In the world of procurement, efficiency is everything. The ability to streamline processes, eliminate duplication, and make informed, strategic decisions can be the difference between success and stagnation. At a recent Supply Chain Management Association Ontario (SCMAO) Digital Supply Chain event, TealBook’s Founder and CEO, Stephany Lapierre, shared her insights on how artificial intelligence (AI) can transform procurement data management.
Let’s dive in to the highlights of the session:
How AI streamlines procurement processes
The beauty of AI lies in its automation capabilities, which go beyond merely removing the human element:
Automating data collection and validation: AI can help gather and validate data from a variety of sources, a task that would be impossible to achieve manually at the same scale. This ensures that procurement teams have access to reliable, quality data for decision-making.
Identifying cost savings: AI provides better visibility into procurement processes by providing access to quality data. The trusted data that can be gathered using AI enables teams to identify duplicate contracts, uncover consolidation opportunities, and improve competitiveness across categories.
Evolving roles in procurement: As AI takes over routine tasks, human roles in procurement can evolve to focus more on strategic, high-value activities.
However, to truly harness the power of AI, organizations need to start with good data. Clean, quality data forms the bedrock of effective AI applications and enables better outcomes.
The challenges and solutions in AI integration
Adding AI into your procurement operations is not without its challenges, but they can be overcome with careful planning:
Data access: When organizations are more digitally mature, adding AI to their tech stack is easier. For example, if an organization has access to a centralized data lake, it can accelerate the use of business intelligence tools so teams can achieve valuable insights that they can be comfortable using.
Change management and setting realistic expectations: It’s crucial to understand what AI can realistically achieve compared to current processes. AI should be seen as a tool that enhances human performance and decision-making, rather than replacing it entirely. For example, AI can be used to amass and analyze vast amounts of data about suppliers, including their performance, delivery times, quality, and pricing. This information can be used to identify potential risks, opportunities for cost savings, and areas where performance can be improved.
However, while AI can provide valuable insights, it cannot replace the human element of building and maintaining relationships with suppliers. This involves negotiation, conflict resolution, and the ability to understand and react to non-verbal cues.
Efficiency and scalability: These should be the focus for procurement teams when adopting AI tools. The primary benefit of an AI tool with scalability is that it can handle increasing amounts of work in a capable manner or expand its capacity to accommodate growth. As the demands on the system increase, whether due to more users, more data, or more complex tasks, a scalable AI tool can adapt without losing performance.
For instance, consider a procurement team at a large organization that gets dozens of requests every week for new software licenses from several departments. This takes a lot of time and resources to action, so the procurement team launches a digital request form that leverages AI to automatically identify the purchase category of the software and summarize the pros and cons of similar vendors.
A scalable AI request form would be able to handle an increase in requests without requiring a complete redesign or significant additional resources. It can learn from each interaction, becoming more efficient and accurate over time. On the other hand, an AI tool that isn’t scalable would struggle to maintain performance as workload increases. This could lead to slower response times, less accurate results, and ultimately, a decrease in user satisfaction.
How a supplier data foundation and AI work together
The real magic happens with AI in procurement when AI is paired with a supplier data foundation. A supplier data foundation serves as a centralized platform that continuously enhances supplier data. It empowers organizations to streamline analytics, mitigate non-compliance and fraud risks, amplify operational efficiency, enrich spend analysis, and ensure seamless procurement workflows.
A supplier data foundation allows for the simultaneous gathering and analysis of information from various sources. This synergy eliminates dependencies on supplier portals or the need for one-time data enrichments.
Through automating the collection, verification, and enrichment of supplier data, the combined power of AI and a supplier data foundation eradicates manual management efforts which are often prone to errors and rework. This helps in maintaining a high-quality, real-time data stream that businesses can tap into for better decision-making.
The supplier data foundation also functions as an organization’s unified source of truth for all supplier-related information. It provides a comprehensive supplier profile containing critical business details and certifications. And, it seamlessly integrates with existing technologies like ERP systems, Source to Settle tools, or supplier onboarding systems, ensuring data integrity and consistency.
The amalgamation of AI with a supplier data foundation sets the stage for introducing technology that allows for further automation in procurement, opening up new avenues for efficiency and growth.
Connie Jensen is the Senior Manager of Content Marketing at TealBook.
