Benefits of adopting AI in procurement
With the advent of artificial intelligence (AI) and machine learning, businesses have undergone a sea change in terms of planning, strategizing and decision-making as well. It is more than important to understand the way in which such developments impact the scope of businesses and optimise the returns by adopting this revolutionising stream.
Organisations centred on procurement are focussing on AI and analytics. In fact, businesses are fast incorporating such changes given the fast pace of development. There are numerous benefits that procurement teams as well as businesses as a whole can expect in the form of:
Advanced data analytics and new digital technologies are equipping procurement with an edge which is aiding in delivering bottom-line impact. The overall business stands to gain as more savings are made. Considering that until recently, it was difficult to arrive at organisation’s overall spending figures, AI has transformed that problem with a solid data foundation which has been analysed through multiple algorithms. This has enabled organisations to find hidden opportunities across several layers. Spend-analytics can help organisations save 10-20 per cent on the organisation’s addressable spends. AI has enabled procurement to find a solution to this huge problem and accrue financial benefits as well.
Procurement teams can focus on savings if they can save needless time and efforts through analytics and AI. They no longer have to spend their time in analysing data out of spend capture systems which requires massive efforts to be linked, cleaned and sifted to be put to analysis. AI helps configure this data at a click of a button. Through advanced spend analytics solutions, procurement can gather hidden savings, quantify them and suggest ways to optimise the impact of various sourcing initiatives.
There is equal efficiency in financial matters considering that granular savings insights accelerate execution of the procurement plans and help deliver the impact much sooner than expected, say with three to six months of faster savings.
It is the most underestimated concept but is still the most significant. AI adoption can help establish procurement to a prominent position within the organisation and help it drive business decisions. This is important to note considering that procurement has historically been seen as a support function that is essential to the organisation but not as a strategic one. Now, as organisations are moving towards data-based systems and approaches, there are two key manifestations:
Internal stakeholder engagement:
Through adopting AI technologies, procurement teams are able to start an internal conversation at par with the other departments of the organisation with detailed data-driven analytics. They are now pretty much a part of business in the real sense of the term, all thanks to robust amount of spend analytics data, facts and figures and numbers that are hard to ignore for other functionaries. This also changes the perceptions and perspectives of other internal stakeholders towards procurement and makes them realise its importance.
Better results from external suppliers:
Negotiations with external suppliers become easier owing to presence of data that can’t be ignored. Instead of relying on verbal ways or words or personal relationships and typical bargaining methods, a category manager can show the requisite data of say, budget constraints and ask for a price drop and let the suppliers consider dialogue over terms.
No doubt, AI is new and requires time but the benefits are aplenty if they are well-invested with data in time. Procurement can gain and help the organisation to deliver par expectations if a strong and solid data foundation is laid.
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