube" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">The Smart Cube</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Transformation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Is It Time to Add AI to Your Commodity Insights? - Future of Sourcing" addthis:url="https://futureofsourcing.com/is-it-time-to-add-ai-to-your-commodity-insights"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 30 Nov 2021 02:00:00 +0000 Omer Abdullah 2087 at https://futureofsourcing.com https://futureofsourcing.com/is-it-time-to-add-ai-to-your-commodity-insights#comments Five Technologies to Future Proof Supply Chain Inspections https://futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png" title="Five Technologies to Future Proof Supply Chain Inspections" class="colorbox" rel="gallery-node-2084-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png?itok=WgUpK4IO" width="624" height="325" alt="Five Technologies to Future Proof Supply Chain Inspections" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Five Technologies to Future Proof Supply Chain Inspections</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/new-trends-and-challenges-for-sourcing">New Trends and Challenges For Sourcing</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The COVID-19 pandemic has jolted digital transformation into overdrive, with technology adoption enabling businesses across industries to accommodate remote work and operations. But now more than 18 months into the crisis, businesses that source globally remain ensnared by rampant order delays, factory lockdowns, persistent transit challenges, rising costs and debilitating mass shortages.</p> <p>To raise resiliency and thrive post-pandemic, businesses with a global sourcing footprint must continue to accelerate the digital transformation journey. As poor quality and non-conformities can have severe impacts on business value, leading businesses will be the ones that innovate by implementing digital quality and supplier management solutions and driving real-time, data-based decision-making. This way, they can prevent risks of volatile supply and demand patterns, while still protecting essential quality and compliance measures as they rebuild their supplier networks.</p> <p>However, with so many tools and platforms on the market, choosing where to go next can be a daunting task. The following are five key technologies and functions that businesses should prioritize as they digitize inspections across their supply chains.</p> <h2>Cloud Computing and Remote Connectivity</h2> <p>With inspections being done offsite and often in multiple locations, businesses need easy-to-deploy software solutions that can be operated without extensive support from the IT department and can work within their existing IT ecosystem. Ideally, the inspection solution can integrate across devices on the cloud and plug in to existing PLM and ERP solutions via APIs. In doing so, data can be centralized, removing data duplication and the errors that can come with it.</p> <p>Another key feature for digital inspections is the ability to function offline or with limited internet connection. As brands diversify their sourcing footprint to new geographies, they must consider varying digital ecosystems. With so many factories and inspection sites lacking internet connectivity, platforms that require an internet connection are basically obsolete and potentially detrimental to the inspection process.</p> <h2>Artificial Intelligence and Machine Learning</h2> <p>When it comes to safeguarding a business&rsquo;s sourcing footprint, the most valuable data is generated daily on the factory floors. Artificial intelligence (AI) and machine learning (ML) help businesses achieve real-time visibility of vital metrics such as product quality, compliance and supplier performance. Through the use of these technologies the supply chain team can turn data from various sources into actionable insights, empower more informed decision-making and accurately assess risk that may affect their supply chain, now and in the future.</p> <p>An innovative application of machine learning and artificial intelligence for quality control is the use of voice command technology to perform time-consuming measurements. While still making headway in the supply chain space, voice tech has already proven itself to be far more than a passing technology trend.</p> <p>Most digital inspection platforms in today&rsquo;s marketplace use IoT-connected rulers and other automation measures. But these tools require businesses to additionally invest in dedicated devices for all factories and provide intensive training to all employees or suppliers involved in the process. When supply chains engage hundreds or thousands of parties, this becomes a costly endeavor.</p> <p>Moreover, the precision between devices is inconsistent, with up to a 10% delta between two measurements, according to QIMAone data. In the long-term, such a wide margin of error presents grim implications for quality control and process efficiency.</p> <p>Unless other connected devices that require additional costly investments and intensive training, measurements powered with voice recognition require minimal onboarding. Notably, there&rsquo;s a low learning curve as most people are already familiar with the functions of speech recognition technology thanks to devices like Google Assistant or Amazon Alexa. By infusing the inspection process with accurate speech recognition capabilities, the inspectors, armed with just a tablet or other mobile device, can simply speak up and upload their data directly and immediately to a cloud-based system.</p> <h2>Predictive Quality Analytics&nbsp;</h2> <p>Predictive quality analytics (PQA) anticipates the impact of high-risk events and pinpoints root causes, leading to reduced quality issues and a stronger pulse on products and raw materials. To be successfully deployed, PQA needs clean, reliable and standardized large amounts of data collected along the supply chain &ndash; from raw material factories to assembly suppliers, warehouses and retail stores</p> <p>Essentially, &nbsp;digitization enables easier and more effective data collection and analysis &ndash; core to supply chain decision-making, collecting insights at every touchpoint and illuminating real-time visibility from factory floor to shelf. However, while algorithms can be intricate and specialized, data must be accessible and actionable for a business&rsquo;s decision-makers.</p> <p>When data summaries are available and manageable in a single place, rather than across multiple systems that don&rsquo;t sync up or communicate with each other, businesses can continuously ingest insights and take action accordingly. For example, through performance tracking insights, they can review individual supplier and inspector metrics to easily identify the best and worst performers across their sourcing footprint. With risk radar, they can build a risk profile for each supplier and factory, which helps anticipate problems sooner rather than later.</p> <h2>Automation</h2> <p>To complement data analytics, automation should use a balanced model that empowers suppliers with intelligent design and third-party monitoring. There are three fundamental functions of automation: risk-mitigation, decision-making and reporting.</p> <p>With data-based decision-making based on AQL criteria, a platform can automatically suggest a result (pass or fail) and accept or refuse a shipment for pre-shipment inspection (PSI). Proactive alerts can be automatically triggered, along with corrective and preventative action plans to suppliers to identify the root cause and solve the issue as quickly as possible. Finally, an inspection report can be automatically issued and used in a standardized format populated with all of the data collected during the inspection.</p> <p>Moreover, a digital platform can change the back-end processes for how inspections are scheduled. A &ldquo;smart booking&rdquo; function leverages advanced risk management to automatically assign inspections to a business&rsquo;s internal inspectors or supplier&rsquo;s staff. When indicators show potential integrity issues &ldquo;on the ground&rdquo; with suppliers, the platform can trigger an inspection with third-party experts.</p> <p>By automating inspection allocation based on location, product expertise, teams&rsquo; schedules and severity of the issue, businesses maximize their resources and save time in the long term.&nbsp;&nbsp;</p> <h2>Collaborative Network</h2> <p>Whether navigating disruptions spurred by the <a href="https://www.supplychaindive.com/news/china-supply-chains-procurement-sourcing-resilience-vietnam/606321/" target="_blank">U.S.-China trade war</a> or the pandemic, businesses have learned that they cannot succeed alone and must prioritize supplier relationship management (SRM). Against volatile consumer demand and economic uncertainty, SRM is perhaps the single most critical differentiator that will decide supply chain success or failure.</p> <p>To successfully digitize supply chain inspections and assert strong SRM, businesses must loop suppliers into a computer-based collaborative network so they can bring together entities that are autonomous, geographically distributed and heterogenous in their operations. While entities may vary in culture, values and social capital, a collaborative network brings them together on a computer network so they can better achieve common goals.</p> <p>A collaborative network allows a business to bring their suppliers on board the digital transformation journey. This way, meaningful benefits are unlocked for all parties. For example, a digital inspection program can be bolstered by innovative features such as integrated inspector apps, actionable insights, automation tools, configurable workflows, API integration and interactive reporting. To strengthen supplier onboarding, many digital platforms also offer training courses on operational workflows and best practices.</p> <p>In <a href="https://www.qimaone.com/" target="_blank">QIMAone&rsquo;s annual survey</a>, supplier communication and quality were cited as serious issues by 59% and 41% of respondents, respectively. However, compared to their peers, businesses with highly digitized supply chains cut concerns of supplier communications and quality in half, according to QIMA data. Providing collaborative training and onboarding as part of digital transformation will help businesses overcome challenges and future proof their SRM framework, instilling the supply chain with the &ldquo;3Ts&rdquo; of trust, transparency and teamwork.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/machine-learning" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Machine Learning</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Five Technologies to Future Proof Supply Chain Inspections - Future of Sourcing" addthis:url="https://futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 16 Nov 2021 02:00:00 +0000 Sébastien Breteau 2084 at https://futureofsourcing.com https://futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections#comments Rethinking Supplier Risk in the Era of Diversity and Inclusion https://futureofsourcing.com/rethinking-supplier-risk-in-the-era-of-diversity-and-inclusion <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Rethinking%20Supplier%20Risk%20in%20the%20Era%20of%20Diversity%20and%20Inclusion.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Rethinking%20Supplier%20Risk%20in%20the%20Era%20of%20Diversity%20and%20Inclusion.png" title="Rethinking Supplier Risk in the Era of Diversity and Inclusion" class="colorbox" rel="gallery-node-2039-IUV-kCaGrOk"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Rethinking%20Supplier%20Risk%20in%20the%20Era%20of%20Diversity%20and%20Inclusion.png?itok=ygOarv9P" width="624" height="325" alt="Rethinking Supplier Risk in the Era of Diversity and Inclusion" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Rethinking Supplier Risk in the Era of Diversity and Inclusion</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/7-actions-procurement-leaders-can-take-to-improve-diversity-and-inclusion">7 Actions Procurement Leaders Can Take to Improve Diversity and Inclusion</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>While everyone around the globe has become aware of the focus on diversity and inclusion, not everyone has embraced or welcomed it. Some are deliberate and vocal about expressing dislike of these necessities at work, school and in our communities. Others are quietly against it but raging inside, rallying against diversity and inclusion, both consciously and subconsciously.</p> <p>Having worked in the procurement, sourcing, vendor management, and risk functions over my career, I have observed how conscious and subconscious biases have played themselves out; in some cases very visibly, but many covertly affect the enterprise.</p> <p>I thought sharing some observations may bring awareness for reconsideration of selecting suppliers and redetermining their risk posture. Since the cause and effect of decisions made a long time ago are the foundation of conscious, unconscious and open biases, they have been the driving force for what has been deemed as risks in enterprises that may hinder abilities to improve diversity, both within organizations and when it comes to suppliers.</p> <p>As aptly pointed out in a recent <a href="https://www.supplychaindive.com/news/procurement-employees-diversity-DEI-Gartner/596504/" target="_blank">Gartner study,</a> the procurement function, the stewards of enterprise supplier risk, is at the bottom of the barrel along with sales when it comes to diversity. The study findings should be a cause for concern for organizations. If there is a lack of diversity in the procurement functions and its leadership, the value of diversity and inclusion lacks decision-making by those operating in the function.</p> <p>Unfortunately, the supplier-side sales functions have also been complicit enablers of this vicious cycle. If the supplier wants to win business from an enterprise client, they place client-facing sales teams that fit the mindset of the enterprise procurement or business buyer holding the checkbook, but they also bring biases in their award decision-making or selection process. Both procurement and sales diversity and inclusion will need to evolve; they carry a more significant reputational risk for both enterprises and suppliers.</p> <p>Unfortunately, deeply rooted unconscious biases often became the catalyst for decision-making, even by those who were part of the underrepresented populations. I can recall countless instances when biases were on full display by those responsible for determining risk for an organization.</p> <p>I am hopeful that sharing my observations may help organizations become aware and revisit their procurement and risk functional views by seeking to understand what is a genuine risk to the enterprise and how to manage it.</p> <h2>Reputational Risk</h2> <p>When it comes to suppliers, reputational risk is an interesting one, but it closely follows the same lens as hiring employees. However, like peeling the layers of an onion, many things can trigger a reputational risk for suppliers, so it&#39;s not necessarily a &quot;one-size-fits-all approach.&quot; Yet, many organizations have long adopted this notion of reputational risk regarding suppliers.</p> <p>The organization and its leaders must be willing to look at the many layers of this risk category and determine which ones are true to their organization&#39;s reputation, and then target those specific areas. Many products and tools have incorporated the faulty notion of reputational risk in its decision-making of what is deemed as a risk. So, if we are intentional about improving diversity and inclusion, we need to be willing to peel back the layers and seek to understand.</p> <p>An example of this layer is understanding the history of how enterprises&#39; reliance on risk software or processes for determining supplier risk was born out of the financial industry having an underlying cause and effect. One of the elements of this reputational risk is the &quot;background check&quot; to determine an individual reputation, particularly executive team members&#39; criminal record, which comes from the employee hiring practices in financial institutions.</p> <p>Of course, this notion of a background check and criminality makes sense for banking and financial institutions dealing with money, resulting in it being an important consideration. However, when the banking or financial executives went to other companies or industries, they carried their view of &quot;reputational risk&quot; in employee and supplier considerations. So, this lens became the new norm even when it was around supplier selection considerations.</p> <p>Another striking aspect of it is that when other industries were looking to implement risk practices, knowing that the financial industry already had them in place, they quickly deemed these processes as best practices and adopted them as their own, without either a consideration of whether it applied to their company or industry, or likely due to conscious or unconscious biases. Such group think resulted in most companies choosing not to hire an individual as an employee if they had been in trouble with the law, without regard to understanding what the actual issue might have been and why, or if they were the victim of a systematic conscious or unconscious bias.</p> <p>Some forward-thinking organizational HR and business leaders have started to understand this issue. They are no longer considering this aspect when hiring employees except in few roles where it could be applicable. However, the procurement or risk departments have not done the same; thus, relying on the deep rooted and established way of considering supplier risk still being the norm.</p> <p>I recall more than one instance over my career where a white-collar crime or otherwise for a supplier employee showed up on the risk tool, usually leading to the consideration of the supplier being too risky. Supplier exclusions are automatically triggered based on the software implemented by someone in a leadership position who hadn&#39;t required a reasonability test to determine how risky the supplier is for their use, stemming from this long-adapted over-reliance on software tools for our decision-making.</p> <p>Mind you, no considerations are given to understand the circumstances. The organization may never encounter the supplier or its personnel, while this supplier might be a leader in the industry, or they are doing a large book of business with your peers or other large enterprises. Typically, none of these are considered or open for discussion. So, the decisions are consistently being made similarly across many enterprises to eliminate such suppliers from consideration because we still rely on the old way of determining risk.</p> <p>Since no one wants to fight the decision-maker on their rationale, exception processes get put into place to be invoked for any team in the enterprise wanting to use a flagged supplier, creating bureaucratic layers simply because of biases of one person who could only see the risk lens based on a financial institution and not their own, in which such circumstances would never come to fruition.</p> <h2>Supplier Risks in the Age of AI</h2> <p>My recommendation is for organizations to look at how supplier risk has been considered and empower their people to apply a diversity of thought to the applicability of the risk to the organization. Organizations should attempt to understand if their supplier risk processes are over reliant on software tools and, if so, how those software tools determine risks. It is essential to understand if the software tool&#39;s risk lens would have the same applicability as your own. Since supplier risk tools originated from the financial industry, those parameters have been lost or forgotten over time. Hence, it&#39;s worth revisiting to determine the applicability to your organization and industry.</p> <p>For example, when we look at the financial risk of a supplier, there are only a handful of tools in the market. None truly addresses the global nature of supplier financial risk, but because they have the market share, their lens has become the decision-making view determining suppliers&#39; financial risk. The question to explore would be this: Why are we looking through a financial lens of a supplier organization based on just one or a few software companies&#39; points of view, given that they all originated to support the financial industry?</p> <h2>The Many Faces of Supplier Risk</h2> <p>Supplier risk has many legs and each has variance tied to the industry: what you are doing with the supplier, why and how should all map to your organizational risk appetite with the software tools in use. The invoked processes should reflect your organizational risk posture and not that of the supplier risk software alone.</p> <p>Enterprises should also be willing to consider more of a supplier intelligence versus a supplier risk program approach. The supplier intelligence view highlights many areas that an enterprise should evolve to understand a comprehensive and holistic view of the supplier, specific to your industry and your organizational risk appetite. Today, supplier risk tools are disparate and don&#39;t provide a holistic view across the multiple dimensions of risk and intelligence important to your organization.</p> <p>Start exploring supplier intelligence tools and their approaches and pressure test to ensure that their foundational view of what and how we consider supplier risk is evolving. It will be necessary for the software players operating in the space deemed supplier risk or supplier intelligence to bring a holistic view of the supplier that matters to your organization and not what they believe should matter to you. I am encouraged by some of the supplier intelligence elements coming together on some of the newer software tools. However, they still have a lot of work in evolving and personalizing the various dimensions important to each organization.</p> <h2>Changing the Face of Supplier Risk in the Age of AI</h2> <p>As we head into the AI-led processes, it&rsquo;s important to understand and root out decision-making by a few with conscious or unconscious bias. This is where the AI will learn from what it deems as a risk and what it does not. Many new software players have popped up over the past couple of years that are starting to apply the variation of the lens but, more importantly, starting to show the &quot;why&quot; through the explainability feature when using Machine Learning methods. It benefits us to understand it a bit more by applying critical thinking to determine if the risk identified by the machine in a supplier risk consideration is valid or not.</p> <h2>Closing Thoughts</h2> <p>If we believe that people and situations cannot change, we would certainly be hard-pressed to accept that those who didn&#39;t practice diversity and inclusion are now acting differently. Being the optimist that I am and seeing the positive in people, I believe that people and situations can change, so we need to be adaptable and mindful of giving safe spaces for people to become self-aware and self-reflect. Continuous learning is required to improve diversity and inclusion in our organizations and how we consider supplier risk in the future.</p> <p>Suppose we don&#39;t reconsider our risk posture in the AI-enabled future. In that case, our organizations will experience losses if we continue to operate from the original foundation of supplier risk processes based on historical decision-making methods. Our future organizational sustainability requires us to think and act differently. Organizations and leaders with intentionality that step up to the plate will thrive in the AI-led fourth industrial revolution, and those that do not will struggle to survive.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/diversity-and-inclusion" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Diversity and Inclusion</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Rethinking Supplier Risk in the Era of Diversity and Inclusion - Future of Sourcing" addthis:url="https://futureofsourcing.com/rethinking-supplier-risk-in-the-era-of-diversity-and-inclusion"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 15 Aug 2021 17:00:00 +0000 Purvee Kondal 2039 at https://futureofsourcing.com https://futureofsourcing.com/rethinking-supplier-risk-in-the-era-of-diversity-and-inclusion#comments