Artificial intelligence is making significant inroads into procurement processes. Its applications span across different corporate functions. Starting from improvements in forecasting to the optimization of resources, including the development pricing initiatives, AI is transforming every single business function. Not only this, AI’s ability to improve forecasting accuracy of end-customer demand for finished goods and material requirements will definitely aid in the growth of procurement organizations. Seeing the role of AI in procurement, we have outlined the kind of changes that you can expect AI to bring in procurement functions over the next few years.
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Impact of AI in Procurement Functions
Siri, Alexa, and Google are becoming mainstream for people today. This application of artificial intelligence is going to influence the strategic sourcing process as well. AI in procurement will help businesses to interact with users across their platform and obtain contextual suggestions based on real transaction and purchase order data. Intelligent bots will facilitate a whole new paradigm of interactions that will allow people to be more efficient and deliver next-generation user experience for customers.
Logistics forms an integral part of the procurement process. IoT will enable fleets and assets to be tracked more precisely in real-time wherever they are in the world using remote sensors. AI then processes data to give them meaning.
Procurement teams with strategic supplier networks could leverage AI in procurement across broader areas. They can build IoT platforms by utilizing machine learning to identify and address anomalies for shipment tracking and fleet management.
Inability to manage spend data remains one of the greatest challenges facing procurement organizations. No matter how much efforts companies put cleaning up and classifying long tail spend, the complexity of spend data goes beyond the time and resources. AI in procurement will enable companies to extract real-time, granular insights from enterprise spend data. It will handle dull and repetitive tasks and achieve higher spend classification accuracy.
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Managing legal invoices and contracts
If managing procurement costs has been a challenge for you, think about your colleagues managing the legal department. Legal invoices are famously complicated with the description of billable costs often included in unstructured and written forms. If legal costs form a large part for your business as well, using AI in procurement can be of great help. Not only this, it can prove beneficial in renegotiation, uploading multiple contract line items, and viewing of the contract outline.