Dive Brief:
- Building a fully automated supply chain is technically possible but not desirable, according to a white paper from procurement firm GEP. Full automation could lead to hampered innovation and a "battle of the algorithms," where systems negotiate with each other in an infinite loop.
- A hybrid model utilizing human intervention and artificial intelligence is optimal, according to the report. Artificial intelligence can free humans from tedious administrative tasks, allowing them to innovate and create added value to the supply chain.
- The report suggests businesses use technology to fix their procurement process, not simply make a broken process run faster. Automated systems should have built in flexibility to adapt to business changes, GEP says, noting cloud-based procurement solutions are often the way to go.
Dive Insight:
Enterprise resource planning systems are no longer able to keep up with modern procurement practices, GEP says. It's a mistake, however, to try to "shoehorn" an existing on-site system into a constantly changing role that requires flexibility.
As a result, managers responsible for purchasing automated services, including software and machine technology, should consider the technology's role in the entire process.
"Procurement’s role would be to leverage automation capabilities as they arise for the benefit of the business, but maintain a keen and critical eye on global and local influences to ensure innovation in tactical and strategic operations," the white paper says.
Regardless of whether procurement becomes more automated, the role of people will stay vital since the supply chain is not becoming any less complex as time goes by. Examples of technology integration in the workplace, such as visually guided forklifts at Giant Eagle's distribution center, are increasing productivity at record rates while helping workers gain technology-based skills that may be useful in the future.
