The RA model
The RA model uses the principles from the TMS, which may be refered to as the Operational Loop, and reinforces the capabilities with the addition of a Learning Loop. It is the Learning Loop, which gives the RA the power to grow performance significantly over time.
The Operational Loop
The efficiency part of the Operational Loop is described in detail under in the TMS section (read it here). These efficiencies are carried forward into the Rational Assistant as an integrated part.
Many aspects of collaboration are described in the TMS section (read it here). There is one more aspect of collaboration, which is not described under TMS, eventhough it also applies for the TMS. That is the aspect of collaboration with other systems and in particular with other kinds of algorithm-based technologies (predictive analytics, machine learning, RPAs etc.).
It is more important to mention this in connection with the RA technology. The RA technology is highly specialized and focused on the problem of negotiations. If other technologies are applied both upstream and downstream of the trading process as part of a deeper digital transformation process, then the effects of the RA and the other tools can be further amplified.
We write more about this in the section about digital transformation.
The Learning Loop
The data-point is where the two loops intersect, which is due to the fact, that data is the common language between people and algorithms. This also means that both algorithms and people learn from the data and through that learning process get smarter, more intelligent. Data is therefore the natural entry point to the Learning Loop.
The Rational Assistant
The Rational Assistant is a negotiation support agent, a set of algorithms, which works to generate recommendations to the user on how best to achieve the desired goals. The Rational Assistant gets input about its goals from the user and also learns from both the actions of the user and the response from the counterpart. This allows the Rational Assitant to constantly improve its performance (make better recommendations) and predict where the negotiations are heading. Time is usually in short supply, so shortening the time to get to a good result is valuable.
When the Rational Assistant provides recommendations it serves like a co-pilot to the team.Unlike the individual team members, the Rational Assitant can work with the full picture of the negotiations and therefore the recommendations take the overall goal into account even when the individual team member cannot see it. It is similar to a GPS taking all the small roads, side roads and byways into account and not just the main high roads. This gives more room to adapt if a specific path seems blocked.
The Rational Assistant (which does not look like the friendly robot in the image above) continues to learn and to add capabilities, which means the service becomes more and more performant without installling new software or systems. It is also worth noting that the Rational Assistant works equally well for both buyers and sellers, because the RAs get tuned specifically to each company's needs and strategy.
The team is part of the Learning Loop. Via the recommendations provided by the Rational Assistant the team gets to explore its own assumptions on the strategy and the next bids. As the team learns that the recommendations make sense they will gain confidence in the recommendations. In this way both the Rational Assistant and the team are on a learning curve.
If the team gets a new member (a new employee) then part of the training of the new employee will come from learning on the job with the recommendations made by the Rational Assistant. In holiday periods team members can cover each other's jobs with the support of the Rational Assistant.
The best shared knowledge of the team will always be working.
The effect of the combined output of the TMS and the Rational Assistant is essentially the capability to do more and better trading. The efficiency gains of the TMS already provide a significant return on investment, but the RA makes it possible to achieve even more, because it can turn complexity into opportunity.
One example is the possibility to pursue value in the long-tail of your procurement. The long-tail can hold a lot of value, but the individual items are usually low cost/low volume making it too costly to optimise manually. But for the RA the long-tail is part of the business.
You can read some more about negotiations and the complexities of large portfolios here.
The Rational Assistant is a customized solution. While principles are shared it is adapted to individual companies. Reach out to us to find out, how you may benefit from the RA technology.