In today’s dynamic procurement world, artificial intelligence’s potential is more than theoretical — it’s a game-changer with tangible benefits. Procurement professionals need not fear AI; they should embrace it as a strategic ally.
Procurement’s workload is increasing while staffing levels either remain flat or minimally increase. In addressing the headcount gap, AI is more than a tool. It’s a force multiplier for procurement professionals.
Every organization has unique pain points where AI can deliver significant value. Those involved in the merging of companies with different data systems know that classifying the combined spend can take months. The general ledger was likely reviewed item by item by multiple team members, a time-consuming and labor-intensive activity. With AI, the task can be completed in a much shorter time, using fewer resources.
Data analysis and report generation are critical tasks in procurement. To analyze data for spend analysis, supplier selection, requests for proposals, contract management, inventory management, opportunity analysis, negotiation preparation, risk analysis and budget planning, companies often rely on multiple spreadsheets, spending days extracting, categorizing and analyzing in order to produce reports.
AI tools like Microsoft Power BI, Adobe AI Assistant and Gemini for Google Workspace are free or low-cost options that can increase effectiveness and productivity by analyzing internal documents and data. Other helpful AI tools such as ChatGPT, Microsoft CoPilot and Grammarly are adept at quickly scouring the internet for information based on “plain English” questions or prompts. AI-produced summaries can be highly useful for assessing market conditions, identifying potential suppliers and generating research to make informed strategic decisions. As with any form of internet research, however, users should take care to review the sources that AI is tapping, and verify their credibility.
Retail supply chains often struggle with inventory management. By implementing AI-powered demand forecasting models, they can predict consumer trends, minimize stockouts and optimize store inventories. Warehouse drones can run inventories in minutes using bar codes and optical scanners. Many organizations are still using manual counting and cycle counting to accomplish these tasks, which requires intense effort, lots of labor and inaccurate results.
A logistics company looking to enhance its transportation planning processes can draw on AI-driven route optimization software, reducing fuel costs and carbon emissions with improved delivery times. Automatic compliance management and invoice data extraction are two additional tools that speed up tasks and reduce labor, with greater accuracy than humans can achieve.
Data integrity is paramount for AI success. Consider the example of a financial institution employing AI for fraud detection. It was able to mitigate fraudulent activities by implementing data governance practices and relying on AI algorithms to analyze transactional data in real time.
Continuous learning is essential in the ever-evolving landscape of AI. A technology company that invests in employee training programs focused on AI and machine learning can upskill its workforce, foster a culture of innovation, improve recruiting and retention, and even make learning fun.
The true power of AI emerges when humans and machines collaborate seamlessly. AI algorithms streamline contract-review processes and flag potential risks in contract-management software. Procurement professionals, meanwhile, provide strategic insights and negotiation expertise.
The use of contract data extraction and lifecycle management has improved the ability of procurement to manage contracts and reduce risk.
One financial management and automotive company with contracts among many different departments had no central controls. This led to the companies being exposed to risks they didn’t know they had. AI can eliminate this risk and precisely calculate exposure, renewals, language and recommendations.
By embracing AI as a strategic enabler and implementing it precisely, organizations can drive efficiency, mitigate risk and tap new growth opportunities. With the right mindset and tools, procurement professionals can navigate the AI-powered landscape and achieve remarkable results.
Bill Michels is co-founder and chief revenue officer of LavenirAI.