Financial Stability, a Critical Factor for Choosing a Business Partner, is Now Easier to Assess

Transcript of a discussion on new ways companies gain improved visibility, analytics, and predictive indicators to assess financial viability of partners across global supply chains.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’re listening to BriefingsDirect. Our next digital business risk remediation discussion explores new ways companies can gain improved visibility, analytics, and predictive indicators to better assess the financial viability of partners and global supply chains.

Gardner

Businesses are now heavily relying upon their trading partners across their supply chains -- and no business can afford to be dependent on suppliers that pose risks due to poor financial health.

We will now examine new tools and methods that create a financial health rating system to determine the probability of bankruptcy, default, or disruption for both public and private companies -- as many as 36 months in advance.

To learn more about the exploding sophistication around gaining insights into supply-chain risk of a financial nature, I am pleased to welcome Eric Evans, Managing Director of Business Development at RapidRatings in New York.

Eric Evans: Thanks, Dana. I appreciate being on the podcast.

Gardner: We are also here with Kristen Jordeth, Go-to-Market Director for Supplier Management Solutions, North America at SAP Ariba. Welcome, Kristen.

Kristen Jordeth: Hi, and thank you very much.

Gardner: Eric, how do the technologies and processes available now provide a step-change in managing supplier risk, particularly financial risk?

Evans

Evans: Platform-to-platform integrations enabled by application programming interfaces (APIs), which we have launched over the past few years, allows partnering with SAP Ariba Supplier Risk. It’s become a nice way for our clients to combine actionable data with their workflow in procurement processes to better manage suppliers end to end -- from sourcing to on-boarding to continuous monitoring.

Gardner: The old adage of “garbage in, garbage out” still applies to the quality and availability of the data. What’s new about access to better data, even in the private sector?

Dig deep into risk factors

Evans: We go directly to the source, the suppliers our customers work with. They introduce us to those suppliers and we get the private company financial data, right from those companies. It’s a quantitative input, and then we do a deeper “CAT scan,” if you will, on the financials, using that data together with our predictive scoring.

Gardner: Kristen, procurement and supply chain integrity trends have been maturing over the past 10 years. How are you able to focus now on more types of risk? It seems we are getting better and deeper at preventing unknown unknowns.

Jordeth: Exactly, and what we are seeing is customers managing risk from all aspects of the business. The most important thing is to bring it all together through technology.

Within our platform, we enable a Controls Framework that identifies key areas of risk that need to be addressed for a specific type of engagement. For example, do they need to pull a financial rating? Do they need to do a background check? We use the technology to manage the controls across all of the different aspects of risk in one system.

Gardner: And because many companies are reliant on real-time logistics and supplier services, any disruption can be catastrophic.

Jordeth

Jordeth: Absolutely. We need to make sure that the information gets to the system as quickly as it’s available, which is why the API connect to RapidRatings is extremely important to our customers. On top of that, we also have proactive incidents tracking, which complements the scores.

If you see a medium-risk business, from a financial perspective, you can look into that incident to see if they are under investigation, or if things going on where they might be laying off departments.

It’s fantastic and to have it all in one place with one view. You can then slice and dice the data and roll it up into scores. It’s very helpful for our customers.

Gardner: And this is a team sport, with an ecosystem of partners, because there is such industry specialization. Eric, how important is it being in an ecosystem with other specialists examining other kinds of risk?

Evans: It’s really important. We listen to our customers and prospects. It’s about the larger picture of bringing data into an end-to-end procurement and supplier risk management process.

We feel really good about being part of SAP PartnerEdge and an app extension partner to SAP Ariba. It’s exciting to see our data and the integration for clients.

Gardner: Rapid Ratings International, Inc. is the creator of the proprietary Financial Health Rating (FHR), also known as RapidRatings. What led up to the solution? Why didn’t it exist 30 years ago?

Rate the risk over time

Evans: The company was founded by someone with a background in econometrics and modeling. We have 24 industry models that drive the analysis. It’s that kind of deep, precise, and accurate modeling -- plus the historical database of more than 30 years of data that we have. When you combine those, it’s much more accurate and predictive, it’s really forward-looking data.

Gardner: You provide a 0 to 100 score. Is that like a credit rating for an individual? How does that score work in being mindful of potential risk?

Evans: The FHR is a short-term score, from 0 to 100, that looks at the next 12 months with a probability of default. Then a Core Health Score, which is around 24 to 36 months out, looks at operating efficiency and other indicators of how well a company is managing the business and operationalizing.

We can identify companies that are maybe weak short-term, but look fine long-term, or vice versa. Having industry depth -- and the historical data behind it -- that's what drives the go-forward assessments.

When you combine the two, or look at them individually, you can identify companies that are maybe weak short-term, but look fine long-term, or vice versa. If they don’t look good in the long-term and in the short-term, they still may have less risk because they have cash on hand. And that’s happening out in the marketplace these days with a lot of the initial public offerings (IPOs) such as Pinterest or Lyft. They have a medium-risk FHR because they have cash, but their long-term operating efficiency needs to be improved because they are not yet profitable.

Gardner: How are you able to determine risk going 36 months out when you’re dealing mostly with short-term data?

Evans: It’s because of the historical nature and the discrete modeling underneath, that’s what gets precise about the industry that each company is in. Having 24 unique industry models is very different than taking all of the companies out there and stuffing them into a plain-vanilla industry template. A software company is very different than pharmaceuticals, which is very different than manufacturing.

Having that industry depth -- and the historical data behind it -- is what’s drives the go-forward assessments.

Gardner: And this is global in nature?

Evans: Absolutely. We have gone out to more than 130 countries to get data from those sources, those suppliers. It is a global data set that we have built on a one-to-one basis for our clients.

Gardner: Kristen, how does somebody in the Ariba orbit take advantage of this? How is this consumed?

Jordeth: As with everything at SAP Ariba, we want to simplify how our customers get access to information. The PartnerEdge program works with our third parties and partners to create an API whereby all our customers need to do is get a license key from RapidRatings and apply it to the system.

The infrastructure and connection are already there. Our deployment teams don’t have to do anything, just add that user license and the key within the system. So, it’s less touch, and easy to access the data.

Gardner: For those suppliers that want to be considered good partners with low financial risk, do they have access to this information? Can they work to boost up their scores?

To reduce risk, discuss data details 

Evans: Our clients actually own the subscription and the license, and they can share the data with their suppliers. The suppliers can also foster a dialogue with our tool, called the Financial Dialogue, and they can ask questions around areas of concern. That can be used to foster a better relationship, build transparency, and it doesn’t have to be a negative conversation to be a positive one.

They may want to invest in their company, extend payment terms or credit, work with them on service-level agreements (SLAs), and send in people to help manage. So, it could be a good way to just build up that deeper relationship with that supplier and use it as a better foundation.

Gardner: Kristen, when I put myself in the position of a buyer, I need to factor lots of other issues, such as around sustainability, compliance, and availability. So how do you see the future unfolding for the holistic approach to risk mitigation, of not only taking advantage of financial risk assessments, but the whole compendium of other risks? It’s not a simple, easy task.

Jordeth: When you look at financial data, you need to understand the whole story behind it. Why does that financial data look the way it does today? What I love about RapidRatings is they have financial scores, and it’s more about the health of the company in the future.

But in our SAP Ariba solution, we provide insights on other factors such as sustainability, information security, and are they funding things such as women’s rights in Third World countries? Once you start looking at the proactive awareness of what’s going on -- and all the good and the bad together -- you can weigh the suppliers in a total sense.

Their financials may not be up to par, but they are not high risk because they are funding women’s rights or doing a lot of things with the youth in America. To me, that may be more important. So I might put them on a tracker to address their financials more often, but I am not going to stop doing business with them because one of my goals is sustainability. That holistic picture helps tell the true story, a story that connects to our customers, and not just the story we want them to have. So, it creates and crafts that full picture for them.

Gardner: Empirical data that can then lead to a good judgment that takes into full account all the other variables. How does this now get to the SAP Ariba installed base? When is the general availability?

Customize categories, increase confidence 

Jordeth: It’s available now. Our supplier risk module is the entryway for all of these APIs, and within that module we connect to the companies that provide financial data, compliance screening, and information on forced labor, among others. We are heavily expanding in this area for categories of risk with our partners, so it’s a fantastic approach.

Within the supplier risk module, customers have the capability to not only access the information but also create their own custom scores on that data. Because we are a technology organization, we give them the keys so an administrator can go in and alter that the way they want. It is very customizable.

It’s all in our SAP Ariba Supplier Risk solution, and we recently released the connection to RapidRatings.

Evans: Our logo is right in there, built in, under the hood, and visible. In terms of getting it enabled, there’s no professional services or implementation wait time. So once the data set is built out on our end, if it’s a new client that’s through our implementation team, and basically we just give the API key credentials to our client. They take it and enable it in SAP Ariba Supplier Risk and they can instantly pull up the scores. So there is no wait time and no future developments to get at the data.

Once the data set is built on our end, we just give the API key to our client. They take it and enable it in SAP Ariba Supplier Risk and they can instantly pull up the scores. There is no wait time.

Jordeth: That helps us with security, too, because everybody wants to ensure that any data going in and out of a system is secure, with all of the compliance concerns we have. So our partner team also ensures the secure connection back and forth with their data system and our technology. So, that’s very important for customers.

Gardner: Are there any concrete examples? Maybe you can name them, maybe you can’t, instances where your rating system has proven auspicious? How does this work in the real world?

Evans: GE Healthcare did a joint-webinar with our CEO last year, explained their program, and showed how they were able to de-risk their supply base using RapidRatings. They were able to reduce the number of companies that were unhealthy financially. They were able to have mitigation plans put in place and corrective actions. So it was an across the board win-win.

Oftentimes, it’s not about the return on investment (ROI) on the platform, but the fact that companies were thwarting a disruption. An event did not happen because we were able to address it before it happened.

On the flip side, you can see how resilient companies are regardless of all the disruptions out there. They can use the financial health scores to observe the capability of a company to be resilient and bounce back from a cyber breach, a regulatory issue, or maybe a sustainability issue.

By looking at all of these risks inside of SAP Ariba Supplier Risk, they may want to order an FHR or look at an FHR for a new company that they hadn’t thought of if they are looking at other risks, operational risks. So that’s another way to tie it in.

Another interesting example is a large international retailer. A company got flagged as high risk and had just filed for bankruptcy, which alerted the buyer. The buyer had signed a contract, but they had the product on the shelf, so it had to be resourced and they had to find a new supplier. They mitigated risk, but they had to take quick action, get another product, and some scrambling had to be done. But they had de-risked some brand reputation damage by having done that. They hadn’t looked at that company before, it was a new company, and it was alerted. So that’s another way of not just running it at the time of contract, but it’s also running it when you’re going to market.

Identify related risks 

Gardner: It also seems logical that if a company is suffering on the financial aspects of doing business, then it might be an indicator that they’re not well-managed in general. It may not just be a cause, but an effect. Are there other areas, you could call them adjacencies, where risks to quality, delivery times, logistics are learned from financial indicators?

Evans: It’s a really good point. What’s interesting is we took a look at some data our clients had around timeliness, quality, performance, delivery, and overlaid it with the financial data on those suppliers. The companies that were weak financially were more than two times likely to ship a defective product. And companies that were weak financially were more than 2.5 times more likely to ship wrong or late.

The whole just-in-time shipping or delivery value went out the window. To your point, it can be construed that companies -- when they are stressed financially – may be cutting corners, with things getting a little shoddy. They may not have replaced someone. Maybe there are infrastructure investments that should have been made but weren’t. So, all of those things have a reverberating effect in other operational risk areas.

Gardner: Kristen, now that we know that more data is good, and that you have more services like at RapidRatings, how will a big platform and network like SAP Ariba be able to use machine learning (ML) and artificial intelligence (AI) to further improve risk mitigation?

Jordeth: The opportunity exists for this to not only impact the assessment of a supplier, but throughout the full source-to-pay process, because it is embedded into the full SAP Ariba suite. So, even though you’re accessing it through risk, it’s visible when you’re sourcing, when you’re contracting, when you’re paying. So that direct connect is very important.

We want our customers to have it all. So I don’t cringe at the fact that they ask for it all because they should have it all. It’s just visualizing it in a manner that makes sense and it’s clear to them.

Gardner: And specifically on your set of solutions, Eric, where do you see things going in the next couple years? How can the technology get even better? How can the risk be reduced more?

Evans: We will be innovating products so our clients can bring in more scope around their supply base, not just the critical vendors but across the longer tail of a supply base and look at scores across different segments of suppliers. There could be sub-tiers, as a traversing with sub-tier third and fourth parties, particularly in the banking industry or manufacturing industry.

We will be innovating so our clients can bring in more scope around their supplier base, not just the critical vendors but across the longer tail of a supply chain and examine the scores of different segments of suppliers. It could be third tiers and fourth-parties.

And so that coupled with more intelligence or enhanced APIs and data visualization, these are things that we are looking into as well as additional scoring capabilities.

Gardner: I’m afraid we will have to leave it there. You have been listening to a sponsored BriefingsDirect discussion on new ways that companies can gain improved visibility, analytics, and predictive indicators to better assess the financial viability of their partners across their global supply chains.

And we have learned about new tools and methods create a Financial Health Rating system to determine the probability of bankruptcy, default, or disruption for public and private companies.

So a big thank you to our guests, Eric Evans, Managing Director of Business Development at RapidRatings in New York. Thank you so much, Eric.

Evans: Thank you, I appreciate it.

Gardner: And we have also been here with Kristen Jordeth, Go-to-Market Director for Supplier Management Solutions, North America at SAP Ariba. Thank you.

Jordeth: Thank you.

Gardner: And a big thank you as well to our audience for joining us for this BriefingsDirect digital business risk remediation discussion. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series of SAP Ariba-sponsored BriefingsDirect interviews. Thanks again for listening, and do come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.

Transcript of a discussion on new ways companies gain improved visibility, analytics, and predictive indicators to assess financial viability of partners across global supply chains. Copyright Interarbor Solutions, LLC, 2005-2019. All rights reserved.

 

You may also be interested in:

• How enterprises like McKesson digitize procurement and automate spend management to slash waste
• SAP Ariba COO James Lee on the best path to an intelligent and talented enterprise
• How a Business Matchmaker Application Helps SMBs Impacted by Natural Disasters Gain New Credit
• The New Procurement Advantage-How Business Networks Generate Multi-Party Ecosystem Solutions
• How Data-Driven Business Networks Help Close the Digital Transformation Gap
• Building the Intelligent Enterprise with Strategic Procurement and Analytics 
• How SMBs impacted by natural disasters gain new credit thanks to a finance matchmaker app
• The new procurement advantage: How business networks generate multi-party ecosystem solutions 
• SAP Ariba's chief data scientist on how ML and dynamic processes build an intelligent enterprise

How Enterprises Like McKesson Digitize Procurement and Automate Spend Management to Slash Waste

Transcript of a discussion on how leading enterprises are digitizing procurement and automating spend management to reduce inefficiencies, cut manual tasks, and streamline the entire source-to-pay process.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’re listening to BriefingsDirect. Our next intelligent enterprise innovations discussion explores new ways that leading enterprises like McKesson Corp. are digitizing procurement and automating spend management.

Gardner

We'll now examine how new intelligence technologies and automation methods help global companies reduce inefficiencies, cut manual tasks, and streamline the entire source-to-pay process.

To learn more about the role and impact of automation in business-to-business (B2B) finance, I’m pleased welcome Michael Tokarz, Senior Director of Source to Pay Processes and Systems at McKesson, based in Alpharetta, Georgia.

Tokarz: Thank you.

Gardner: There’s never been a better time to bring efficiency and intelligence to end-to-end, source-to-pay processes. What is it about the latest technologies and processes that provides a step-change improvement?

Tokarz: Our internal customers are asking us to move faster and engage deeper in our supplier conversations. By procuring intelligently, we are able to shift where resources are allocated so that we can better support our internal costumers.

Gardner: Is there a sense of urgency here? If you don't do this, and others do, is there a competitive disadvantage?

Tokarz: There's a strategic advantage to first-movers. It allows you to set the standard within an industry and provide greater feedback and value to your internal customers.

Gardner: There are some major trends driving this. As far as new automation and the use of artificial intelligence (AI), why are they so important?

The AI advantage 

Tokarz

Tokarz: AI is important for a couple of reasons. Number one, we want to process transactions as cost-effectively as we possibly can. Leveraging a “bot” to do that, versus a human, is strategically advantageous to us. It allows us to write protocols that process automatically without any human touch, which, in turn is extremely valuable to the organization.

AI also allows workers to change their value-quotient within the organization. You can go from someone doing manual processes to working at a much higher level for the organization. They now work on things that are change-driven and that bring much more value, which is really important to the organization.

Gardner: What do you mean by bots? Is that the same as robotic process automation (RPA), or they overlapping? What’s the relationship?

Tokarz: I consider them the same technology, RPA and bots. It’s essentially a computer algorithm that’s written to help process transactions that meet a certain set of circumstances.

Gardner: E-sourcing technology is also a big trend and an enabler these days. Why is it important to you, particularly across your supplier base?

Tokarz: E-sourcing helps us drive conversations internally in the organization. It forces the businesses to pause. Everyone's always in a hurry, and when they're in a hurry they want to get something published for the organization and out on the street. Having the e-sourcing tool forces people to think about what they really need from the marketplace and to structure it in a format so that they can actually go faster.

E-Sourcing, while you have to do a little bit of work on the front end, you enable the speed of the transaction on the back end because you have everything aligned from all of the suppliers in one central place, so that you can easily compare and make solid business decisions.

Gardner: Another important thing for large organizations like McKesson is the ability to extend and scale globally. Rather than region-by-region there is standardization. Why is that important?

Tokarz: First and foremost, getting to one technology across the board allows us to have a global standard. And what does a global standard mean? It doesn't mean that we're going to do the same things the same way in every country. But it gives us a common platform to build our processes on.

It gives us a way to unify our organization so that we can have more informed conversations within the organization. It becomes really important when you begin managing global relationships with large suppliers.

Gardner: Tell us about McKesson and your role within vendor operations and management.

Tokarz: McKesson is a global provider of healthcare solutions -- from pharmaceuticals to medical supplies to services. We’re mainly in the United States, Canada, and Europe.

I’m responsible for indirect sourcing here in the United States, but I also oversee the global implementations of solutions in Ireland, Europe, and Canada in the near future. Currently in the United States, we process about $1.6 billion in direct transactions. That’s more than 60,000 transactions on our SAP Ariba system. We also leverage other vendor management solutions to help us process our services transactions.

Gardner: A lot of people like you are interested in becoming touchless – of leveraging automation, streamlining processes, and using data to apply analytics and create virtuous adoption cycles. How might others benefit from your example of using bots and why that works well for you?

Bots increase business 

Tokarz: The first thing we did was leverage SAP Ariba Guided Buying. We also then reformatted our internal website to put Guided Buying forefront for all of our end users. We actually tag it for novice users because Guided Buying works similar to a tablet interface. It gives you smart icons that you can tap to begin and make decisions for your organization. It now drives purchasing behavior.

The next thing we did is push as much buying through catalogs and indirect spend that we possibly could. We've implemented enough catalogs in the United States that we now have 80 percent of our transactions fully automated through catalogs. It provides people really nice visual cues and point-and-click accessibility. Some of my end users tell me they can find what they need within three minutes, and then they can go about their day, which is really powerful. Instead of focusing on buying or purchasing, it allows them to do their jobs, their specialty, which brings more value to the organization.

We use the RPA and bot technology to take the entire organization to the next level. We're always striving to get to 90 touchless transactions. If we are at 80 percent, that means an additional 50 percent reduction in the touch transactions that we're currently processing, which is very significant.

The last thing we've done is taken it to the next level. We use the RPA and bot technology to take the entire organization to the next level. We’re always striving to get to 90 percent touchless transactions. If we are at 80 percent, that means an additional 50 percent reduction in the touch transactions that we’re currently processing, which is very significant.

That has allowed me to refocus some of my efforts with my business process outsourcing (BPO) providers where they’re not having to touch the transactions. I can have them instead focus on acquisitions, integrations, and doing different work that might have been at a cost increase. This all saves me money from an operations standpoint.

Gardner: And we all know how important user experience is -- and also adoption. Sometimes you can bring a horse to water and they don’t necessarily drink.

So it seems to me that there is a double-benefit here. If you have a good interface like Guided Buying, using that as a front end, that can improve user satisfaction and therefore adoption. But by also using bots and automation, you are taking away the rote, manual processes and thereby making life more exciting. Tell us about any cultural and human capital management benefits.

Smarts, speed, and singular focus 

Tokarz: It allows my procurement team to focus differently. Before they were focused on the transactions in the queue and how fast to get them processed, all to keep the internal customers happy. Now I have a bot that processes that three times a day, it looks at the queue, and so we don’t have to worry about those any more. The team is only watching the bot to make sure it isn’t kicking out any errors.

From an acquisition integration standpoint, when I need to add suppliers to the network I don’t have to go for a change request to my management team and request more money. I can operate within the original budget with my BPO providers. If there's another 300 suppliers that I need added to the network, for example, I can process them more effectively and efficiently.

Gardner: What have been some challenges with establishing the e-sourcing technology? What have you had to overcome to make e-sourcing more prevalent and to get as digital as possible?

Tokarz: Anytime I begin working on a project, I focus not only on the technology component, but also the process, organization, and policy components. I try to focus on all of them.

So first, we hired someone to manage the e-sourcing via an e-sourcing administrator role. It becomes really important. We have a single point of contact. Everyone knows where to go within the organization to make things happen as people learn the technology, and what the technology is actually capable of. Instead of having to train 50 people, I have one expert that can help guide them through the process.

From a policy standpoint, we've also taken the policies and dictated that. People are supposed to be leveraging the technology. We all know that not all policies are adhered to, but it sets the right framework for discussion internally. We can now go to a category manager and access the right technology to do the jobs better, faster, cheaper.

As a result, you have a more intriguing job versus doing administrative work, which ultimately leads to more value to the organization. They're acting more as a business consultant to our internal customers to drive value -- not just about price but on how to create value using innovations, new technology, and new solutions in the marketplace.

To me, it’s not just about the technology -- it’s about developing the ecosystem of the organization.

Gardner: Is there anything about Guided Buying and the added intelligence that helps with e-sourcing – of getting the right information to the right person in the right format at the right time?

Seamless satisfaction for employee

Tokarz: The beautiful thing about Guided Buying is it’s seamless. People don't know how the application works and that they are using SAP Ariba. It’s interesting. They see Guided Buying and they don't realize it's basically a looking glass into the architecture that is SAP Ariba behind the scenes.

That helps with transparency for them to understand what they are buying and get to it as quickly as possible. It allows them to process a transaction via a really nice, simple checkout screen. Everyone knows what it costs, and it just routes seamlessly across the organization.

Gardner: So what do you get when you do e-sourcing right? Are there any metrics or impacts that you can point to such as savings, efficiencies, employee satisfaction?

The biggest impact is employee satisfaction. Instead of having a category manager working in Microsoft Outlook, sending e-mails to 30 different suppliers on a particular event, they have a simple dashboard where they can combine all of the answers and push all of that information out seamlessly across all the participants.

Tokarz: The biggest impact is employee satisfaction. Instead of having a category manager working in Microsoft Outlook, sending e-mails to 30 different suppliers on a particular event, they have a simple dashboard where they can combine all of the answers, or questions, and develop all of the answers and push all of that information out seamlessly across all the participants. Instead of working administratively, they’re working strategically with internal customers. They are asking the hard questions about how to solve business problems at hand and creating value for the organization.

Gardner: Let's dig deeper into the need for extensibility for globalization. To me this includes seeking a balance between the best of centralized and the best of distributed. You can take advantage of regional particulars, but also leverage and exploit the repeatability and standard methods of centralization.

What have you been doing in procurement using SAP Ariba that helps get to that balance?

Global insights grow success 

Tokarz: We’re in the process of rolling out SAP Ariba globally. We have different regions, and they all have different requirements. What we've learned is that our EMEA region wants to do some things differently than we were doing them. It forces us to answer the question, “Why were we doing things the way we were doing them, and should we be changing? Are their insights valuable?”

We learned that their insights are valuable, whether it be the partners that they are working with, from an integration standpoint, or the people on the ground. They have valuable insights. We’re beginning to work with our Canadian colleagues as well, and they've done a tremendous amount of work around change management. We want to capitalize on that, and we want to leverage it. We want to learn so that we can be better here in the United States at how we implement our systems.

Gardner: Let’s look to the future. What would you like to see improved, not only in terms of the technology but the way the procurement is going? Do you see more AI, ML, and bots progressing in terms of their contribution to your success?

Tokarz: The bots’ technology is really interesting, and I think it's going to change pretty dramatically the way we work. It’s going to take a lot of the manual work that we do in processing transactions and it's going to alleviate that.

And it’s not just about the transactions. You can leverage the bot technology or RPA technology to do manual work and then just have people do the audit. You're eliminating three to five hours’ worth of work so that the workers can go focus their time on higher value-add.

For my organization, I’d like us to extend the utilization of the solutions that we currently own. I think we can do a better job of rolling out the technology broadly across the organization and leverage key features to make our business more powerful.

Gardner: We have been hearing quite a bit from SAP Ariba and SAP at-large about integrating more business applications and data sets to find process efficiencies across different types of spend and getting a better view of total spend. Does that fit into your future vision?

Tokarz: Yes, it does. Data is really important. It's a huge initiative at McKesson. We have teams that are specifically focused on data and integrating the data so that we can have meaningful information to make more broad decisions. They can be made not by, “Hey, I think I have the right knowledge.” Instead insights are based on the concrete details that guide you to making smart business decisions.

Gardner: I’m afraid we’ll have to leave it there. You have been listening to a sponsored BriefingsDirect discussion on new ways that companies gain improved visibility, analytics, and predictive responses across their supply-chain activities.

And we have learned how new tools and methods are coming together to help organizations be more intelligent by using such new technology as bots to improve not only the outcome from procurement activities -- but the satisfaction of those doing the procurement.

So a big thank you to our guest, Michael Tokarz, Senior Director of Source to Pay Processes and Systems at McKesson in Alpharetta, Georgia. Thank you so much, Michael.

Tokarz: Thank you.

Gardner: And a big thank you to our audience for joining this BriefingsDirect intelligent enterprise innovation discussion. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host throughout the series of SAP Ariba-sponsored BriefingsDirect interviews. Thanks again for listening -- and do come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.

Transcript of a discussion on how leading enterprises are digitizing procurement and automating spend management to reduce inefficiencies, cut manual tasks, and streamline the entire source-to-pay process. Copyright Interarbor Solutions, LLC, 2005-2019. All rights reserved.

You may also be interested in:

• SAP Ariba COO James Lee on the best path to an intelligent and talented enterprise
• How a Business Matchmaker Application Helps SMBs Impacted by Natural Disasters Gain New Credit
• The New Procurement Advantage-How Business Networks Generate Multi-Party Ecosystem Solutions
• How Data-Driven Business Networks Help Close the Digital Transformation Gap
• Building the Intelligent Enterprise with Strategic Procurement and Analytics 
• How SMBs impacted by natural disasters gain new credit thanks to a finance matchmaker app
• The new procurement advantage: How business networks generate multi-party ecosystem solutions
• SAP Ariba's chief data scientist on how ML and dynamic processes build an intelligent enterprise
• SAP Ariba’s President Barry Padgett on building the intelligent enterprise