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East Coast Forum preview: How automation will change procurement

East Coast Forum preview: How automation will change procurement

Procurement Leaders East Coast Forum returns to Boston in September for two days of debate and discussions on the topics driving transforming within the function.

 

General Electric’s GM sourcing and global operations, Doug Paul, talks about his views on automation and the challenges ahead for the function.

 

Automation is a big topic for procurement today. What is procurement at GE actively doing in this space?

Doug Paul (DP): We strive to reduce touches everywhere we find them. One of my areas is accounts payable, so we’re aggressively pursuing automation in the likes of self-billing, evaluated receipt settlement and e-invoicing with multiple partners. We’ve got about 30 robotics programs, doing everything from looking up and transcribing accounting codes, validating invoices with government authorities, resolving non-purchase order (PO) invoices, and automating requisition or PO inputs.

 

We also have mobile applications for requisitions, invoice approvals and supplier pricings.

 

How do you see automation progressing in the years ahead?

DP: It is only going to accelerate. I’ve talked a lot about the back end of the source-to-pay process so far but the automation tools for PO collaboration and smart contracting are also making strides and this is coming from both mature companies and start-ups. We’re going to start to see differences in the marketplace and better ways to share information. Think about Facebook, Uber, LinkedIn, Twitter, and so on. These applications are completely changing how we interact socially but ask yourself how such technologies are being used in procurement. The answer is, they’re not.

 

Look at all the handoffs back and forth between the buyers and sellers and not just in terms of the PO process: diversity status, factory locations, quality certificates, and so on. We are constantly asking questions about these but mobile applications are still in their infancy. Why is this? Because we’re all stuck in a paradigm where we believe our information shouldn’t be shared. The reality, though, is that less than 10% of our information probably deserves that type of treatment. Sourcing is currently a mobile function without any mobility tools.

 

What do you foresee around the corner for procurement?

DP: International rules and policies are changing rapidly, there will be more complexity around imports and exports, while various countries are attempting to incentivise or disincentivise different commodities and markets. This will put mounting pressure on the function to source from key sales markets.

 

What challenges does procurement face and how are you preparing for these?

DP: One of the biggest challenges is for the function to understand, articulate and deliver business outcomes – rather than just procurement-only outcomes. You can only do this by talking to and understanding all your stakeholders and putting some skin in the game. In my area, I’m looking at how we can do things more effectively on a ‘one GE’ level – rather than on an ‘eight GEs’ level with each of the separate business units.

 

How have you driven change and challenged your team to think bigger in recent years?

DP: You often see companies trying to get started with shared services by developing long and detailed enterprise standards and looking to implement them in a way that ends up with a controllership, governance mindset. A big part of my role has been to build on the foundations that the enterprise standards gave us and ensure compliance. I also encourage the team to focus on the much-needed business and supplier deliverables with a mindset to year-on-year improvements and productivity. In the same way, we run our factories and expect our suppliers to run theirs. We have an outcome focus, and we work as business partners with the operating units on this.

 

One of the biggest changes we’re working on is around supplier master data. We have more than 100 enterprise resource planning systems and a similar number of operating units and company codes, as well as countless systems delivering supplier data.

 

Attempted handoffs of supplier information between the businesses were easily costing us millions of dollars each year. We realised we needed to completely revamp the way we onboarded and maintained supplier information, we needed to stop the redundant assessments, the difference in interpretations of our own ‘know your supplier’ policies and external regulations, to make it easy for our category experts to know which suppliers we are already using and stop onboarding any more unnecessarily.

 

What are the lessons you hope to take from the Forum?

DP: I’m looking for best practices, and ideas that I haven’t thought of. We’ve got some ongoing activities in GE that I think others will find interesting so I’m keen to get some feedback on these activities from the community. I’ve also got a couple of ideas about what is happening in the world of procurement today and what might happen soon, so I’d like to hear if anyone agrees or sees something different.

 

Find out more about Procurement Leaders’ East Coast Forum

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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