Envisioning the Future of Procurement: Navigating Active Redundancy with AI and Technological Innovation"

A few months ago, while devising a mechanism to implement passive redundancy and shield against the subpar service levels of certain suppliers, a train of thought emerged—a journey I invite you to embark on. But before diving into deep waters we first need to clarify some concepts for readers not so well-versed in the differences between passive and active redundancy which is key to optimizing supply chain resilience.

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On the one hand passive sourcing redundancy exists when organizations use a single sourcing channel at a time. Any shift between options entails at least a temporary cessation of the previous sourcing method. While passive redundancy provides a level of security, it may introduce delays and potential vulnerabilities during transitions. Contrastingly on the other hand active sourcing redundancy allows the simultaneous existence of two or more sourcing channels. This enables the generation of purchase orders concurrently from different sources, providing flexibility and adaptability in real-time. Active redundancy not only mitigates risks associated with interruptions but also enhances agility in response to dynamic market conditions.

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A once-in-a-lifetime performance on the active redundancy stage reveals its indisputable benefits. Yet, it's at this juncture that our journey transitions from the realm of the practical to the ideal. To truly implement active redundancy, an organization must, first and foremost, possess an ERP capable of furnishing timely and precise information on the total cost to buy. However, the majority of market solutions only offer insights into actual (past) purchase costs, incapable of projecting impending expenses such as final costs of nationalization, insurance, freight, brokerage, inventory costs, and more. These activities are often managed ad hoc by procurement personnel using spreadsheets.

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Now, let's assume we are at the helm of procurement in a company that has prioritized choosing a comprehensive, cloud-based procure-to-pay (P2P) system, powered by the "Big Three" of digital transformation technologies—artificial intelligence-based robotic process automation, centralized, integrated data management, and advanced analytics. In this scenario, we can contemplate the level of active redundancy we aspire to achieve and how we can genuinely leverage available technology to elevate the procurement process. It's an opportunity to ponder and respond to the quintessential question that every visionary asks: "What if?"

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Let us try to envision a future where a robust ERP is complemented by a CRM gauging consumer and supplier sentiments and a generative AI redesigning contracts for enhanced satisfaction. The challenge may seem daunting, yet several companies are already leveraging AI in marketing campaigns, as explored in the @Anush Kumar article or in @Muddassir Ahmed 's SCMDOJO blog. This prompts us to ask: Why not apply the same principles to procurement? Imagine coupling internal systems data with social listening tools, anticipating market demand shifts, and empowering AI to trigger RFQs and optimize negotiations. What if our virtual buyer could not only negotiate conditions but also design blockchain contracts ensuring optimal information, goods, services, and payment flows for mutual benefit? As technology transitions from fiction to reality, leaders must embrace its potential. While change is not easy, a long-term vision can pave the way for successful transformations, echoing success stories like Pepsico, where Dr. Athina Kanioura spearheads transformation, as shared in Daniella F Santana's newsletter. Consider also the noteworthy work of @Larry Ellison(Oracle), @Werner Vogels (Amazon Web Services), or @Kevin Scott (Microsoft). These leaders illustrate how identifying use cases for technology can ensure long-term success, while those who resist change risk fading into obsolescence, as emphasized in the transformation journey of Dominos Pizza.

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Embrace change, explore possibilities, and join the ranks of those steering their organizations towards a future where innovation prevails. The time for action is now!

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credits on the image to Deloitte https://www2.deloitte.com/us/en/blog/business-operations-room-blog/2023/generative-ai-in-procurement.html