Sourcing and Procurement
Adapting to procurement changes with AI
The COVID-19 pandemic caused major disruptions in how businesses operate. Businesses across the globe were forced to adopt methods and innovative technologies that they were unfamiliar with. The pandemic has given impetus to the *digital transformation journeys of businesses across the globe.
One of the severely-hit areas of businesses was the procurement function. Procurement had to cope with issues such as shortages in supplies, misaligned supplier contracts, price fluctuations, and more.
Technologies like Artificial Intelligence (AI) have an effective way of managing bottlenecks faced by procurement. AI offers a seamless digital experience to everyone involved in the procurement lifecycle. Besides, it also adds value and addresses risks. Smart AI algorithms enhance the efficiency and effectiveness of complex problem-solving in procurement.
In procurement, AI is leveraged for various applications such as management of data related to suppliers, management of contracts and spend analytics. AI enhances the efficiency of the procurement function by automating several tasks and facilitating data-based decisions.
Some areas of procurement where AI is deployed
Classification of Spend Data
AI-based software provides spend analytics capabilities. The AI bot gathers data from multiple sources such as financial transaction data, invoices, purchase orders, and receipts. Based on this data, the software generates reports that help organisations understand the areas of spend and identify areas for cost saving.
Contract Lifecycle Management
AI with its subsets, Machine Learning (ML), and Natural Language Processing (NLP) can streamline the contract lifecycle management process.
A business has large volumes of data related to current and previous contracts. All this data needs to be used. Advanced ML algorithms extract all the required information automatically with minimal errors.
AI-based contract lifecycle management tools advise users to pick the best terms for negotiating contracts and minimising business risks.
One of the critical areas in contract lifecycle management is obligation management within enterprise contracts. AI overcomes the shortcomings of manual obligation management and facilitates the automatic extraction of obligations from contracts.
Supplier Identification
In the current business scenario, supply chain disruptions occur frequently and businesses need to rapidly identify and hire new suppliers. AI enhances the supplier identification process by scanning millions of suppliers in a quick time. The product/service or manufacturing ability is defined along with any constraints. The NLP algorithm performs iterations and narrows down the list of suppliers based on specific criteria. The software scans millions of suppliers and shortlists the best ones at a high speed with high precision.
Risk Monitoring
Risk mitigation is a critical component of a procurement process. In a dynamic marketplace assessing and mitigating risks can be difficult. Inadequate measures to minimise risks can cause severe losses. AI helps in accurate risk assessment. AI and ML algorithms can be coded based on the risk assessment framework. Real-time data can be provided to this framework from multiple sources. AI bots provide data-based insights with the help of different techniques. They also evaluate the risk score from a large data pool and then alert designated professionals regarding the risk.
Cognitive Sourcing
Cognitive sourcing entails leveraging AI techniques to mimic human intelligence and behaviour. AI software performs tasks like data mining, pattern recognition, and self-improvement. The benefit of using AI is that it can easily analyse large volumes of structured and unstructured data in a very short span of time and provide valuable insights.
AI Chatbots
The procurement function focuses on enhancing customer experience and optimising costs. AI-based chatbots help create unique user experiences that can also be replicated. The user experiences are developed based on aspects such as buying behaviour, buying patterns, browsing history, etc. The chatbot provides a great customer experience by conversing with the buyer in natural language. Powered with various details about the customer, the chatbot offers a personalised experience to the user.
In Conclusion
AI helps enhance the efficiency of different processes in the procurement function. It improves decision-making by providing valuable insights based on data to decision-makers. These insights not only help identify new opportunities but also boost profits. The AI software optimizes operations throughout the business cycles. Intelligent data management also establishes better relationships with suppliers while optimising delivery routes and inventory management.
*For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.
