Artificial intelligence and its many potential applications have long been a much-loved concept. This is true both in science fiction and theoretical models. Only recently have we begun to see the future of these possibilities take shape as a reality instead of a fantasy.
The estimate is that AI for procurement will increase business productivity by 40%. That should give an all-encompassing view of the sheer impact it will have in every sector.
With specific regards to procurement, there are multiple areas in which AI can contribute. Essentially, any task that involves transmuting excessive amounts of raw data into value will benefit.
Understanding the purpose of AI for procurement
Large or complicated sets of data, such as those found in cost-benefit and cost-utility analysis? These are where AI particularly shines. The AI can process and decipher patterns and sequences easily, thanks to one thing.
That key piece of the puzzle is machine learning. Ai has already been applied in plenty of business settings to carry out simple instructions in a human-like fashion.
Where machine learning is different is its ability to do more than make decisions. It can also integrate all of the aforementioned data in that process. The ability to adapt, learn, and forge new strategies.
Almost every step of the procurement process, in any industry, can benefit from the assisted power of machine learning. Services offering ai-assisted boosts to performance, productivity, and profit are becoming invaluable.
Contract management assistance
Contract management can be one of the most data-intensive processes in procurement.
Depending on the size of the company in question, you could be looking at tens of thousands of contracts a day. Even if you’re dealing with smaller numbers, that’s still a large overwhelming amount of legwork.
Legwork that will not only require immense amounts of time but also labor. With that labor comes a naturally occurring degree of human error, which will drain even more time.
Artificial intelligence that makes use of machine learning will have no such issues. It will be able to get through vast swathes of data and demanding work. All that work and virtually no errors.
This will allow somebody working in procurement to focus on actually utilizing their skills and expertise. All that, instead of doing the grunt work.
Ai-assisted technology will also prevent value loss from mistakes made during the life cycle of a contract. What’s more, the analytics provided by an AI will offer new insights into costs, pricing, and sourcing.
Software and hardware maintenance costs
Procurement operations often have a heavy reliance on interconnected software and hardware solutions. These also suffer losses from malfunctioning components. Complex networks are especially problematic.
An AI in these web-like systems of dependent components can predict potential faults and problems before they occur. Preventing downtime in this way further streamlines the work and mitigates costs.
With regards to networks, in particular, they will typically be the conduit for the vast information being transmitted. An AI can perform optimizations to these networks.
No more lost data, no more delays. Every second can count when processing large amounts of contracts or checking up on the many contract details. Ai will give you all those seconds and more.
Advanced adaptability
Technological advancements have increased the rate at which supplier markets shift and evolve. Staying on top of the near-daily advancements is a borderline impossible task.
An AI can entirely automate this process, providing detailed analytics about upcoming trends. This AI-assisted adaptability will help procurement tighten the margins. This will give better profits on all purchases and contracts.
Depending on the industry that you operate in, those margins can truly make or break the profitability of your operations.
There is some worry that the powerful potential of an AI will somehow make procurement professionals redundant. A closer look reveals the opposite is true.
Though that adaptability has the potential to generate plenty of useful information, it enabled a procurement professional to focus on the more important key skills of the job.
Namely, utilizing those skills to build better relationships between business partners, vendors, and suppliers.
Fraud prevention
Financial crime can be a bane to procurement contracts and is also one of the more difficult issues to combat given the complexity. It’s another job that an ai shines at, however.
A tiny, minute error can easily slip by the human AI. Even time and time again, if an error is small enough, it will go unnoticed.
A statistic and number-driven AI, however, will miss no such thing. The ever-watchful eye of an AI will not only be 100% accurate in its detections, but it will also be able to monitor constantly.
That sleepless watch will ensure that nothing can slip by.
Novel new solutions
Thinking outside of the box with the usage of AI can offer a whole new host of possibilities. One example was a chatbot with a machine-learning ai at its heart.
That chatbot was able to use data to simulate conversations between procurement and suppliers. This activity helped to shape a better idea of which subjects and conversational roads would yield better results.
An innovative idea, and likely just the beginning. In terms of its use in business, AI is still in its fledgling stages and is just waiting to be fully taken advantage of.
The chatbot example was from two years ago. Who knows what kind of developments and unthought-of ideas are waiting to be discovered in the trends of 2022 and beyond.
Join a future driven by AI
As you can see, there is almost no end of benefit to implementing AI for procurement. If you want to embark on bringing your procurement department into the future, consider thinking machine systems.
It’s such a gamechanger that it creates a ‘before’ and ‘after’ situation, and there’s no reason for you to be left in the ‘before’.
The benefits will pay for themselves, exploiting and leveraging every obtainable advantage in your procurement. Being on the cutting edge with these technologies has the potential to put you ahead of your competition.
