Speed to value can be elusive but it is of vital importance for any organisation.
Many procurement organisations realise the increasing pressure to maximise savings and accelerate delivery timelines. But they also want to mitigate supplier risks. Altogether, legacy manual processes and age-old frameworks compel procurement leaders to rethink their strategy.
Subhro Sen, from procure-to-pay solutions provider Zycus, discusses five core areas where digital procurement transformation augmented with artificial intelligence (AI), machine learning (ML) and robotic process automation (RPA) are driving value for organisations who are seeking fast-paced growth while trying to keep ahead of the competition.
1. Simplified spend management and analysis
The challenge with traditional spend analytics is that it does not allow you to do something beyond the limited functionality of spreadsheets. New analytics technologies have the potential to reach conclusions that are beyond the scope of traditional spreadsheets.
The data from sources such as spend, contracts, suppliers, invoices, etc. are disparate in their format and presentation. They are not easily joined or analysed together, individually or collectively. But these sets of data are a major source of intelligence that can help you to gain unique insights.
The best procurement automation solutions use AI and ML algorithms. Such technology utilises data from disparate sources to compile crucial insights. AI/ML algorithms can help users to gain insights to solve pressing problems and, along with it, get suggestive actions. AI, in self-learning environments, is capable of understanding complex cause-and-effect relationships. It can perform what-if analyses at the click of a button. This results in better spend management and opens new avenues for procurement savings.
2. Procurement transformation: from tactical to strategic
Three of the four procurement executives from the Zycus Pulse of Procurement 2019 study claim that procurement is critical to enterprise strategy and success.
While digital solutions make procurement processes far more efficient and effective than in the past, it is procurement that creates strategic opportunities. Within the idea of cognitive procurement, professionals are at the forefront of driving strategic relationships. They can innovate across entire value chains. Cognitive procurement offers capabilities that can achieve real-time insights into your market and competitors to help you plan ahead of time.
In addition to self-learning, cognitive procurement uses demand-sensing combs to filter insights from massive volumes of structured or unstructured data. Procurement can thus exploit a high degree of segmented and automated tail spend to facilitate strategic decisions.
By helping accelerate innovation across an organisation, procurement executives play a vital role in shaping a company’s broader digital vision.
3. Automated and agile operations
AI can offer companies automation to boost procurement efficiency and performance. AI, with its inherent capabilities, can help reduce redundant and time-consuming tasks to free up valuable time for other crucial engagements. Also, the administrative burden created by huge volumes of unstructured data is now easily managed by procurement teams. AI can delegate day-to-day tasks, such as checking invoices against contracts, record-keeping and transcription to a digital assistant.
While the possibilities are endless with AI in procurement, here are two important features to create more agility and efficiency in your function:
– With AI, you can bring all purchases under direct control by facilitating the creation of requisitions from free-form data (like that contained in an email) and not just data entered into a requisition entry screen.
– You can trust AI to review, generate and monitor supplier contracts, apart from merely automating labour-intensive tasks.
4. Breaking silos and frictionless processes
Certainly, true digitisation flows end-to-end across different functions. It seamlessly brings together all stakeholders.
Procurement automation helps teams to easily share data and collaborate with cross-functional teams using centralised shared data. This accelerates cycle times and supplier performance, resulting in greater value for the business.
5. Intelligent and smarter procurement
The building blocks to smarter procurement are richer data sets, optimisation engines and tools to control demand and enforce compliance.
For a long time, procurement has focused on data collection. Every day, the function generates information about areas such as expenditure and suppliers, and only through rigorous analysis of this data can processes improve. The recent advancements in AI-enabled procurement systems have augmented procurement organisations with the power to spot worrying trends and alert teams automatically, removing the need for staff to spend time analysing data.
This way, AI-backed procurement solutions enable procurement organisations to execute advanced category management, better sourcing strategies and improved forecasting.
The procurement function is standing at an exciting crossroads. It can either proactively adopt the change through digital solutions or it can wait on the side-lines and react to the need of the hour. Leaping digital procurement transformation will not only reap significant gains in efficiency, but will also help to enhance the role of procurement in organisations.
At the same time, modern procurement, using cognitive technologies such as AI and ML, will make day-to-day tasks more efficient and seamless, allowing stakeholders more time to spend on performing strategic activities.
Have you experienced AI in procurement yet? What do you think will be the most significant value of AI-driven procurement automation for your organisation?