What is the importance of AI in procurement?
In this digital era, AI in procurement is the key to establishing long- term strategic plans. Organizations that have access to historical as well as real-time data on spending, budgets, and costs will be better informed to make critical business decisions that drive future action. Furthermore, organizations should be prepared to think strategically beyond data collection and analysis. Unfortunately, many establishments are not set up with a system that promotes strategic thinking and are unaware of the values of AI in procurement.
Creating an effective procurement strategy is essential for business to gain traction over competitors in the industry. Request for a FREE proposal to discover how you can conceptualize the power of AI in procurement and stay ahead from the competition.
How can AI in Procurement Expand Business Value?
Artificial Intelligence (AI) is finding applications in almost every business process and is gradually being adopted by industry players to gain a competitive edge; AI in procurement is no exception. The emergence of cognitive technologies such as natural language processing (NLP), advanced algorithms, and machine learning have enabled procurement pros to enhance their capabilities and deliver higher value to the enterprise.
AI is no longer a futuristic notion. Software that can sense the requirements, robots that respond to changes in their surroundings, and supply chains that think in ‘real-time’- It is all here. Business pioneers have already implemented AI in procurement functions to innovate and grow faster. However, the bottom line here is that businesses that understand how to harness AI can surge ahead and those who neglect it will fall behind.
Here’s how procurement leaders are taking their analytics strategies to the next level with intelligent procurement:
Supply management: Supply chain processes need to be monitored to ensure the supplier-relationships are bringing in value to the organization. Spend analysis along with the capabilities of artificial intelligence helps businesses understand the total cost of doing business with a supplier. AI in procurement also helps in comparing supplier performance across various benchmarks; thereby, presenting procurement with an opportunity to improve the supply services it offers stakeholders.
Machine learning and risk management: The most critical value of many AI based analytics offerings is that they offer accurately classified data to the procurement teams. The procurement officials can also integrate sustainability and corporate social responsibility (CSR) scores, financial risk scores, and other similar third-party data sources related to risk. Moreover, machine learning techniques help firms to uncover new trends and key data relationships, which, in turn, aid in risk reduction.
Natural language processing (NLP): Natural language processing is a subsegment of machine learning and AI that aids in deciphering large amounts of foreign data in a reorganized manner. NLP also plays a significant role in streamlining auditing and compliance actions that were initially unable owing to the existence of language barriers between buyer-supplier bodies.
From tracking exchange rate volatility to managing risks and identifying new market segments, procurement teams of leading organizations are now looking at leveraging solutions that utilize AI in procurement to streamline processes and improve decision-making across their supply chain. Also, with the developments in artificial intelligence and machine learning, particularly the power of deep learning algorithms, the gaps in analytics offerings are beginning to narrow. Real-time and precise classifications have become the new standard, and prescriptive intelligence-based benchmarks are offering new procurement insights which are not possible with previous offerings. But the reality is that to drive value from AI, organizations should deploy the technology using the right platform, data, and processes.
Developing a competitive procurement strategy is crucial for companies to stay ahead in the market space. Connect with our experts by requesting service on our procurement platform to gain the latest insights into the power of AI in procurement.
Procurement market intelligence for a leading food service industry client
Challenge: The client, a leading player in the food service industry wanted to gain an in-depth understanding of the supply market. They also wanted to assess their overall procurement capability across the supply chain.
Benefits offered: Helped the client evaluate suppliers’ pricing strategies and their overall procurement competence across the supply chain network. Also, offered detailed insights into the supply market.
SpendEdge shares your passion for driving sourcing and procurement excellence. We act as a global strategic partner for leading Fortune 500 firms and other leading companies across industries. Our strength lies in delivering robust, real-time procurement market intelligence solutions that help sourcing and procurement professionals make informed decisions. Our innovative procurement solutions also help enterprises transform structural capabilities, improve execution efficiency, and fast-track time to savings.
Every business needs smart procurement intelligence to stay at the top of their game; we provide actionable insights utilizing lean methodology to help enterprises make better purchasing decisions. We offer businesses with the precise combination of resources, tools, and techniques to help them redefine sourcing and procurement capabilities. We cover a broad spectrum of industries starting from pharmaceutical and life sciences to transportation with expertise in supply market intelligence, spend analysis and benchmarking supply chain risk assessment, and category management.