Transforming procurement through automated sourcing and smart contract negotiations

Drastic liquidity shortages dovetailing with geopolitical uncertainties have led many organizations to expedite their digital transformation initiatives, making the reinvention of the pivot of business activities — supply chains — a priority. The use of modern IT tools to automate, augment, and reinvent procurement, coupled with the trend to outsource more and more ancillary activities to third parties has led to increased interest in the automation of enablers of procurement activities. However, the answer to the question of how far this automation will go remains uncertain, leading to diverging opinions, from the expected complete commoditization of “spend categories” to the carry-over of the entirely bookable unavailability of procurement professionals. In this chapter we concentrate on the first side of the automation debate, using a specific enabler — sourcing — and a generalization of its application to show the promise of more advanced automation techniques, where the sourcing procedure takes place inside a smart contract negotiating automatically on behalf of a business participant using a variety of available agent negotiating engines.