Are Procurement Teams Ready for AI?
Artificial intelligence (AI) offers exciting potential to improve procurement functions, from helping to recommend products to improving fraud detection. However, many companies are still in the early stages of incorporating AI into procurement. Only 2% of procurement leaders have fully deployed AI/cognitive technologies, finds a Deloitte survey.At the same time, AI appears likely to be more prevalent in procurement in the coming years. In the same Deloitte survey, approximately another 44% say they are either considering adding AI or are already piloting or scaling this technology.
Similarly, a survey from consultancy Roland Berger found that 67% of CPOs say AI is a Top 3 priority for them over the next decade. While many CPOs see the value of AI, many procurement teams still need to improve their data, talent and overall technology capabilities in order to get the most out of AI.
Start With a Strong Data Foundation
A strong data foundation can prepare procurement teams to benefit more from AI, as data is the lifeblood of AI. The more quality data that an AI system can analyze, the more informed decisions it can make. For example, in order for an AI system to make purchasing recommendations, it needs data such as on past purchases and current budgets in order to recommend products that meet a company’s needs.
In some cases, AI platforms also facilitate data collection and analysis on their own, such as within some e-procurement platforms where purchasing data is automatically captured and used to find the best pricing, for example. Still, organizations should not assume that all platforms collect the right data, and instead, procurement teams should first define what data they want to collect, such information on employee purchases, department budgets, supplier inventory, supplier fulfillment history, compliance requirements and more.
From there, procurement teams can decide what platforms make sense for their needs, whether that means only utilizing an e-procurement platform that incorporates AI capabilities or utilizing a procurement platform that captures end-to-end spend data that can then be fed into another system, such as a data analytics platform that uses AI to identify supply chain risk.
Add AI Talent
In order to get the most out of AI, procurement teams should also think about whether they have the right skills in-house to work alongside AI systems. According to a global IBM study, 63% of businesses say they lack the people skills to benefit from the full potential of AI.
To remedy this issue, many companies are taking a combined approach of re-training staff and hiring new ones with desired skills in areas ranging from programming to quantitative analysis. Related to having a clear data strategy to identify what AI capabilities they need, procurement teams should try to clearly define their strategy for using AI, so they can efficiently add support as needed.
For example, some procurement teams might prioritize using AI to identify cost savings opportunities via supplier negotiations, whereas others might focus on using AI to save time in areas such as invoice management. Tackling these priorities may require different skill sets, particularly if they require the use of separate platforms, so procurement teams should train or hire staff accordingly.
The Future Is Now
Many procurement teams are still in the early stages of incorporating AI to improve the overall value of procurement departments, but it appears likely that this technology will become more prominent and powerful in the coming years. As such, procurement teams should start to focus on their data and talent strategies now so that they’re prepared to take advantage of AI, rather than falling behind competitors who’ve taken action already.
To learn more about how your procurement team can benefit from using AI to turn disorganized purchasing activity into business insights, schedule a demo with GoProcure today. You can also read more about 10 ways you can add value to your procurement department.