Procurement teams deal with huge volumes of complex data, which create a considerable administrative burden for the function and take up vast amounts of procurement professionals’ time. The function is among those that stand to benefit most from artificial intelligence (AI), yet it is often the poor relation of innovation – missing out on investments in technology made elsewhere in the business.
Despite what the headlines may say, rather than being a threat to jobs, AI is a way for procurement to help grow the business and improve the lives of buyers. The technology can help bring a step change in efficacy and efficiency to the function.
Procurement teams that use AI are able to improve operational efficiencies by up to 50% and save millions. Why? Because AI enables buyers to complete tasks, such as interpreting handwritten notes on a contract, that were previously impossible for humans to accomplish efficiently.
A new source of power
Procurement’s efficacy, or power, comes from regaining control of data and the way in which it is managed. Teams that use AI are able to delegate day-to-day tasks, such as checking invoices against contracts, record-keeping and transcription, to a digital assistant. Such programs automate the control of thousands of line-by-line invoices by comparing them with purchase orders, supplier contracts or accounting plans and then automatically populate complex databases.
This, in turn, frees up procurement professionals to focus on higher-value work and spend more time developing relationships with both suppliers and internal stakeholders to create additional value for the business. Automating routine tasks helps the function to manage risk and ensure compliance. For procurement teams, AI can enhance competitiveness while ensuring the organisation meets continuously evolving regulatory requirements.
Unlike other technologies, AI adapts to the user. Once the system has been set up and the rules engine has been tailored to address a specific challenge, the automation tool then learns how to optimise those rules and provide results that can be seamlessly integrated into existing systems and provide real-time results.
AI has many practical applications, such as semantic search and analytics. The technology could be used, for example, to detect duplicate invoices, make sense of contracts that have been revised numerous times by multiple users and integrate data from third-party systems, such as data around supplier line-level invoices and card information. Once the function has mastered this, the next step would be to generate predictive analytics and to support category managers and their internal partners in deepening their understanding of buyers’ behaviours while further leveraging their sourcing strategies precise, real-time monitoring capabilities.
Automation will not only help teams be more productive, it may also have softer benefits such as motivating staff and attracting high-quality candidates. The next generation of talent is already au fait with new technologies and will be encouraged to enter a new industry that is springing up around AI.
Forward-looking firms want to reduce the procurement function’s administrative burden and see AI as an opportunity. The technology provides procurement chiefs with an opportunity to improve the working lives of their teams and, through productivity gains, grow the business at the same time. Those who seize this opportunity will be the winners.