Boeing turned to Fairmarkit, AI to help land its tail spend

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In a large organization such as Boeing, controlling tail spend is a massive undertaking. And quite often, these organizations can’t effectively monitor it. But technologies like artificial intelligence and new platforms that can dig deeper into this spending and analyze it are helping Boeing and others bring that uncontrolled spend in for a safe landing.

“What we didn’t have was a good handle on our transactional procurements that we’re going through,” explained Tiffany Andrews, senior manager at Boeing’s Indirect Procurement Center of Excellence. “We had catalogs in our systems, but anything that wasn’t on a catalog that was strategically placed was considered a SPO or a one-time and we didn’t have a great handle on that.”

Andrews was speaking at the ISM World conference in Las Vegas earlier this year. She was joined in the discussion by Erin McFarlane, vice president of operations at Fairmarkit. Fairmarkit is a global autonomous sourcing platform.

“We opted to go with Fairmarkit [because it] had everything to do with the generative AI that they have in their system,” Andrews said. “What it would do is pull all of our trends from our old work system and our current system and [perform] an evaluation of all of our data, of our spending trends. How we like to spend our money and what suppliers that is with.”

Andrews compared the platform to a runner that has a favorite brand of clothing. They keep buying that brand but the system lets them know how much they are spending on the brand and what the cost would be if a different brand were chosen.

“It is a great defense when having that strategic conversation on what you are buying with your leadership because it grabs all of that data for you,” she said.

‘Automate the boring stuff’

In a conversation with Supply Chain Management Review following the presentation, McFarlane noted how generative AI technology is allowing companies to “automate the boring stuff.”

“There’s a whole bunch of work that happens in procurement and supply chain that is rote where you’re picking up something from column A and you’re putting it in column B—you are copying something from one space to another,” McFarlane said. “It doesn’t require a lot of human thought. You go by the rules and the rules are pretty clear. You can have almost anybody do it. That’s the stuff you automate. And whether it’s automating on the supplier side, the buyer side or automating on the requester side, it doesn’t matter because nobody wants to be doing it. It’s not interesting. What happens is if you automate the boring stuff, then what you can do is take those people who frankly didn’t have very exciting jobs or are spending a lot of their time doing not exciting work, and reallocate those people and move them into something more interesting.”

McFarlane said that many companies have junior buyers or procurement operations going to source three bids as part of a tactical sourcing initiative. But, they remain new at sourcing, so they need decision support.

“There’s a whole bunch of work that happens in procurement and supply chain that is rote where you’re picking up something from column A and you’re putting it in column B—you are copying something from one space to another. It doesn’t require a lot of human thought. You go by the rules and the rules are pretty clear. You can have almost anybody do it. That’s the stuff you automate.

“They need more AI support, they need more recommendations, they need a little more guidance,” McFarlane said. “So that’s where the AI can provide the decision support and where it can help them build the RFP. It can help them do scenario analysis and look at the different responses. There’s a really nice transition between the two if you automate the boring stuff. You can take those people and give them more interesting and exciting things to do.”

McFarlane said the process works on the quoting side of the process as well. She added that employee retention is a natural outgrowth of automating these processes.

“I think the expectations, especially of younger workers in procurement and in supply chain, are that they want to be doing meaningful, interesting work more quickly,” she said. “Maybe my grandfather was perfectly okay working as a welder at the factory his whole career. We see different expectations. And so being able to be involved in a project like this is is good career movement.”

Boeing’s global spend

Andrews noted that Boeing has been able to roll out the Fairmarkit platform globally, helping it gain more insight and control of its spending in distant locales.

“On the international side of the house, after reviewing their end-to-end processing, we realized that there wasn’t any one consistent system pushing them through and that they were doing a lot of offline RFQs, offline sourcing,” she said. “We couldn’t even keep track of their supply base per commodity because there was so much of that disconnect through email and through other methodologies.

“They’re skeptical at first because I mean, we have the indirect spend in South Africa and they’re like, how are you going to know our supply base?” Andrews added.

The reality, she said, was that the platform is working. Boeing rolled it out in India and its seeing more acceptance and success there, with plans to roll it out globally. “That way we can get a full picture of what we’re spending globally,” Andrew said.

Hitting diversity goals

McFarlane also noted that automating processes such as spending and quoting can assist companies in meeting diverse supplier requirements.

“What our technology and other technologies can do is automate that and we can show you that a diverse supplier was invited to participate in every one of these events,” she said. “If sustainability is what’s important, we can make sure that your green certified suppliers are actually invited or that we’re asking certain carbon questions and they’re being included in the evaluation. When you make a statement that this is the policy, that’s hard to enable and enforce. Whereas if you have technology helping you with that, it’s a lot easier.”

The other interesting statistic McFarlane pointed to is what Fairmarkit has found as it rolls out its platform. Roughly 97% of awards go to suppliers already part of the customer’s ecosystem. But, automating the process doesn’t necessarily trigger competition where the lower price always wins.

“A level of supplier freakout is completely expected,” she said. “We’ll be surprised if it’s not there. And there’s kind of two ways to come at it. Las Vegas Water is a government entity. So they literally said to their suppliers, either you quote through here or you don’t get my money. They’re able to lay that law down. A lot of companies are not in that kind of a position. So what we show them is that a Fairmarkit is good for everybody. If you are an awesome Boeing supplier, you may also be able to win business from Sunoco. The more you participate with one supplier, the more you are to get recommended for another customer.”

That means more doors are potentially opened for smaller suppliers, improving their lot in life, but also the diversity goals of larger organizations.

“What they realize over time is that, oh, not only is this not bad, I’m actually winning more business this way because there’s a whole bunch of business that I can now quote on,” McFarlane said of these businesses.

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