Harnessing AI in procurement for increased efficiencies for your business in 2023 - Future of procurement.
The efficiency of your procurement process can significantly impact your company’s overall financial health and competitive performance. Efficient procurement processes can help save your business both time and money, boosting your bottom line. Inefficient procurement processes lead to delayed payments, poor relationships with suppliers, and potential inventory shortages.
Integrating digital solutions into procurement software help companies dependent on paper-based, manual procurement workflows become more agile and profitable. Artificial Intelligence solutions can simplify these remedial procurement tasks by doing all the heavy-lifting and providing actionable insights. This allows you to run your procurement as efficiently as possible.
1. Spend Analytics
One of the major challenges that procurement professionals face is spending analysis. If your company can manage risks and optimize its buying power, you can easily boost your bottom Swline. However, with today’s volatile economy, it’s nearly impossible to control spending with data analyzed by humans. Artificial Intelligence enables procurement software to track and Analyse data for all your purchases and evaluate usage patterns. AI can also classify your spending data into structured, functional, and standardized classes. This allows you to analyze your company’s transaction data by department, making it easy to identify any purchasing irregularities or errors like duplicate orders. It also gives you more detailed insights into your company’s spending, helping you gain control over them and proactively identifying cost-savings opportunities.
2. Supplier Risk Management
Another proven way that you can leverage AI is to manage supplier risk. AI, such as Tenderize enables you to quickly and accurately spot sudden changes with a specific supplier and evaluate whether this change decreases or increases the risk. It does that by keeping track of all your supplier’s risk factors in real-time and monitoring numerous sources for new and emerging risks. This helps you get rid of high-risk suppliers with ease, so you can avoid the hassle of working with them. This helps you prevent human error in your business operations and identify mistakes made by your suppliers, eliminating costly errors in your procurement process.
3. Inventory Management
Traditional procurement methods are often plagued with inconsistencies and inaccuracies in inventory management. This is especially true where multiple product versions are managed simultaneously across different catalogs or suppliers. This leads to difficulties in managing orders, costly miscalculations, and poor stock management and inventory visibility. It also increases the risk of creating double entries and can be challenging to place and receive orders. These conventional methods also require lots of human resources and can be time-consuming to locate stock, which can be incredibly costly for your business. AI helps you identify the best inventory practices for your business, allowing you to maximize the available storage space. It also enables you to recognize irregularities in your catalog by quickly identifying duplicates, associating products with the correct catalogs, and spotting new product opportunities. This helps you achieve optimal catalog management, reducing costs linked to sourcing relevant products. On top of increased accuracy and visibility, AI will analyzes the performance of products, employees, and suppliers, further boosting potential savings. By identifying less performing areas of your supply chain, your procurement teams can analyze supply chain performance, improving decision-making and ensuring tighter operation.
4. Automation of Manual Tasks
Traditional procurement methods often involve lots of menial and repetitive tasks. Utilizing artificial intelligence software, you can automate manual tasks such as approval of purchase orders and invoice processing that consume a lot of time and by default cost time - time that could be spent on more strategic aspects of your business. It also helps expedite the procure-to-pay process, which often takes weeks, if not months, to complete manually. By automating these tasks, your procurement teams don’t have to spend their time working on low-value, arduous tasks. Instead, they can dedicate their time to more strategic endeavors and build relationships with internal stakeholders and key suppliers. Automation helps improve efficiency, accuracy, and speed in your procurement process, eliminating human error and providing immediate savings for your company.
5. Guided Buying
Procurement is an integral part of every department in your business. However, your procurement teams often struggle with mundane tasks like establishing contracts, negotiating better prices, and finding ideal suppliers. Once the purchases are completed, they end up in some filing system, making it difficult to locate them. This process often results in off-contract spending. Artificial intelligence can help solve this issue by providing guided buying. Procurement teams gain access to the correct buying channels to make smart buying decisions. This allows your procurement teams to focus on delivering their key responsibilities and maximize value from the purchase.