Commentary by Dan Berthiaume
For fans of dystopian science fiction films like “The Terminator” series and “2001: A Space Odyssey,” machines gaining the capability to perform functions once thought to be the sole province of humans is probably not a comforting thought. And as someone who has wasted a few evenings watching and rewatching Arnold Schwarzenegger play the ultimate cyborg killing and wisecracking machine, I was initially less than comfortable hearing MIT Principal Research Scientist Andrew McAfee explain how machines are indeed beating people in all sorts of “human” endeavors during a presentation at the recent Enterprise 2.0 Conference in Boston.
But McAfee actually had some pretty optimistic things to say about a future where machines perform many tasks formerly done by humans. And many of them related specifically to applying predictive analytics to procurement and supply chain functions. Let me explain.
‘Supply Chain Automation’ Takes on New Meaning
On a broad level, McAfee said the explosion of Big Data combined with the constantly improving analytical capabilities of computers is leading to an era where machines can outperform humans at everything from playing chess to analyzing tissue samples for cancer to driving a car. In fact, he said an analysis of 136 studies comparing human and machine performance in a wide range of tasks showed humans winning a grand total of eight times.
Of most interest to those in the procurement and supply chain outsourcing world, McAfee cited a couple of specific examples showing that computers can do a far better job than people of analyzing procurement/supply chain events and creating accurate forecasts based on that analysis. In one interesting case, a computer program that predicted the quality of Bordeaux wine for a given year based on how climate and other natural factors would affect grape harvests proved far more accurate than the estimates of the world’s leading wine experts. McAfee also said that analytical supply chain software can predict vendor compliance and performance with much greater precision than the forecasts of the most seasoned supply chain experts.
What It Means for Procurement BPO
Procurement BPO specialists may be reading this and preparing to shift their business models to pure ITO strategies. But this does not have to be the case at all. McAfee concluded his lecture by citing the results of a “freestyle” chess competition where a team of two amateur players assisted by a chess-playing computer beat all other participants, including world-class experts and other computers. It turns out that when humans do what McAfee termed “race with the machine,” or use the incredible analytical power of computers to support and bolster their human expertise and intuition, rather than ignore or combat machines (or “rage against” them, as fans of 1990s alternative rock may wish to do), they achieve results that cannot be matched by any single human or automated opponent.
Or to put it much more simply, “If you can’t lick’em, join ‘em.” For procurement and supply chain BPO providers, this means that immediate research of and investment in leading-edge analytical systems is a must. Your customers deserve and demand the very best possible predictive analysis that will help them optimize their operations and avoid poor decisions. The real dystopian future will occur for BPO providers who ignore the potential that advanced analytics hold and instead do things the way they’ve always been done. “Lift and shift” is nice, but is hardly the wave of the future.