AI in Procurement – 3 Improvements CPOs will look forward to
CPOs, Strategic Purchasers and Supply Chain Managers all know the score – procurement is stressful and time consuming. With the use of AI and Big Data, however, these 3 pain points will be a thing of the past.
Okay, fellow purchasers, let’s be real here: We’re all facing the same issues. It seems like regardless of whom you’re talking to or whatever survey you look at – buyers tend to mention the same 3 challenges when asked about their procurement tasks:
- Finding the right suppliers
- The ever-existing need to reduce costs
- Accurate Data
Granted, one could go on and on with this list as the challenges CPOs and purchasers face are multi-faceted and always changing. However, what if we told you that these pain points can be overcome with the usage of artificial intelligence in procurement?
You might be rolling your eyes right now, thinking “another article stuffed with a meaningless buzzword” or even “I am not willing to have an AI do my job”, but give us another minute of your valuable time and we may change your mind.
1. Find new suppliers with the use of AI in procurement
We’ll put it mildly here: scouting suppliers with the use of traditional methods is a lengthy and tedious process. And if you’re brutally honest to yourself: at the end of a long search, often all that remains is U2’s famous song “Still haven’t found what I’m looking for”. However, a data-driven procurement platform like scoutbee uses AI to find the best suppliers for you. Think of it as a marketplace such as amazon. You place your demand based on keywords and our artificial intelligence ARTIMIS will find you a longlist of suppliers by making use of its enormous data pool. Likewise, suppliers onboard on the platform to fulfill your procurement needs.
But this is not about us. It is about your advantages using AI in your procurement process.
Not only can AI provide you with an extensive list of potentially fitting vendors. It is also using data to verify and evaluate each supplier and creates a trust score out of that. Needless to say, only trustworthy suppliers will end up in your longlist. In just a couple of weeks, an artificial intelligence will provide you a healthy choice of trusted suppliers you can compare and collaborate with. Or, to put it differently: an AI helps you complete your procurement tasks in a fraction of the usual time.
See what we’re getting at? Finding new suppliers doesn’t have to be tedious. If you’re using AI to facilitate your supplier scouting, it only takes away the redundant tasks that go along with the process – hours of inefficient research, escalating travel expenses and the uncertainty whether or not you really found the best supplier for your specific needs. Artificial intelligence allows you to refocus on what really matters – your value-adding procurement tasks.
2. Effective cost reduction through AI in procurement
One thing is for sure – procurement is a highly-competitive field of work and AI is not going to change that anytime soon. But there is hope! What artificial intelligence can indeed do, is help you reduce process- and material costs. With a lot more potential suppliers to choose from, you’re in a favorable position to negotiate and close the best possible deal for you. On top of that, you’re not wasting any more working hours on finding suppliers for complex products in remote countries.
Especially when it comes to global sourcing tasks, process costs can often become a bottomless pit. For instance, finding vendors in China is one of the most complex situations a lot of purchasers have found themselves in at some point. While economically, the Chinese supplier market is massively attractive, the estimated process costs to identify a well-rounded list of suppliers can be outrageous. Therefore, plans to source materials from China often just stay plans instead of evolving into serious business operations.
With AI in procurement, however, you’re able to find suppliers everywhere and in a fraction of the usual time. By facilitating the scouting process, artificial intelligence can make plans that were deemed too expensive or complex become reality. This is how you should view AI in procurement: it is an enabler to bring your plans to fruition.
3. AI provides Accurate Data
Alright, by now you’ve probably identified a pattern there – artificial intelligence tackles some of procurement’s toughest challenges. Let’s take a look at one more way to use AI to your advantage.
When trying to find suppliers in remote countries, inaccurate data (or even lack of data in general) often seems to be a huge problem. Let’s stick to our aforementioned example for a second and assume that the goal is to find Chinese suppliers. You might get a somewhat long list of vendors through the use of conventional search engines, although you still only have information from their websites and are therefore merely scratching the surface. But how trustworthy are they? Do they collaborate with any market leading companies or OEMs? And what about possible tier 2 suppliers? All these questions remain unanswered due to missing or inaccurate data. In the end, the non-existent transparency of the Chinese supplier market as well as the involved risk in such an undertaking will probably outweigh the possible benefits, and your plans to source from China are in jeopardy.
Consequently, we’re probably not going out on a limb by saying supply chain transparency is key for a successful procurement strategy. In reality though, there still seems to be a massive need for optimization: Deloitte’s 2018 CPO report reveals that 65% of the respondents have no or only limited supply chain transparency below tier 1. Therefore, it is hugely important to embrace AI in procurement and use it to your advantage. It provides you with billions of accurate datasets and therefore establishes supply chain transparency all the way to tier 3. It makes supplier networks visible so you have access to valuable information that will make your procurement processes much easier.
What can AI do for you?
Let’s wrap it up again: AI equips you with accurate and valuable data to screen the supplier market thoroughly, helps you to achieve crucial cost savings and to find the best possible supplier for your global sourcing projects. In procurement, artificial intelligence is the daily companion that makes your life easier and enables you to focus on your most important tasks. If you leave the monotonous duties to AI, the 3 main challenges of procurement might very well be a thing of the past.