By now we all understand the potential artificial intelligence holds for making our working lives easier and more straightforward. But how many of us understand the best way to use it effectively, to make the most of what it can do?
I’ve said before how artificial intelligence is not a magic wand, but rather a tool, and therefore only as effective as those who use it. Part of the beauty of artificial intelligence tools is they are inherently user-friendly, but it’s still worth taking the time to learn how to use AI in procurement.
Being able to interpret and use data effectively is a skill which only increases with the use of AI. AI might bridge some of the technical gap, allowing you to process data more effectively, however a person still needs to interpret the data, connect the dots, and draw conclusions based on that data.
Digital Procurement
Digital procurement is the means of using technology as a tool to bolster your existing procurement processes. This can mean enacting workflows mapped to process, which help to keep relevant stakeholders on-task, informed, and keeps projects overall on time. Artificial Intelligence can absolutely play a part in this. So, when we ask the question ‘how to use AI in procurement?’ an aspect of that is ensuring that your existing tech stack can support AI-enhanced processes.
Therefore, part of how to use AI in procurement is learning more about the different digital tools available to you – and not necessarily new ones. I’m sure ChatGPT is front of mind as the latest shiny development, however you may find that you already have some digital help available to you. I believe it’s a case of walking before you run – before taking the leap into AI enhancement, make sure that you understand how your existing digital infrastructure works. As technology continues to develop, adopting a learning mindset will help you feel less out of your depth as the standard continues to climb.
Supplier Relationship Management
A key aspect of procurement, regardless of whether you have the most advanced tech available to man or if it’s just you and an excel spreadsheet, is supplier relationships. This encapsulates everything from performance management to complaints. As part of learning how to use AI in procurement, learning to use AI to help nurture and support effective supplier relationships is absolutely essential.
To make supplier relationship-related activities really effective, you can use digital scorecards to track the KPIs and SLAs which matter to your organisation. This means you have a dated record of performance to monitor and use in supplier negotiations.
Supplier contract management is an important aspect of supplier relationship management, too. And an interesting thing which is possible using AI enhanced tools is to have artificial intelligence create a generated summary of specific supplier contracts. If you’re interested in exploring a particular aspect of the contract, or if you’re concerned by risk, you can further tailor AI prompts to suit your needs.
What’s important here, however, is digitising process to enable AI tools to properly appraise and work effectively.
Cost Optimisation
How to use AI in procurement for cost management? This is an aspect of procurement which can often be seen as savings-led, cutting unnecessary cost in order to meet savings targets as set by the organisation.
It is important to note, however, that while cutting costs as a part of optimisation is valid, true optimisation considers cost more strategically. You may find that the right supplier for your organisation long-term is not necessarily the cheapest.
Using artificial intelligence in procurement to aggregate or compile spend data, and other associated supplier data, into easily appraisable mediums can help to make strategic decision-making much easier. It will also positively affect general housekeeping, weeding out duplicate supplier records, inactive suppliers, and more.
Organisational Alignment
Working in operational siloes is not only inefficient, but in the modern day, it’s an active hindrance to organisations. When thinking about how to use artificial intelligence in procurement, using it to align teams within an organisation towards an overarching goal is key to achieving targets such as savings targets, quality targets, or ESG-related targets.
Artificial intelligence-enhanced systems can use their greater functionality to automatically keep relevant teams in the same loop and provide accurate data to teams who need it in order to progress projects. This helps to frame and centre procurement as a core team of any organisation, rather than a historic back-office function – driving the conversations which can help make procurement’s lives easier.
Therefore, in terms of effective AI use in procurement, it’s all about using it with purpose. AI is fantastic at organising data – the interpretation still requires a human touch. Regardless of the kind of data you are using AI to digest, arrange, and identify, the key component in all of these actions is you.