Home » The role of AI Technology in Procurement Management

The role of AI Technology in Procurement Management

AI technology is growing more and more as time goes by. The more interesting thing is the fact that it is getting better and better. AI is learning and so are we when it comes to programming its systems in business.

Modern businesses are developing and not just because it is a hit and rage but because we need it to develop as much as possible so they can be as productive as possible. Running a business means that you need to think about each aspect of it from production to sales, but the job doesn’t stay there, you need to go even deeper.

To some procurement sector of a business doesn’t sound that intriguing or important but you better believe it is. Many businesses have crumbled on “little things” and this just goes to show that in a successful business everything counts.

What is procurement anyway?! Procurement is vital to every business and it involves every possible activity in obtaining whatever you need for the company to support your needs in daily operation. Sometimes procurement means you have to deal with sourcing, certain terms that need negotiations, purchase of goods and services, and inspecting them as they come in. So, as you can see it is a big operation in a business as a whole and it takes several workers or more, depending on the size of the business and what you do, for it to be successful. This is why AI is important here and this is where Softengi can help you.

Source: salestechstar.com

Now, above we already started discussing the role of AI in procurement but now we will try to dissect it a bit more. As you could deduce from the intro the procurement jobs were done manually and it is a rather menial task. You needed manpower for this and you needed them to be on top of their game every time and every day. When it comes to people and their abilities one thing is for sure – we make mistakes. Being a human means you will make mistakes and you will make bad moves. This is exactly where solutions like AI come in handy and where it helps out significantly.

AI is an algorithm or a program that is made to do the job of a human but with more precision and more efficiency which is needed in today’s markets. You can program your AI to do the things you need it like contracts and their management, sourcing as well as analysis of your spending habits, electronic invoice processing and have it deduced information and display them in real-time at any moment so you can effectively take actions to correct the course of your business if needed.

From this, you can see one of the most important assets in modern business and it is DATA. Data is something we are all on the hunt for to boost our business to new heights. Gathering valuable information is the bedrock of every business and with enough of it you can position yourself in the market, you can target specific audiences, you can thrive while everyone else is still wondering what is happening.

Source: blogs.idc.com

When it comes to procurement and AI the data that will be available with the AI will give you a precise picture of your spending, your relationships, and relations to your vendors as well as an insight into supplier management. Data will give you certainty and it will give you precision and cutbacks when needed and allow you to avoid overspending and money-wasting in times like these. Difficult times call for drastic improvements and changes. AI in procurement was never more needed than these past years. Companies that were still on old-style procurement methods suffered and are suffering. Some aren’t getting enough of what they need for daily operations while others have more than they need creating a surplus that is a waste of money.

We had some surveys and some tests being done in 201 and back that around 19% of businesses reported having an AI piloting their procurement sector with great savings and great results. Savings are not everything, efficiency rose as well and with those businesses started blooming. In 2019, just a year later we saw a huge increase of business transferring to some forms of AI procurement systems and that increase amounted to more than 25%. So, as you can see it is a trend that is on the rise and we believe that the researches done in 2022 and 2022 will show an even bigger increase even though the whole business industry is fighting with this global pandemic as hard as we as individuals are.

Source: networkworld.com

When it comes to things like this where you need software to run your entire department you need it to be as smooth and as operational as possible. This will be ensured right after you manage to understand it and you need to know what it is tackling and why. Every AI will first start with an understanding of your data to enhance your strategic sourcing. The next step is to do the analytics of spending, manage contracts, automate all manual tasks and do the inventory management. After all that every AI procurement system will try to deal with the management of supplier risk, reduce all interruptions that can be caused by one-off purchases, do the guides for buying and the last step is to detect errors in the process and apply corrective steps.

As you could see AI is nothing to be afraid and long past are those days where we all were afraid that it will take our jobs, it will replace manual labor, and not lead to anything good. The time has proven that there is enough work for everyone and that AI is and should be an integral part of every successful business. The times and needs call for it and all of you must answer that call. You are all aware of this but it has to be said anyways, AI in procurement is still in its early stages and there are plenty of unknowns and uncertainties but as far as we can see it is developing positively and the results it has provided so far to the community is extraordinary.

Mariah Robinson