siliconindia | | September 20179commodity prices and currency exchange rates. In order to avoid unforeseen spikes in spend, companies are in-creasingly using predictive analyt-ics to forecast changes to their cost base. For instance, a soap manufac-turer can use predictive analytics to forecast the future cost of palm oil. If a rise is on the horizon, the category manager can stock up on palm oil, thus preventing the business incur-ring higher costs. Predictive analyt-ics is also being adopted for indirect categories now and will increasingly do so. For a large global pharmaceu-tical client, The Smart Cube has de-veloped a solution to forecast 200+ commodity prices and 50+ currency exchange rates, which informs cost changes for several key categories of spend, and enables the company to make strategic forward-looking buying decisions. Centralized Buying, Enhanced By TechnologyTo centralize or not to centralize? Procurement departments have long grappled with this debate. With the availability of advanced technology solutions, organizations are increas-ingly moving away from decentral-ized buying to achieve greater con-trol on spend and improve bargaining power. Tools from e-Sourcing to re-duce sourcing cycles while running global events, to virtual meetings for enhanced collaboration, to online catalogues, are all enabling this shift. A top-5 global pharmaceuti-cal company adopted a centralized approach by developing an online marketing content catalogue, and the marketing team was required to leverage existing content unless there was a valid business case for not doing so. This enabled the com-pany to reduce the number of creative agencies globally from 26 to 9, and a stronger negotiating position con-tributed significantly to reducing the overall category spend.Enhanced Traceability of Materials Because of BlockchainBlockchain ­ the technology behind the world's first unregulated de-centralized digital currency Bitcoin ­ is now being considered for sup-ply management. Blockchain can enhance the traceability of sourced materials, which is particularly im-portant in industries such as food and pharmaceuticals. The world's largest retailer, Walmart, has tested blockchain to track pork in China and mangoes in the U.S., from `source to store', including details of the farms, batch numbers, processing data, ex-piration dates and shipping details. Walmart was able to trace data in a couple of seconds using blockchain ­ a process which previously took up to a week. The highly accurate and automated nature of blockchain also enables smart or self-executing contracts, through the single ledger, which enhances trust and reduces workflow complications. This tech-nology also has the potential to link upstream S2P and P2P with down-stream supplier processes, thereby automating supplier payments. Looking at all these attributes of blockchain, companies are slowly starting to adopt it in the procure-ment function. Bitcoin may soon gain popularity in the sourcing and pro-curement world as well after having won over countless netizens in the past decade.Gazing at the futureNew technologies are enabling pro-curement to enhance its role as a val-ue-generating function, through two main routes ­ Increased effectiveness of traditional procurement activities, and Introduction of new possibilities that were never thought of earlier. Emerging technologies such as artifi-cial intelligence can be used for ana-lysing purchase orders, contracts and internal policies, to discover hidden spend and reduce off-contract spend-ing, and will steadily become inte-grated with the procurement function. Self-trainable chatbots will also start to be commonly used in buyer-sup-plier conversations about sourcing practices & policies, purchase orders requirements, and others, to reduce the possibility of human errors.Scalable algorithms are already being applied to the procurement universe. One particular proprietary machine-learning algorithm be-ing utilized by The Smart Cube for identifying risk, continuously tracks news from 200+ sources for select suppliers. This algorithm filters out relevant news based on defined pa-rameters and uses sentiment analysis to further filter news that will have a negative impact on the client's sourcing processes. In the not-too-distant future, re-petitive and predictable tasks will be handled solely by technologies such as Robotic Process Automation and algorithms, freeing up people to play a strategic role and apply their time in generating value for the business. New technologies are enabling procurement to enhance its role as a value-generating function through two main routes ­ Increased effectiveness of traditional procurement activities, and Introduction of new possibilities that were never thought of earlier
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