Cognitive Technology in Procurement: The Right Tools to Use
The innovations and trends in supply chain and procurement have been much talked about in the recent times. One such trend in procurement that has turned out to be the new buzz word is the use of ‘cognitive technology.’ This technology consists of a set of self-learning systems that use pattern recognition, data mining, and […]
The innovations and trends in supply chain and procurement have been much talked about in the recent times. One such trend in procurement that has turned out to be the new buzz word is the use of ‘cognitive technology.’ This technology consists of a set of self-learning systems that use pattern recognition, data mining, and natural language processing (NLP) to function in the way a human brain works. In fact, cognitive technology is often considered to be a subset of artificial intelligence. The technology is so advanced that it not just repackages data but rather analyzes, compares, finds correlations, and identifies various trends. But in a function like procurement, where technology and digitization are new entrants, companies might often face several challenges while implementing cognitive technology. The following are some of the pain points associated with the digitization of procurement:
- Several procurement teams are still working in a reactive and transactional world without digitized processes to automate transactions
- Limited automation in supplier catalogs
- Currently, most companies use spend information from historical data for decision-making
- The inability of key personnel to focus on stakeholder management, interaction with the user, and negotiations with the supplier due to lack of sufficient insights
Cognitive technology tools to enhance procurement
Here are some of the cognitive technology tools that businesses can leverage to enhance their company’s procurement process:
Supply chain risk insights:
This solution is a tool of cognitive technology that fetches unstructured data from social media and creates alerts ahead of time. This will help category managers to take preventive action to reduce or eliminate the impact of challenges. To establish a cost-effective supply chain, effective demand forecasting and proactive risk management are critical.
This tool combines data obtained through unstructured sources (e.g., social media, news feeds, competitor websites, corporate social platforms, blogs, and forums.) and contrasts that with other data sources to generate insights that were earlier inaccessible. Procurement managers can use this data to identify a new supplier for a category that had not been considered earlier, or even to drop an existing supplier because of the potential risks.
With the help of this tool, companies can save millions of dollars by tracking contract prices in contrast with dynamic market prices, rather than sticking to contract costs that remain constant for a number of years. It allows procurement managers to achieve 3 – 10 % in savings in crucial spend categories over and beyond what has already been saved.
Cognitive buying assistant:
This cognitive tool promotes a superior user experience by applying cognitive tools to a mobile app. It recommends the most relevant items to buy based on user profile, usage patterns, as well as sentiment analysis that is gained out of feedback from other users. It means that ordering items in the professional capacity will soon be as easy as ordering products for personal use. The tool is a critical driver of user adoption as an enhanced buying experience will result in better compliance and better savings for the user as well as the business.