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July 4, 2023
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Artificial intelligence has tremendous potential, and its benefits are permeating into more industries every single day.
In fact, companies have embraced AI in their operations as it helps them gain a competitive edge.
Today, artificial intelligence in procurement is being adopted, as technology simplifies complex and monotonous processes.
However, as this is a radical change, executing it can be quite tough, and can take time.
Therefore, it is critical that procurement leaders should be aware of both the opportunities and the challenges associated with artificial intelligence.
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So, what is the need for AI for procurement?
Procurement managers are searching for novel ideas to leverage the potential of procurement to the fullest, and unleash its full value.
In the digital world that we live in, the full and real value of procurement rests in becoming a tactical unit of the organization, contributing to its business growth.
By giving AI its due importance, and using it to guide demand trend forecasts, optimize bids for projected savings, calculating vendor scores depending on contract terms, tracking budget performance, etc.
AI in procurement can help teams in automating cumbersome tasks and processes, increasing productivity and cost-effectiveness.
AI can help you save time and money, be more efficient, and give you an edge over the competition.
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The potential of artificial intelligence in procurement and supply chain is tremendous, and there are limitless opportunities for modern industry.
However, they can be too complex or arduous to identify directly.
And yet, this is one technology that is capable of impacting your bottom line positively if procurement teams understand the specific opportunities it provides.
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Technology has been at the forefront in helping procurement teams to simplify tasks and handle cumbersome tasks.
AI is another technology that can quicken procurement operations.
It has the capacity to study, recognize, and forecast the requirements of procurement much before expert professionals can, and with the same, or even greater level of accuracy.
Furthermore, AI can give you data that is clean and organized, which enables employees to make informed decisions in the future.
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AI can be helpful in making products available quickly; this is achieved due to the relationship AI has with sophisticated manufacturing processes.
AI solutions are capable of generating digital product designs and routing them to systems like 3D printers and injection molders to create the products automatically and make them ready to be delivered.
Manufacturers often have complex designs and varying order sizes; 3D printers and injection molders are more than capable of handling such orders efficiently, and vendors can respond to such requests faster because of this technology.
This affords tremendous flexibility in procurement; thanks to product sourcing backed by technology like artificial intelligence, procurement leaders need not worry a great deal about potential backend issues with supply.
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It is not just the procurement teams that benefit from AI in procurement.
The customers also benefit. Using automated smart assistants, also called virtual procurement assistants, companies can offer tech support throughout the ordering process.
Customers can get responses to their queries. When their concerns are promptly and precisely resolved, it can increase the customer satisfaction meter, and also save employees time, freeing them from being tied up with customer queries.
Procurement staff can rather, concentrate on more value-adding internal tasks of procurement.
Customers will feel valued as they are attended to throughout the ordering and invoicing procedures.
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As in everything else, there are certain downsides or challenges associated with the use of artificial intelligence in procurement.
While they are certainly not insurmountable, it is imperative that you know about them before you jump onto the bandwagon.
Machines taking over human jobs, and consequently, lives, has been a sore point for human beings – especially, industrial workers, as they are actually facing this problem now.
It is understandable that modern workers will distrust the management when they try to introduce new technology and automation, as they will be worried about their future in the company.
They may feel they no longer have any control, and fear for their future.
It is up to the senior managers and owners of businesses to talk to their employees and reassure them about their job security.
They should convince the employees about the benefits of implementing artificial intelligence and provide ways for employees to feel valued in the organization.
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Organizations may be slow in adopting AI in procurement as the technology is pretty complicated.
While it can help procurement by delivering clean, well-arranged data, the business still requires human experts who can analyze that data, and take necessary actions based on it.
Industry experts recommend that companies engage in re-tooled hiring; that is, a new segment of expert professionals who are specifically hired to work with AI systems.
We have seen both the opportunities and challenges that AI has for procurement.
But how exactly does AI benefit the process?
Would you be amazed if we told you that it can help procurement and sourcing teams at all the touchpoints in the procurement process.
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Let’s take a look at what all AI can power:
Artificial intelligence can help you see what you need to source, and where to source it from.
The AI system can factor in all your requirements with regard to office supplies, and their specifications if any, and recommend the best contract or vendor to manage and deal with.
This can help you to reduce the time you spend on sourcing products, and also get the best deal you could possibly get.
A robust ERP like Tranquil with inbuilt AI capabilities studies your patterns and analyzes past behavior with regard to sourcing, and offer smart recommendations regarding vendors for the future.
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Bidding and e-sourcing of items are another factor that artificial intelligence can help you with.
The AI system can make bids on behalf of vendors, release RFPs or RFIs, and perform real-time tracking of project performance.
The language processing ability of AI enables it to read the necessary content and dynamically generate proposals depending on that data.
It can also offer insights into what can be improved, and how to avoid potential mistakes commonly made by procurement teams.
This helps procurement leaders to decrease the time they spend on detecting and remedying mistakes and saves efforts of all teams.
Tranquil ERP can empower your procurement team through the analysis of vendor performance data like credit scores, assessments, audits, and delivery time.
This can be leveraged to assist in future decision-making with regard to specific vendors.
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Machine learning and artificial intelligence are capable of handling huge volumes of data in a matter of seconds or minutes.
This property is valuable and can be extremely helpful in predictive analysis, which can empower procurement teams to make smart decisions.
This process can be automated and streamlined by artificial intelligence and can help in tracking the spending by your organization, for pinpointing abnormalities.
AI helps to evaluate spending in real-time and to decrease the time your organization spends in the procure to pay process.
At Tranquil, we can help an organization identify opportunities for savings, offer more visibility, and facilitate smart decision-making.
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Artificial intelligence systems track, review, and obtain contract insights to be used now and in the future.
This can greatly help in mitigating risk and maximizing savings opportunities for the organization.
You can concentrate on guaranteeing that your product requirements are fulfilled, and AI will do the task of identifying vendor risk.
This leads to improved compliance and offers more insight into vendor performance, and likely policies of risk mitigation.
It can also help to detect issues with vendors at an earlier stage.
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Though it sounds simple, managing catalogs is anything but often, one can find several versions of the same product being mentioned and managed at the same time, in different catalogs, and with various suppliers.
All these multiple differences can be easily handled by artificial intelligence by identifying duplicates, recognizing opportunities for new products, linking items with the right catalogs, and more.
With AI, you can have optimal catalog management, and decrease expenses with regard to the sourcing of relevant products.
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When you get a vendor’s invoice through email, the norm is to download it on your computer.
You will then proceed to obtain the relevant information in the invoice.
This whole process can be automated by artificial intelligence.
All you need to do is enable automating the invoice matching feature. It functions with the intelligent reading and understanding of the invoices and will extract relevant details like the invoice number, supplier details, the date the invoice is due, product details, cost per unit, the total amount due, and more.
Vital data points are analyzed, and invoices are automatically classified to refine the process further.
This helps in making invoice submission even more accurate, and consequently, timely payments.
You can also get help with capturing discounts for early payments, have greater visibility, and get significant opportunities to save costs.
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Conclusion
Undoubtedly, artificial intelligence has immense potential to empower procurement teams and help them get a competitive edge when they adopt this technology early.
Such organizations can certainly achieve higher returns on their investment.
It can be said with some certainty that AI adoption stands to increase across other departments in businesses, and won’t be limited to procurement alone.
Already, companies are adopting AI for functions like classification and analysis of spends, contract management, HR, and others.
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Procurement management is a complex activity, which when done right, can offer innumerable benefits to the organization. Tranquil ERP leverages the power of AI to help you implement smart procurement practices. Schedule a demo with us to understand in detail how our procurement management software can help your business.
