The Future of AI in Procurement – It All Rests on Good Data

You may have read our three-part introduction to HICX Solutions, on the solution provider’s rapidly growing presence in the supplier information management and supplier master data space. The firm has now sponsored a "Raconteur" report looking at The AI Revolution In Procurement – its premise for doing so being that accurate, reliable, readily available and retrievable master data is the foundation for the control, transparency and efficiency that goes into making the path of digital transformation simpler.

So this report – to which our own Peter Smith contributed, as did Costas Xyloyiannis, HICX founder and the subject of our interview  – takes the stance that AI is coming to procurement (some might say it’s already here) and outlines the opportunities it brings, along with the foundations required to make it work.

It identifies five ways that AI will turbocharge procurement – we often read about the influence that AI will probably have on our procurement roles and processes, but rarely do we see laid out plainly exactly which areas will be affected and how. “From securing a better deal to early warnings on supplier risk, this is where change is coming,” it announces, and then dives into P2P, sourcing, contract management, risk management and innovation and how they will be affected.

There are interviews with a number of industry experts who identify which steps in the procurement process are most likely to benefit from the AI revolution. Oliver Pickup, award-winning business and tech journalist, believes that one of the main uses for artificial intelligence in procurement is to meld internal and external data to provide enhanced supplier risk management and drive informed decision making. Through identifying trend anomalies, it can bring the likes of bid-rigging to the fore, he says.

Nicholas Walden, a senior director at The Hackett Group and a business improvement leader for digital transformation, suggests two ways in which AI can be used for smarter sourcing: increased speed to execute low-to-medium value and risk market opportunities, and rapidly collecting, presenting  and analysing commodity, market, and supply intelligence to inform market strategies.

Marcell Vollmer, chief digital officer at procurement software provider SAP Ariba, believes digitisation will also open the door to totally new levels of supply-chain transparency.

The report then goes on to examine how AI’s success will be dependent on the skills of the people left to wield it, after the low-level tasks become automated.

“The AI future means that low-value administrative roles will be an unnecessary expense and procurement professionals will have greater productivity,” says Claus Jepsen, chief architect at Unit4, of business digital assistant fame Wanda. “Like other professions, procurement professionals need to realise this now and begin to forge their creative and people skills,” he warns. “Technology-wise, virtual digital assistants mean the days of learning how to navigate procurement screens and systems are gone, Procurement professionals can simply interact with digital assistants using natural language.”

Depending on the role, and sector, AI is seen to have varying benefits - Kasia Borowska, managing director of Brainpool, a worldwide network of AI and machine learning experts, believes that what companies really need is just a good data engineer and a data analyst to extract insights from the data that is available. But Dr Hamilton, who specialises in AI and machine learning at Liverpool University’s computer science department, believes that while AI can crunch thousands of data points to help people make quicker decisions, it can’t replace what the person does with it.

The report rounds off with some insight from Giles Breault, of The Beyond Group. He puts into perspective a ‘clear sighted route to digital transformation’ and navigates us through six steps to help us prepare.

Overall the report highlights the important role of data in the new world of AI – “for too long data has been the poor relation of the corporate world. Data input has been an administrative, back-office function – necessary, yes, but in no way part of the strategic agenda,” but that is changing, is the message. “It is precisely this attitude that is hampering the ability of many companies to reap the rewards of AI.” Information needs to be handled in a systematic way, it concludes, if it is to be a critical part of a company’s future.

Read the full report here.

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