Aera Concludes 2021 Cognitive Automation Summit
According to Deloitte, procurement executives believe that the impact of robotics and automation will increase from 50% in 2017 to 93% in 2025. “The big change that is really accelerating now is the realisation that you can’t rely on past experience to make decisions for the future”, said Roy van Griensven of Mitsubishi Chemical. “[You] need to have unbiased, factual recommendations over what feels good based on 10 or 20 years of experience”.
At Aera’s 2021 Cognitive Automation Summit, executives at some of the world’s largest consumer goods corporations talked about what the crystal ball of cognitive automation will mean for procurement. As Karen Jordan, Senior Vice President for Operations at PepsiCo North America, explained, companies now have to make decisions within days and sometimes even hours: “We’re no longer afforded the luxury of long lead times”.
What’s Cognitive Automation?
Let’s break down the buzzwords. Cognitive automation in procurement refers to companies using data mining, pattern recognition, and natural language processing (NLP) to automate Class 3 functions. Essentially, it means that computers can now analyse contracts, on-board suppliers, and forecast prices.
Since self-learning AI can mimic human intelligence in specialised tasks, it no longer makes sense to have humans waste time punching numbers into an Excel spreadsheet.
Before turning to AI, however, procurement teams must address data silos and legacy IT systems. After all, what good is a cognitive automation system that makes quick and flexible recommendations if it’s making the wrong ones? Computers, much as we love them, analyse data whether it’s accurate or not. It’s still up to a company to evaluate if its data is complete, granular, and true to reality.
Can We Trust the Data?
According to PepsiCo’s Jordan, part of what holds companies back is that humans don’t trust data yet. “Data, quality, accuracy, management, and integration [make] this world of cognitive automation more important than ever”, she noted. “But the number one question people have to get over is, ‘Where did that data come from?’”
After all, cognitive automation can either mitigate or perpetuate biases in human decision-making. While it can cut down on resemblance bias, when humans judge a situation based on one that looks superficially similar; confirmation bias, when we double down on our prior beliefs; and the bandwagon effect, in which we take action simply because our competitors choose to do so, AI will never be a silver bullet.
In short: before companies implement cognitive automation, humans must ensure that the data fairly represents their suppliers, shipments, and systems.
What’s the Holdup?
Biases aside, the biggest challenge facing executives is kickback from employees. Mars’ Vice President of Transformation, Will Beery, elaborated: “Everyone is filled with pride thinking that they’re the best at their job”. Employees traditionally cite research indicating that robots and AI will replace 12 million jobs in the US alone by 2025.
But according to Aera’s Cognitive Automation Summit panel, that’s not the full truth. AI isn’t here to steal jobs, but rather, to automate specific mindless job functions. Currently, entry-level employees waste hours trawling through troves of data. But as Len Prokopets, Managing Director of KPMG’s Procurement Operations, put it, most AI solutions are “[not there] to reduce headcount, but to drive results”.
As Jordan concludes, cognitive automation enables employees to work on complex problems—”[tasks] on which they want to be spending more of their time, talent, and energy”.
Grupo Espinosa: 70 years of constant evolution
Founded in 1952, Grupo Espinosa has been relentlessly supporting the publishing industry with producing more than 100 million copies every year – whether its books, magazines, catalogues or single-order custom prints. No project is big or small for Grupo Espinosa, as the facility can scale up on demand and their turnaround times are highly competitive. Grupo Espinosa works with on-demand digital press or offset press, in paperback with glued softcover binding, PUR softcover binding, stitched paperback binding, binder’s board, hardcover, saddle stitched, Spiral or Wire-O. Equipped with the experience needed for a product to leave the plant ready for distribution, Grupo Espinosa delivers anywhere inside or outside Mexico. Traditionally starting off as a black and white printing press, Grupo Espinosa has experienced transformation first hand – from colour to digital offset printing. Currently, Grupo Espinosa is also looking at making capital investments into audio books to match with the increasing demand.
So how did a seemingly local operation in Latin America become a world-renowned printing facility trusted by hundreds of clients? As Rogelio Tirado, CFO of Grupo Espinosa for the last six years says “It all comes down to our market experience and our dedication to quality”. With nearly 70 years behind them, and located in Mexico City, Grupo Espinosa has two major locations – one spanning 75,000 square metres and the other about 45,000 square metres. Both locations are controlled by a single ERP (Enterprise Resource Planning) system ensuring speed, consistency and quality of work. Tirado says this isn’t their only competitive advantage. He adds “Our competitive advantage is the relationship we have with customers and the trust they put in us with their intellectual property”. Speaking of trust, global publishing giant Macmillan Education exclusively partners with Grupo Espinosa for their Latin America operations, as part of Macmillan’s decentralized hub strategy. Having a facility that offered the full spectrum of service – from storing digital content to printing and distributing – was one of the major requirements for Macmillan, and Grupo Espinosa was recognized as the leading printing hub for providing this 360 infrastructure. Another factor that has led to success for Grupo Espinosa is the absolute focus on quality and time. The staff are committed to providing the best quality in the best possible time, without causing wastage of resources. Sustainability is a huge factor playing into Grupo Espinosa’s operations, and they’ve created a healthy environment with the sustainable use of paper and energy resources as well as keeping their employees – most of them associated with the organisation for over 10 years – happy. He adds, “In order to be truly successful, you need to be good to the environment, employees, suppliers, and your customers. But most importantly, you need to be sustainable, you need to have proper working conditions, pay proper salaries, proper prices for paper, source the paper from sustainable sources, pay your taxes, basically be a good global corporate citizen and that's probably one of the biggest achievements that we have.”