AI and machine learning technologies have for the last decade significantly revolutionized the supply chain. In logistics and transportation, for instance, the deployment of AI and machine learning is at its all-time high and is expected to increase even more in the future. One area that has conversely remained untouched is procurement. This is expected to change soon as businesses are realizing the potential of AI and ML in procurement and slowly working towards implementation. If you’re a procurement professional or own a business, below are reasons why it’s wise to adopt AI and machine learning.
Why Procurement Should Embrace AI and Machine Learning Technology
Procurement is an incredibly important part of every business. You can only make the most of it by being open to digitalization. This means embracing and adapting to newer innovations such as AI and machine learning. Here are some of the main reasons why you should do so
1. To Improve Productivity
Procurement and sourcing professionals usually deal with repetitive and time-consuming tasks such as purchasing and categorizing products, invoice processing, and keeping track of supplies daily. When you implement AI and ML into your business, all these tasks will be automated. As a result, employees who previously had to spend endless hours handling them will be free to take on more important duties. This will, in turn, help improve productivity, which automatically translates to increased profits and business growth.
2. To Reduce Errors and Fraud
The most attractive feature of AI and machine learning is its excellent ability to detect patterns in data sets. In procurement, these two technologies can be used to identify abnormalities in supply chain data and automatically alert the relevant parties. This will, in turn, go a long way in curbing incidences of fraud as those involved in fraudulent activities will refrain as they can easily get caught. Besides fraud, AI and ML will also help in reducing errors by automatically alerting procurement and sourcing professionals of any abnormalities in the supply chain, resulting in smooth-sailing operations.
3. To Keep Up with Competition
Even though the implementation of AI and machine learning technologies in procurement is still in its baby steps, it’s expected to change this realm over the next two years significantly. Already, a significant number of businesses have implemented these technologies while countless others are working towards implementation.
As noted earlier, procurement is currently the only major area that hasn’t been majorly disrupted by these technologies. However, as stated previously, this is about to change. In the next two years, almost half of the world’s procurement and supply chain industry will have implemented.
Therefore, embracing AI and machine learning will not only help you increase efficiency but will also enable you to keep up with the competition. This is vital if you want to remain in business. For procurement and supply chain professionals, familiarizing yourself with AI and ML is also critical. The skills required by employers post- AI and ML implementation will be different from what they expect today.
4. For Risk Management
Starting and successfully running a business comes with a lot of risks. However, thanks to AI and machine learning, most of these risks can be alleviated, and if they already happened, they can be prevented from re-occurring. How? Well, as noted, AI technology excels in detecting abnormalities in data sets.
Therefore, using it to analyze historical and real-time data as well as internal and external market data can help procurement officers identify patterns that led to the occurrence of a particular risk in the past. They can also shine a light on risk areas that no one had an idea about and prevent losses by taking necessary steps.
5. To Improve Supplier Relationships
By automatically analyzing past invoices and receipts through machine learning, procurement officers can identify suppliers who, in the past, offered the best rates and quotes. With this information, they don’t need to look for new suppliers as they already have a list of good ones at hand. The more they make purchases from them, the better the relationship between the business and the suppliers.
6. For Increased Savings
Everyone wants to save on costs and improve profitability. This is the main reason why people start businesses anyway. Through AI and machine learning procurement, you too can enjoy increased savings in two ways. First, as noted above, making continuous purchases from the same supplier helps improve the relationship between your business and them. Therefore, they’ll be more open to negotiations and offering you cost-effective prices for the supplies in the long run.
For those with no previous suppliers; for instance, startups, smart sourcing is an ideal way to enjoy saving. For example, if you’re a startup, you can use AI-powered auctions and negotiation bots to find the best supplier. Note, however, smart sourcing is also applicable to entities that are already in business.
7. To Automate Compliance
Even for a small or medium-sized business, keeping track of compliance contracts is quite a mean feat. With so much on their hands, procurement and sourcing professionals can easily forget and fail to renew compliance contracts hence putting you in trouble with the authorities.
Fortunately, such incidences will be avoided if you implement AI and machine learning. For instance, machine learning technologies can quickly scan through past compliance contracts and derive essential data such as renewal and signature dates. Based on the patterns derived, they’ll then alert you of the deadline before it expires. As a result, you’ll never miss a compliance deadline again!
A majority of businesses are already experimenting with AI and machine learning. In a few years, almost all procurement and supply chain businesses you know will have joined this bandwagon. In other words, the only option will be to go AI and ML or go home.
To sum it up, the future of procurement and the supply chain as a whole lies in AI and machine learning technologies. Given the above perks, this fact is no surprise. So don’t be left out! Get in touch with us and let us help you join the AI and ML movement today!