Why AI-Powered Technology is Vital for High-Performing Procurement Organizations

Isn’t it surprising that some businesses have found ways to navigate through prevailing uncertainty while others are still struggling to stay afloat?

The question is: What are businesses in the former category doing differently?

Here’s the answer.

They are building agile procurement and supply chain operations to mitigate risks and ensure supply continuity.

This also means their procurement organizations are now expected to do a lot more and, perhaps more importantly, with lesser resources.

In addition to monitoring costs and negotiating with suppliers, procurement is now expected to anticipate and mitigate risks, identify savings opportunities as well as contribute to ESG and sustainability initiatives.

How can procurement organizations deliver on these additional responsibilities? Can they act as strategic partners and add more value to the business?

High-Performance Procurement Needs Advanced Technology

To begin with, procurement organizations must do away with manual tasks and accelerate digital transformation by leveraging AI-powered procurement technology. Not only can AI-powered technology automate routine operations, but it can also analyze complex procurement data and present actionable insights to optimize processes.

Here are some ways procurement organizations can become high performing by incorporating advanced technology and tools across different stages in the source-to-pay cycle.

Unified Sourcing and Contract Management:

A high-performing procurement organization can leverage technology to quickly identify the most appropriate suppliers based on multiple criteria such as pricing, quality and sustainability. It can use technology to optimize the bidding process, analyze supplier responses and even choose the best combination of suppliers for optimal pricing and supply. It can conduct all sourcing activity through a single unified platform. Further, it can author, aggregate and collaborate on contracts in a central repository that can track and manage performance, savings and compliance.

Improved Supplier Relationship Management and Compliance:

High-performing procurement organizations can work seamlessly with suppliers right from bidding and onboarding to product delivery and performance management. They can identify and implement strategies to enhance supplier performance and compliance. They can also engage in risk mapping on an ongoing basis and take proactive steps to mitigate potential risks. For example, they can identify alternative suppliers located in different regions for critical supplies.

More Spend Under Management:

High-performing procurement organizations can bring more spend under management , access real-time spend data and conduct opportunity analysis to identify savings opportunities. They can identify uncontrolled, unmanaged spend based on reports and business intelligence drawn from all procurement activity across the enterprise. They can also run real-time reports on different spend categories to separate purchase order from non-purchase order spend.

Intelligent Inventory Management:

High-performing procurement organizations use AI-powered technology to maintain the right amount of inventory, avoiding under- or over-stocking or blocking working capital. By leveraging the technology’s predictive capabilities, they can sense changes in consumer demand and proactively take steps to adjust inventory levels.

Seamless Invoice Payments:

High-performing procurement organizations can reduce friction between suppliers and internal teams by seamlessly aligning invoices with purchase orders and goods receipts. They can use intelligent workflows to digitally route invoices for review and approval, thereby reducing the need for manual intervention and ensuring suppliers are paid on time.

Fulfilling the Need for Continuous Procurement Improvement

The key objective of leveraging technology is to transform procurement from a back-office function to a strategic business unit. To succeed in this endeavor, procurement organizations need to invest in continuous learning and improvement.

They can use the insights generated by technology to identify areas of improvement and optimize processes across the source-to-pay cycle. They can also strengthen supplier relationships and contribute in more strategic ways by aligning functional goals with larger business goals.

By harnessing the power of AI-based technology, procurement organizations can accelerate digital transformation and set the stage for enterprise-wide transformation.

Learn how GEP’s AI-powered procurement software can help your procurement business become truly high-performing.