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Giving Autonomous Sourcing the Green Light

June 9, 2021

author:
Keelvar

With autonomous vehicles no longer confined to the imagination of science-fiction writers – studies suggest that we can expect to see one in 10 cars self-driving by 2030 – there’s been plenty of murmurings about to what degree intelligent automation technology may diminish the need for hands-on human involvement in the future. These debates are now active and ongoing in Procurement.

As global logistics is still in a state of considerable upheaval, autonomous trucks could present a golden opportunity to dramatically improve efficiency, reduce haulage costs and transform how freight moves. Meanwhile on our seas, maritime transport could be cruising into an era of unprecedented technological innovation; the autonomous ship market is expected to reach $14.2billion by the end of the decade.

Although procurement has been slow off the mark in allowing intelligent systems to permeate its various functions, the number of industry professionals utilizing artificial intelligence (AI) is steadily increasing to the point where automation has been found by Ardent Partners to be a top priority for procurement executives in 2021. It’s a promising development in what could lead to a complete digital overhaul of how procurement departments function and sourcing teams interact with their suppliers on a global scale.

As you hone in on the area of strategic sourcing, smart automation can help address areas where machines may be better suited and therefore free up humans’ time for work that does indeed require relationship-building and creative thinking skills. Benefits already being realized by early adopter customers include:

  • Speeding up the sourcing negotiation and award process with efficiencies
  • Driving consistency in best practice application
  • Scaling in terms of team productivity and also in supplier engagement

Those are some examples of where intelligent technology can have substantial impact on improving sourcing’s current operating model.

Driving Towards Autonomous Procurement

Just as the technology behind autonomous vehicles appears on a continuum ranging from everyday cruise control to truly driverless cars with no human intervention, procurement teams are on a journey before they reach a future destination of achieving fully autonomous sourcing.

The automation of driving is an apt analogy for what we’ve coined Intelligent Sourcing Automation: a category of software that leverages intelligent systems to do the repetitive, tedious tasks in sourcing and leave human workers to focus on more strategic work. It’s also an area that Keelvar explores at length in our white paper, AI-Enabled Sourcing Automation.

The continuum of automation technology reveals how procurement and sourcing has already been on the road to increasing levels of automation for decades:



Within the most basic “driver only” Level, there existed an unstructured flow of data using email, with only desktop tools such as Excel available for data gathering and to lessen the pain points for procurement teams. At Level 1, eRFX tools came into play, providing assisted automation by helping move supplier information collection into a centralized online system.

It was followed by the emergence of eAuction platforms at Level 2, enabling “partial automation” capabilities that added the ability to automate key aspects of the competitive bidding process in a more transparent environment.

At Keelvar, our vision is to help sourcing teams continue to advance the use of automation technology and help our customers gain even more efficiencies and savings as they keep moving along this journey. That’s why our solutions start at Level 3 with our Sourcing Optimizer platform, which allows our customers to run e-sourcing events with “conditional automation.”

Here, optimization intelligence is added to the mix that helps to quantify information beyond a stated bid price input. This automates the ability to collect and analyze supplier bid inputs that factor in things such as sustainability, creative pricing, alternative offers, flexible contract terms, capacity, incumbency, and more.

Our Intelligent Sourcing Bots are currently considered Level 4 “high automation” on the continuum, meaning they can perform multi-phased tasks once initiated by a human worker. Some of these tasks require human approval of a decision before the Bot proceeds with additional actions. 

This all builds a crucial foundation for the Bots’ use of AI, which allow the bots to reason about the information being received, suggest intelligent actions that should be performed, and react to new information – all while keeping their interaction with human employees streamlined and user-friendly.

Summary

As with self-driving cars, Sourcing Automation requires successful navigation through a series of complex interactions in an effort to reach the user’s desired end goal or destination.

But unlike the physical dangers encountered by autonomous vehicles on roads, sourcing mistakes thankfully don’t come with the additional risk of death or injury, meaning the acceleration of Sourcing Automation technology will be much faster than that of fully autonomous vehicles as a consequence of having lower risk factors. 

So while fully ‘driverless’ autonomous technology isn’t quite within strategic sourcing’s reach just yet (watch this space) the not-too-distant future of Intelligent Sourcing Automation will see wider adoption of Level 4, and from there it’s only a matter of time before Level 5 “autonomous” sourcing gets the green light.

Download a complimentary copy of our white paper to learn more about the journey towards fully autonomous Level 5 automation sourcing systems.

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