In a world awash with a seemingly never-ending list of technology buzzwords such as automation, machine learning and Artificial Intelligence (AI) to name a few, AI is one such technology that is moving away from simple hype and stepping closer to reality in procurement.
Here, CPOstrategy looks at 5 ways in which AI is being utilised in procurement…
Efficiency and accuracy
Procurement, by its very nature, is tasked with handling huge quantities of spend and with spend comes spend data. Often described by leading CPOs as a repetitive task, understanding and sorting that spend data is now being achieved through the implementation of AI.
Through the use of AI, procurement teams can remove human error, increase efficiency and realise greater value from spend data.
One of the biggest ways in which AI is being implemented around the world is in the customer interaction space. In telcos, for example, customer support can now be handled via a highly developed AI chatbot that uses legacy data and context to provide real-time, and unique, solutions for customers.
In procurement, chatbots follow a similar path for both internal and external customers. With tailored and context-aware interactions, chatbots create an omni-channel user experience for all stakeholders in the procurement ecosystem.
Supplier risk identification
Procurement and risk go hand in hand and one of the biggest risks is identifying and working with the right partner. Working in partnerships, which ultimately proves to be a failure, can be extremely costly and so AI is now being used to reduce the risk of failure.
Machine Learning technology, powered by AI, captures and analyses large quantities of supplier data, including their spend patterns and any contract issues that have emerged in previous partnerships, and creates a clearer picture of a supplier in order for the procurement teams to be able to identify whether this particular partner is right for them – without spending a penny.
Benchmarking is key to any organisation’s ambition to measure and continuously improve its processes, procedures and policies. In procurement, organisations such as CIPS are used as examples of best practice in which procurement functions all over the world can benchmark against and identify any gaps.
Similar to supplier risk identification, AI can be implemented within ERP systems to analyse the entirety of data that passes through procurement and present this key data in easy to digest formats.
Examples include data classification, cluster analysis and semantic data management to help identify untapped potential or outliers in which procurement teams can improve their processes.
Purchase order processing/Approving purchasing
Procurement has evolved from its traditional role as simply managing spend into a strategic driver for a number of organisations all around the world.
As the role of the CPO has changed, technology such as AI has been implemented to free up their time from the menial tasks (such as PO processing and approving purchases), allowing them to spend more time in areas of growth.
AI software can be used to automatically review POs and match them to Goods Receipt Notes as well as combining with Robotics Process Automation (RPA) to capture, match and approve purchases through the use of contextual data. This contextual data allows AI to identify and make decisions based on past behaviour.