The potential benefits of artificial intelligence has spread across all areas of business operations, and procurement is no exception. From improving procurement efficiency in spend analysis, contract analysis and more, AI is already making a significant impact in the industry. Today, major procurement technology vendors are using natural language processing (NLP) to create virtual personal assistants (VPAs) and cognitive procurement advisors (CPAs) that can further increase efficiency and automation.
The rise in AI within the enterprise is allowing procurement organizations to gain new insights to take analytics strategies to the next level. Businesses are able to improve the end-user experience through summaries and recommendations on supplier assessments, performance management, risk management, compliance and the likes. However, in reality, it is crucial to deploy the right technology on top of the right platform, processes, and data to be successful.
Let’s take a look at how AI is revolutionizing the procurement industry and why it is important:
Artificial Intelligence can help solve some of the biggest challenges in procurement. Even the most complex & labor-intensive tasks can be automated, thereby, saving tremendous amounts of time and energy. Emerging technologies such as robotic process automation, smart workflow, machine learning, and cognitive learning can be used to make procurement faster, cheaper, leaner, and more efficient.
Using the latest machine learning methods, procurement teams can gain a far more complete picture of the spend analysis report as they can run it before, during and after a sourcing event. This can further be expanded into strategic sourcing using a robust classification, cleansing, and data acquisition process. The real-time classification technology can analyze spend patterns including invoice analysis, spend-to-date reports, savings and spend analysis that can keep purchases compliant.
A whole new paradigm of interactions is being facilitated by intelligent bots that allow for reduced errors in addition to faster processing of payment and invoices. The AI-powered procurement bots allow users to manage key tasks with higher efficiency and speed. Company policies and procedures can be easily streamlined by leveraging machine learning.
Virtual Employee Assistant
The P2P software will see the biggest change with the introduction of chatbots and VEAs. The ability to stimulate a conversation with human beings will enable these computer programs to work on behalf of enterprise and support employee engagement in the procurement process. For example, the AI enabled VEAs can guide end users through the buying process. The chats will also slowly move on to voice-based response in the near future handling common supplier requests and resolving invoice discrepancies.
Procurement organizations are able to improve the supply services aided by new capabilities through artificial intelligence. Instead of just looking at invoices and purchase orders, they are now able to run exhaustive reports on warehouse utilization and inventory turnover that can help them determine overhead costs and predict the stocks well in advance. The advantage of machine learning-enhanced analytics services is that the analytics engine can ingest other content and semi-structured data beyond transactional data; more importantly at a level that is accurate.
By integrating external data, artificial intelligence is able to map out potential risks, positively impacting the industry. The accurately classified data that is cleansed was not available to the procurement industry without time costs. However, with machine learning and predictive analysis, enterprises can integrate financial risk scores and uncover trends and other key data relationships. It also becomes easier to analyze if a particular spend is in jeopardy or uncover unstable geographies for suppliers helping the teams manage sources related to risk well in advance.
As the potential benefits of artificial intelligence continue to expand across the vertical, majority of the procurement organizations are taking the initiative to adapt to analytics offerings. AI has brought a progressive change in procurement and spend management using a host of features such as competitive benchmarking, real-time classification, invaluable insights from classified data trends and AI-based procurement software that are certainly going to revolutionize the industry while answering questions of tomorrow.