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    Blog Image

    What Intelligent Procurement Can Do for Your Business

    • Procurement has an opportunity to leverage advanced AI technology to strengthen its capabilities.
    • It can utilize technology at every stage in the procure-to-pay cycle.
    • Intelligent procurement can not only streamline processes but also contribute to achieving strategic goals.

    September 14, 2023 | Procurement Software

    Procurement has evolved quickly in recent times, with most businesses expecting more value out of the function.

    Can procurement anticipate potential disruptions and act proactively? Can it accurately forecast demand and take steps to align supply with demand? And can it help businesses make well-informed decisions and build resiliency?

    These are just some of the crucial tasks that businesses now expect their procurement teams to perform.

    How can procurement take on the additional expectations?

    The good news is that AI-powered technology has empowered procurement to shoulder all these responsibilities.

    How?

    By leveraging advanced capabilities that can help derive meaning from a large volume of data, provide useful insights and help teams take appropriate action.

    Intelligent procurement aims to empower teams with relevant data and insights that can help them go beyond their usual responsibilities and contribute in strategic ways.

    Why Your Business Needs Intelligent Procurement

    The scope of procurement has expanded significantly in recent years. While the pandemic-induced supply chain disruptions triggered an immediate review of how procurement works, growing economic uncertainty, material and labor shortages and escalating input costs have further necessitated the need to overhaul procurement organizations.

    As a result, a function that was primarily considered routine and mundane suddenly rose in prominence and became vital not only for day-to-day operations but also for the larger business continuity.

    This has changed the overall outlook as well as the work portfolio of procurement, which is now expected to add more value and contribute to strategic objectives.

    All this has compelled procurement to evolve and work in a smarter and more intelligent manner by leveraging data and technology.

    How Procurement Can Become Intelligent

    From sourcing and supplier selection to vendor and contract management and invoice processing, AI is set to make a huge difference in the entire procure-to-pay cycle.

    what-intelligent-procurement-can-do-for-your-business-1

    1. Sourcing:

    AI can simplify supplier selection by evaluating suppliers based on predefined criteria such as pricing, delivery times, quality and sustainability. Generative AI can further simplify this process and quickly determine the most appropriate suppliers in a single chat session. It can also optimize the bidding process, auto create RFX documents, analyze supplier responses and optimize pricing by determining the best combination of suppliers. Further, it can simplify supplier onboarding by automating data verification and document processing. Smooth onboarding can, in turn, enhance the user experience.

    2. Contract management:

    By quickly identifying contract risks, legal language risks and non-compliance issues in contracts, AI can help procurement secure contractual agreements and avoid potential pitfalls. It can also assess supplier performance against agreed service levels.

    Generative AI allows contract managers to perform cross-cube querying and access data from multiple sources. It can also simplify guided buying and transform the buyer experience into an interactive request where questions and answers can lead to auto generated and compliant purchase requisitions.

    3. Risk management:

    AI can streamline risk management by continuously evaluating and monitoring risks associated with suppliers and supply chain partners. This helps procurement understand supplier vulnerabilities and take proactive steps to mitigate potential disruptions. In case of a supply chain disruption, AI-driven automation can recommend alternative suppliers that are pre-vetted for suitability. In this manner, it enables a business to quickly respond to supply chain challenges.

    4. Spend analysis:

    Making sense of spend data has been simplified as procurement can leverage generative AI to pose questions in natural language and derive insights from spend data. For example, they can quickly identify category-wise savings in a region or business unit. AI can also look at real-time data and other sources of intelligence to accurately predict future demand and spend. The technology’s predictive capabilities can enable procurement to make data-driven decisions with precision.

    5. Invoice processing and payment:

    By aligning invoices with purchase orders and goods receipts, AI enables automated payment processing and efficient payment cycles. It can also handle exceptions with ease by assessing price and service delivery against predefined tolerances, thereby clearing an invoice for payment or suggesting further scrutiny. Intelligent exception management reduces the need for manual intervention and enhances process efficiency and financial control.

    In addition to the above, there can be many new use cases of AI in procurement processes, especially as generative AI continues to evolve at a rapid pace.

    Also Read: Adopting AI Responsibly: Guidelines for Procurement of AI Solutions by the Private Sector

    Conclusion

    The rapid emergence of AI solutions has led businesses to explore how best they can utilize the technology’s advanced capabilities. Like other business functions, procurement has a tremendous opportunity to leverage the immense potential of AI and next-gen technologies to streamline operations, enhance visibility and agility and improve decision-making.

    When fully utilized, AI-powered technology can transform procurement into a strategic business function that can go beyond managing suppliers and optimizing costs and play a key role in realizing long-term objectives.

     

    Tags: Intelligent procurement

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