A true digital procurement organization automates repeatable tasks to boost efficiency and potentially drive down costs. It equips stakeholders across the business with real-time access to easy-to-use online tools. It deploys new and smarter ways to infuse data models to enrich daily operations and decision-making.
For AI to add value in purchasing, organizations must create a technological foundation and use the full spectrum of IT tools. Doing so is a multi-stage process that successively creates the necessary level of maturity: getting the right data accessible across the entire procurement organization; automating the basics of the workflow, whereby a combination of cloud-based enterprise resource planning systems and state-of-the-art supplier relationship management suites usually makes sense; and adding robotic process automation for repetitive tasks.
Building an AI-driven procurement organization
Indeed, the introduction of AI into companies is a historical turning point in the way companies do business. Our project experience shows six steps in a successful rollout.
· First, companies must evaluate AI's relevance for the organization and develop a high-level AI strategy based on a comprehensive AI readiness assessment.
· Then it’s important to quantify the potential for quality improvements, customer satisfaction, risk mitigation or competitiveness.
· Third, companies need to gather internal and external stakeholders to select which AI tools it wants to implement, based on the particular challenges of the organization and its entire ecosystem.
· Now it’s time in a fourth step to implement and deploy AI through a series of sprints, with an understanding that for the more advanced solutions, companies will actually need to create them.
· In the fifth step, it’s time to close the circle by capturing the company’s learnings from its successes, failures and ongoing improvements.
· Finally, the sixth step involves a systematic development of the cognitive skills of the strategic buyers who will be using the tools. Talent development is crucial for companies to play the procurement endgame.
Five ways AI will turbocharge procurement
From securing a better deal to early warnings on supplier risk, this is where change is coming.
· Purchase to pay: The fundamental purchase to pay (P2P) forms for managing and recording the procurement transaction are as of now automated somewhat in numerous organizations. Artificial intelligence will take this to another level. For example, it will help decision-making by staff who place orders through an inventory type tool – 'guided purchasing' will become standard. AI will likewise bolster in regions, for example, automated invoice processing, helping frameworks figure out how to deal with non-standard invoices or spot potentially fraudulent examples.
· Sourcing: AI could support sourcing as today is done, just as driving better approaches for picking suppliers and granting contracts. Under regular ‘request for proposal’ (RFP) or ‘invitation to tender’ processes, AI-driven devices will recommend which providers ought to be welcome to take an interest in the activity. Utilizing proof from past occasions, AI will help structure the process and reports and bolster the assessment, which will be heavily automated. AI will watch that suppliers have the accreditations or confirmations they have to take the necessary steps. In the end, AI could empower new procedures that move beyond the RFP altogether.
· Contract management: AI-based intelligence is probably going to assume a job at each phase of the contract management process. It is as of now being utilized to look through the current contracts in organizations for terms and conditions that may convey risk for the buyer. It will likewise bolster the drawing up of new contracts, recommending appropriate clauses and conditions. At that point, AI will recognize the data required from the supplier to deal with the contract and performance and ensure this is captured, recorded and reported. And there will be no risk of missing key dates such as a notice to terminate – AI will provide calendar alerts.
· Risk management: Supplier and supply-chain risk management have ascended the plan as the business has turned out to be faster-moving, more complex and global. AI will assist associations with making feeling of the enormous measure of information, data accessibility and that could help in terms of risk management. Understanding what is important for every organization, putting the correct data before the opportune individuals as fast as could reasonably be expected, and guaranteeing that data is transformed into actionable intelligence are all aspects of risk management where AI will play a central role.
· Innovation: The idea of procurement as a key driver for innovation is generally new, yet numerous organizations are understanding that supply markets are possibly tremendous sources of ideas and competitive advantage, often more important or productive than internal innovation or product research. Discovering suppliers that can give genuine worth isn't in every simple, especially the same number of are probably going to be smaller and younger firms. So AI-controlled search capacity will enable organizations to characterize and afterward distinguish the providers that are well on the way to bring these points of interest.