Starting Procurement’s Innovation Revolution

What’s the first thing that comes to mind when you think of innovation?

Maybe you picture Tesla and self-driving cars. Maybe it’s when Apple first launched iPhone, basically giving you a handheld computer.

Or maybe you thought of something a bit more intangible.

AI seems to be the go-to when people try and explain innovation or new ‘cutting-edge’ technologies, but how many can really explain what AI is or does?

Innovation is so much more than just AI . It’s the little things, it’s the behind the scenes, it’s the journey from the horse and buggy to self-driving cars and everything in between.

The magic happens in the day-to-day, in-between the lines, until one day, everything changes.

Procurement’s Crossroads

Procurement has come a long way since it’s humble beginnings in Ancient Egypt.

We’ve gone from recording stock on papyrus scrolls, to inventing risk management and insurance principles in Ancient Rome, and then the official ‘Procurement Department’ being coined along with the industrial railway.

Throughout this time there’s been countless innovations driving both procurement and business forward, but somewhere along the way that day-to-day innovative fire went out.

Now procurement finds itself at a crossroads.

For years procurement was considered a tool for cost reduction, and then came the push towards becoming a strategic business partner, but as our recent survey with IPG reports , now we’re stuck somewhere in the middle.

The way I see it, we have two choices.

Resign ourselves to menial paperwork and slip back into being a cost reduction tool for the business.

Or lean back into that innovative spirit and become a beacon of change and strategic value to help guide business forward.

I don’t know about you, but I very much prefer the latter.

The ‘Digital Mind’ Project

To that end, JAGGAER assembled some of the best and brightest to kick off what we’re calling our ‘Digital Mind’ project.

It’s an intellectual factory that will drive innovation forward every day, arming you with the tools and technology you need to work smarter, faster, and ultimately, grab your seat at the head of the strategic business table.

Our Digital Mind project was built on the foundation of three new solutions, aimed to make work easier, smarter and faster. But before we look at those let’s take a look at what innovations have already been powered by this initiative.?

Intelligent Award Navigator (IAN)

Nicknamed IAN for short, the Intelligent Award Navigator is a new integration into an already advanced Sourcing Optimizer solution. Sourcing Optimizer is designed to deal with incredibly complex sourcing events, that deal with tens or hundreds of thousands of variables, all in an intuitive solution.

What IAN adds to the mix, and was a large ask from our customers, is the ability to consider the unknown.

According to my colleague Tim Johnson , our resident Sourcing Optimizer and IAN expert, “IAN leverages artificial intelligence (AI) and advanced game theory to uncover the hidden options available to buyers within their award scenarios. Essentially, IAN provides a guiding hand to sourcing teams by showing them other options for awarding their business within the constraints and preferences they have already identified.”

“This is an iterative process, where IAN is constantly asking “What is optimal for this user?”, and transforming what it learns into meaningful recommendations. IAN guides the user to think bigger and more strategically about the award outcome they most desire, each time presenting new options with different results to achieve a closer match” Johnson continued.

Over time it will learn what the preferences are and begin offering better and smarter alternatives, opening up the door to more strategic and valuable award scenarios you may have never considered otherwise.

On-Time Delivery Predictor (OTD)

Our OTD Predictor lives up to the name. By applying machine learning and predictive analytics algorithms, the system can predict if an order will be late, before you even place it, with an accuracy of up to 95%.

A person simply can’t get that degree of accuracy, and certainly not within a timeframe where it can be actionable.

OTD helps you get in front of potential risks before they ever occur, allowing you to ensure that your supply chain won’t break down due to a high-priority late shipment.

Contract Risk Analysis

Contract management is one of the most important pieces of any business. The problem has always been the sheer number of contracts you had to manage and the many risks that come along with them.

So, with our partners at EdgeVerve we combined CLM and AI to create intelligent contract risk analysis and lifecycle management.

This is going to provide value in four main areas :

Cost Reduction: AI provides the opportunity to take the administrative burden off people, largely cutting down the cost of managing each contract.

Not to say people won’t be needed, but people won’t have to handle the repetitive tasks of CLM. AI can also give advanced analysis to find opportunities to cut costs and leverage certain clauses to drive more value.

Risk Management: Contracts are full of risks. Asking a single person, or even a team of people to thoroughly vet them takes time and isn’t always done accurately.

Instead, AI can perform an in-depth, constant analysis to flag exceptions for review, monitor risk factors, alert you of dynamic changes, and assigns a contract risk score for future reference. It can also provide out-of-the-box suggestions to replace risky clauses.

Agility and Scalability: AI can cut down the contract process from ingestion, extraction, scoring, and digitization, all within 60 seconds. This significantly reduces the time it takes in the procurement phase of the contract, all while keeping things error free.

At the same time the AI can scan the contract, pick out risky clauses, flag them for review, and allows for quicker changes to be made in the case of department or industry changes.

Visibility: AI provides powerful spend classification and analytics to offer insights for renegotiating contracts and using real-time data to best leverage and manage your on-contract spend.

You can set up vendor-specific dashboards to view each vendor’s strengths and vulnerabilities for better partner identification and renegotiation and get a 360° view of your supplier ecosystem.

Work Faster, Work Smarter with Adopt, Assist & Advise

The Digital Mind needs to be more than just a project or a strategy. We want it to be a revolution that changes how procurement is thought of.

To that end, the foundation of it is built on three new standalone solutions that we’ve launched.

Each offering unique value, each offering a solution to business problems, and each, that although can stand alone, will build on another, and guide procurement on a journey towards greater strategic value.

JAGGAER Adopt : Developed to solve one of the biggest roadblocks in any digital transformation effort, digital adoption. Get the insights you need to reduce the friction digital adoption brings and help tailor your change management strategy.

JAGGAER Assist : Combining innovations in natural language processing and search with a comprehensive knowledge base built over 25 years to help guide you to maximizing ROI in everything you do.

JAGGAER Advise : Operates within the guardrails that make sense for your business. Constantly analyzing data in the background to give you prescriptive analytics-based recommendations; saving you time, money and ultimately, helping you guide your strategy.

This is just a part of the journey. We’re going to break down each solution along the way, detailing exactly how to take the next steps towards solidifying your strategic business position by driving innovation forward.

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This article first appeared on the?JAGGAER blog