I’m 40,000 feet in the air flying from Boston to Dublin. As I sit back in my seat with a Guinness in hand, I begin to consider the safety of my flight. I start contemplating the various procedures required to fly the plane and feel myself thinking I’d be more comfortable with the auto-pilot navigating the plane than the captain and his crew. It’s not that I don’t trust the skills and experience of the pilots; it’s just that I know that they’re limited by the constraints of human error and capabilities.
No matter the profession, even the most experienced humans can make mistakes. It’s next to impossible to process thousands of calculations in milliseconds. It is only human for our emotions to weigh into our decisions, thus causing us to become susceptible to the influence of negative outside factors, such as unconscious biases which impact an objective review.
Let me put down my Guinness and get to the point! Big data analytics, machine learning, robotic process automation, artificial intelligence, and blockchain are no longer just buzzwords for Venture Capital (VC) pitches, they’re proven technologies used to improve and enhance our everyday lives. Many people fear the unknown, fear change they cannot fully appreciate and naturally resist this change in general. An example of just such an organization that is resistant to change is your procurement department.
Before we get into what Fairmarkit sees as the benefits of new technologies to the procurement industry and why they’re essential, we must first remove the notion of “fear” when it comes to these technologies. If I were to compare the procurement industry to that of the aviation industry I’d see that the two “commodities” that each industry is afraid of losing most are money and lives. The aviation industry, which is entrusted with the vital responsibility of human lives, has already for the most part turned the keys over to advanced technology. If the aviation industry is willing to do this for your life, then why not the procurement industry for your money?
Sticking with the flying analogy and getting more specific to sourcing… in your buyer’s cockpit, let’s discuss the knobs, levers, and data that they must manage:
The next challenge is data relevancy. The richer the data the stronger the objective analysis leading to better, move valued business outcomes. The problem with rich data is it consumes space and as a result our brethren in the Finance space jettison unwanted, unneeded meta data not relevant, unless it’s important to categorizing the expense, allocating it to the correct company/cost center and needed for payment to a supplier, pcard company or the employee. The result can be unstructured, incomplete data making procurement/sourcing’s task more challenging.
Managing the levers require clarity to consider how to tackle sourcing opportunities, develop wave strategies, supplier stratification, etc. On top of that, this all needs to be done in real-time because SLAs to the business are shrinking and procurement already has a bad rep.
At Fairmarkit, we help companies start to hand the keys (or even just the GPS routing guide) off to technology. If this is your first intro to Fairmarkit, you should know that we are laser-focused on being the #1 platform to streamline and optimize tail spend purchasing.
Big Data Analytics: Most organizations have the answers to their problems right within their own data, and when you couple that with external data, not only can you solve your problems at hand but you can look at broader strategic initiatives. There is an exciting world of hidden information to be uncovered in large data sets. With added insight companies can improve performance, get better prices, and enhance connections between people, items and businesses. Fairmarkit evaluates each customers areas of large spend, trending categories and major data outliers. Following best practices, we’ve developed a simple process to continuously analyze where you can decrease risk and increase cost savings through pattern matching. It’s been said that data is the new oil, so it only makes sense to ensure you’re getting actionable intelligence from yours.
Machine Learning: In its most simplistic form, machine learning allows your buyer’s actions to train software to mirror their decision process. The more data and patterns the system recognizes, the more effective it is in reducing your buyer’s workload. An essential part of utilizing machine learning is building a large enough set of data so it can become more intelligent. Running learning algorithms on small data sets doesn’t produce enough intelligence to make consistently correct decisions, so Fairmarkit is also in the business of gathering actionable data to further improve machine learning.
Automation: Once the platform has data and understands the buyer’s habitual actions (while considering pre-set policies and procedures), Fairmarkit begins automating the sourcing process. By helping companies automate the repetitive sourcing processes for commodity based tail spend purchases buyers have increased time and money to look towards more strategic initiatives. Without Fairmarkit, buyers manually follow internal processes to ensure the correct number of bids are returned, from the right vendors, at the best price. If Fairmarkit can leverage technology to automate the process and deliver a better price, organizations can now re-allocate procurement manpower to other critical functions.
Artificial Intelligence (AI): The functions mentioned above were created to complete manual tasks faster and more effectively; AI enables the process to become more intelligent and begin to think for itself. For example, your company has a certified business spend goal, but you’re struggling to find small, veteran or minority owned businesses that can provide thousands of small purchases, but can also deliver at a competitive price. AI can recognize patterns among the small purchases you’re making, the traits of the certified vendors you prefer, and pricing that you’re receiving compared to other companies. In doing this Fairmarkit can intelligently match the right business, with the right item, at the optimal time. Additionally, Fairmarkit can find more cost effective vendors, with business profiles similar to your current suppliers (years in business, rating, inventory, response time). Using AI, we can create and rank such profiles across millions of vendors, all done without a buyer’s time or touch.
Blockchain: Blockchain has the power to become the most impactful technology to the procurement industry. At Fairmarkit, our ideal roadmap is to transform your tail spend procurement in a series manageable goals. Initially, leveraging private hyperledgers reduces the risk of cybersecurity and ensures data continuity. This will allow us to migrate to phase 2, which brings transparency and secure data sharing across our entire customer base. The greatest barrier, but most meaningful will be phase 3, where we facilitate the transactions through smart contracts. This will eliminate the risk of payment fraud, trust issues of payments being made, eliminate the hours and resources spent on the PO and invoicing processes and decrease the transactional costs associated with using traditional financial institutions. You’ll see more and more articles from the procurement giants about blockchain. As a startup, our unique position is to build our core architecture to incorporate the optimal applications of the technology, versus trying to reverse engineer the technology to fit a legacy and pre-existing platform.
Generally speaking, the internet and big data bring transparency and disruption to almost every industry they touch. At Fairmarkit utilizing AI, automation, machine learning and big data analytics empowers us to significantly reduce time and cost our clients spend on small to medium sized purchases. We are continually improving the services we offer and researching the ways data can transform the procurement industry and our business partners. The way we see it is, we allow technology to fly our planes, inform decisions in our operating rooms and analyze our financial investments, shouldn’t we be open to exploring how it can help us purchase the goods and services needed for our company?