Jump-Start Procurement-Led Innovation ProcureCon Webinar July 27, 2016

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The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. Information about potential future products may not be incorporated into any contract. The development, release, and timing of any future features or functionality described for our products remains at our sole discretion.

Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user's job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here.

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Speakers

© 2016 IBM 3

Dr. Robert Hanfield Director of the Supply Chain Resource Cooperative Author of The Procurement Value Proposition

Speaker

Jeff Townley Former CPO of Nortel Networks Former President of Global Services at Genband

Guest Speaker Speaker

Jim Holbel Procurement Solutions Practice Leader, IBM

Agenda

The Pressure to Innovate What we know about procurement-led innovation A Process for procurement-led innovation IBM Emptoris Cognitive Procurement

The Emerging Role of Procurement

Procurement is at an inflection point where the old “bag of tricks” no longer works.

Opportunity for savings through leveraging of spend have been depleted?

Analytics represents the next wave of opportunity.

Supply chain innovation is on the horizon.

A new set of procurement tools enabled by analytical innovation is required!

Time

Value

Traditional Sourcing Leveraging spend

Procurement analytics TCO Slm Clean sheeting Demand management

Supply chain innovation Value creation Working capital reduction Asset velocity Trade financing

Supplier Innovation is a critical development area

Source: Key Issues Study, The Hackett Group, 2016

Degree of supplier integration into new product development decision making

Degree of Supplier Influence

Informal Supplier

Participation

No Supplier Involvement

Formal Supplier

Participation

Primarily Supplier Driven

100%

0%

Degree of Buying Company Influence

Supplier integration varies on different new product development projects

Black Box – Supplier developed

Internal Design and Make

Gray Box – Joint development

Buyer Established Functionality

and specification

Successful Partner Integration Significantly Improves Partnership Outcome

Self reported results Significantly better outcomes have been achieved when suppliers were integrated into new product/process/service development

Integration improvement: Cost 11% Cycle time 20% New product development time 42%

Quality improvement 14%

Technology access 40%

Difference between Most Successful and Least Successful Partnership Projects Highly correlated success factors include:

• Supplier participation on buying companies team

• Direct cross-functional inter-company communication

• Design team’s consensus on project goals

• Top management commitment to integration by both buyer and supplier

• Clarity of metrics, performance targets and their joint development

What You Might be Thinking Right Now…

? How do I get my suppliers to innovate?

? What changes do I need to make right away to get this going?

? What technology tools are available to help me identify the right partners?

?

Two Criteria for Success

There are aligned strategies, and a process in place to establish key approaches for achieving strategic milestones within a foreseeable planning horizon.

Demonstrated excellence in inventory management, planning, material handling, and order fulfillment.

Clearly defined roles, with open, honest and ethical discussions relying on sharing of all relevant cost, technical, and commercial-related issues.

Aligned Strategic Focus: Demonstrated Record of Performance:

Five-step process for procurement-led innovation

Technology Perspective #1: Cognitive Analytics Capabilities:

Cognitive analytics is the most advanced form of analytics—one that combines machine learning with natural language processing and human-like reasoning, to collect insights into specific queries related to supply management innovation.

#2: Supplier-centric Workflows with End-to-End Visibility:

Managing supplier relationships and fostering trust is central to procurement-led innovation. Best of breed supplier lifecycle management systems are essential to assessing supplier capabilities and managing the ongoing relationship.

#3: Collaborative Platforms:

Collaborative platforms play an increasingly important role in SRM. It can serve as powerful catalysts for conducting initial discussions with suppliers, to explore the opportunities for innovation.

Cognitive Computing Brings Significant Benefits Optimized operations

Employee-facing applications that aid knowledge workers in execution of business process

Leverage experience & best practices for improved decision-making

Access disparate systems to provide holistic view of an account

Shift time spent finding information to making decisions & recommendations

Explore Discover Decide

Where do I find comprehensive

research on an account?

How do we form a single view of a

company from many disparate internal and

external sources?

What's happening in my client's world that I should know about?

How do I identify a new business

opportunity?

IBM Emptoris Cognitive Procurement

2.5 quintillion bytes of new data created daily Expertise matters more today than ever, but even top experts can’t keep up

Are you ready for the challenges and opportunities?

Oil & Gas

80,000 sensors in a facility produce 15 petabytes of data

Public Safety

520 terabytes of data are produced by New York City's surveillance cameras each day

Energy & Utilities

680m+ smart meters will produce 280 petabytes of data by 2017

Healthcare

The equivalent of 300 million books of health related data is produced per human in a lifetime

Supplier Master Data

Spend Data

Contract Data

Sourcing Bids & Results

Scorecards

POs/Invoices

What About Procurement Data?

Enterprise spend management

Strategic Sourcing

Procurement Contracting

Procurement Compliance & Savings Validation Purchase Requisition Invoice

Supplier Qualification

Supplier Risk Management

Supplier Compliance Management

Supplier Classification

Supplier Lifecycle Management

Supplier Evaluation & Development

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IBM Enterprise Source to Pay

What About Procurement Data?

News

PR

Filings

Legal Actions

Regulatory Actions

Events

Social (official)

Social Opinion Analysis

Economic Conditions

Geopolitics

Weather

Employee Data

Customer Data

nTier Suppliers

eMails

wiki

Intranet

Minutes

Incidents

Issues Suggestions Innovations

Complaints

Reviews

Outcomes

Performance

Reports

Analyses

Evaluations

Summaries

Rankings Ratings

Feedback

KPIs

SLAs

Supplier Master Data

Spend Data

Contract Data

Sourcing Bids & Results

Scorecards

POs/Invoices

8%

Company X Struggled to deliver our new Marketing Mobile App for iPhone and android. The overall project was scheduled for 9 weeks but disastrously was 6 weeks late. Our bug list at launch was 50+.

The other 92% Problem

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Watson cognitive capabilities.

50 underlying technologies

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Entity Extraction Sentiment Analysis Emotion Analysis (Beta) Keyword Extraction Concept Tagging Taxonomy Classification Author Extraction Language Detection Text Extraction Microformats Parsing Feed Detection Linked Data Support Concept Expansion Concept Insights Dialog Document Conversion

Language Translation Natural Language

Classifier Personality insights Relationship Extraction Retrieve and Rank Tone Analyzer Emotive Speech to Text Text to Speech Face Detection Image Link Extraction Image Tagging Text Detection Visual Insights Visual Recognition AlchemyData News Tradeoff Analytics

Watson News Explorer

Natural Language Classifier

Tone Analyzer

Structured data

for analysis

Natural Language

Unstructured content “Company X Struggled to deliver our new Marketing Mobile App for iPhone and android. The overall project was scheduled for 9 weeks but disastrously was 6 weeks late. Our bug list at launch was 50+.”

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Supplier Company X

Category IT: Mobile Application Development

Customer Marketing

Platform Smart Phone

Issue 6 weeks late

Issue 50+ Bugs

Watson Natural-language

Classification

Tone Analysis

Watson Tone Analyzer

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Unstructured content “Company X Struggled to deliver our new Marketing Mobile App for iPhone and android. The overall project was scheduled for 9 weeks but disastrously was 6 weeks late. Our bug list at launch was 50+.”

Document-level tone

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Entity Canada Post

Relevance 0.933704

Watson Natural-language

Classification

Concept Trade Union

Concept Strike Action

Concept Lockout

Concept Negotiation

Canada Post Negative

Lockout Notice Negative

Contract Dispute Negative

Strike Notice Negative

Is this article about a supplier of interest?

Are the concepts in the article relevant?

Is the sentiment of the article concerning?

“There were signs of progress Sunday in a contract dispute between Canada Post and the union representing 50,000 of its workers as talks resumed and the post office withdrew a threat to lock out its workers. Canada Post issued a brief statement that said it had withdrawn its lockout notice "which will allow both parties to focus their efforts on serious negotiations."

"We are also expecting the union to honour their repeated public statements that they have no plans to issue a strike notice," it said. Assurance from both parties that the postal system will remain open for business while we negotiate will provide the certainty that Canadians and our employees are looking for."

Scalable Natural Language Processing

Scaled to Millions of Items – Make Connections Documents Facets Time Series Deviations Trends

Facet Pairs Dashboard Sentiment Connections Reports

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Cognitive systems will extend procurement capability

Humans excel at: Common Sense Morals Imagination Compassion Abstraction Dilemmas Dreaming Generalization

Cognitive Systems excel at: Locating Knowledge

Pattern Identification

Natural Language

Machine Learning

Eliminate Bias

Endless Capacity

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Cognitive Procurement solutions

Shifting technology’s role from enabler to advisor

Watson Cognitive Platform

Foundational Analytics

Deep Supplier Insight

Supplier

Trusted Buying Advisor

WBA

Risk Mitigation

Risk Insights

Dynamic Pricing Information

Pricing

External Data

Internal Data

Structured / unstructured

Make better decisions

Scale expertise

Automation

BlueHound

Instant Contract Analysis

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Ebook Procurement’s New Chapter: Innovation

Download at ibm.com/supplier-innovation

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Thank You! Q&A

Join the conversation Blog, YouTube, Twitter and Facebook

For additional questions regarding IBM Procurement Solutions please contact: Jim Holbel IBM Procurement Solutions Practice Leader jholbel@us.ibm.com Alex Zhong IBM Procurement Solutions Senior Market Segment Manager alex.zhong@us.ibm.com