5 Ways AI-Powered Procurement Technology Benefits Midsize Companies

Midsize companies can grow quickly. Rapid growth also means that they have some unique procurement challenges. As many of these companies look to scale quickly, their procurement requirements are more varied than others. 

However, continued reliance on manual processes and tools makes their procurement processes inefficient. This keeps human resources engaged in routine tasks as well as increases costs, errors and risks. 

Also, manual processes and tools cannot provide the level of visibility and control needed to monitor costs and budget overruns. 

Lack of procurement expertise also leads to unnecessary costs and risks. 

The procurement function isn’t clearly defined in many midsize companies, says Alex Zhong, director of product marketing at GEP. “All companies have CFOs, but not all companies have a chief procurement officer, ” he says. 

In many cases, the same staff may be handling multiple functions. This may not have a big impact when operations are limited. But as the business expands and operations scale, procurement may get overwhelmed by the sheer volume of work. 

All said and done, what midsize companies need today is advanced procurement technology driven by artificial intelligence (AI)that can automate routine tasks and unify end-to-end processes. 

5 Ways AI in Procurement Benefits Midsize Companies 

• Granular spend visibility: 

Midsize companies, especially those seeking investors or considering going public, must have granular spend visibility. Before investing their money, investors would like to ensure there is compliance on how they buy and where they spend money. If this information isn’t readily available, they are not likely to invest. 

• Intelligent decision-making: 

Fast-growing midsize companies must be able to utilize data and make intelligent decisions. AI-powered procurement technology can help these companies make sense of the huge amount of internal and external data. “AI can quickly figure out how information from different sources is connected and provide the insights you need to make a fast and smart decision,” says Raj Aggarwal, a director at GEP. 

• Vendor onboarding: 

In many businesses, the accounts payable team currently handles vendor onboarding. They have to send emails and follow-ups, check documents and do a lot of work just to create a vendor ID. Procurement software simplifies this process by providing a platform for vendors to fill out simple information. This information is then automatically routed to appropriate people for approval. Procurement software also recognizes that onboarding requirements may not always be the same and allows for segmentation and prioritization. 

• Vendor segmentation and risk assessment: 

For every company, some suppliers are more important than others. Procurement technology allows companies to segment vendors and integrate third-party data as part of risk assessment. “This gives a view of how important a supplier is and how much they contribute to your business. The third-party data can build a vendor profile that documents what their financial risk is, what their cybersecurity risk is and what their sustainability score is,” says Aggarwal. 

• Collaboration and communication: 

In fast growing midsize companies, procurement is handled by people in different locations using disparate and disconnected systems and tools. This often creates silos and hampers collaboration. A unified procurement platform allows teams working across different locations and making procurement decisions and approvals to share data and benefit from collaboration. Real-time data sharing creates a single source of truth for all stakeholders. Additionally, technology also provides clear, guided workflows that aid in strategic procurement. 

Balancing Costs and Growth 

It is vital for midsize companies to strike the right balance between cost efficiency and growth. Achieving this balance requires these companies to rethink their procurement strategy. 

Procurement should be ready to scale with the changing needs of a growing business. Instead of a single focus on cost, the goal of midsize companies should be value orchestration, and this can be achieved by leveraging technology. Technology can provide the transparency and intelligence needed to balance cost, risks, sustainability and customer satisfaction. 

Overall, the use of AI can transform procurement from a cost-saving function into a strategic function that drives the sustainable growth of a midsize enterprise. 

To learn more, download the GEP white paper How AI-Powered Procurement Software Fuels the Growth of Midsize Companies.