Bid Ops hosts virtual event with insight into the role of artificial intelligence in procurement sourcing

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Among the many trends happening in procurement today, artificial intelligence and machine learning are two of the biggest topics. A recent industry conference, Bid Ops’ Optimal AI event, brought professionals together to discuss the often confusing, but definitely complementary, role that AI can play in a procurement process.

Bid Ops combines sourcing and artificial intelligence under one umbrella solution. By inviting hundreds of thought leaders, professionals and executives to attend the daylong virtual conference, event attendees learned about AI, sourcing and how digital transformation is taking hold in procurement today.

“It’s an interesting moment for AI in procurement. On the one hand, there’s a lot of buzzword bingo and market noise. On the other hand, there’s strong data showing that AI is being rapidly adopted across the procurement industry,” Edmund Zagorin, Founder and CEO of Bid Ops, said in an email to Spend Matters. “So it’s confusing for a lot of procurement professionals — is AI a meaningless buzzword or is it critical for businesses to ‘do more with less’ and manage volatility and change?

“Because we knew a lot of procurement professionals who have implemented AI, we thought it would be helpful to share specific use cases and success stories. Business cases and testimonials are a great way to cut through the noise and find what’s working, how our colleagues are using the technology in their everyday workflows.”

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The day’s keynote address began with Zagorin introducing the topic of AI in procurement. CPO surveys are increasingly showing proof that procurement is transforming to become a business partner to organizations, and this is where Bid Ops sees AI stepping in. AI has the answer to specific questions organizations may have — and answers come as easy as ordering a shirt off Amazon. Zagorin said that AI is for everyone. It’s a powerful toolset to enable transformation, which prioritizes strategic over tactical things.

Joanna Martinez, a keynote speaker and author, presented on “AI demystified.” Her analysis and explanation kicked off the lens of AI and machine learning that shaped the entire day’s events. Martinez pointed out that when thinking about technology and how AI differs, an easy analysis is to think about Microsoft, the human and an AI product.

Microsoft is a tool that performs the same day in and day out. A human uses the tool and learns to adapt to it over time. Every day, the human learns a little bit more about Microsoft than it did before. But, where AI differs from traditional technology tools is its ability to learn and adapt to new information like a human. Martinez said AI is an enabler for transformation and better information.

“There’s a lot of fear that comes with artificial intelligence and all kinds of digitalization, that it’s all about doing away with jobs,” Martinez said. “This is not what AI is about. AI is about helping you make better decisions, giving you more robust information. Helping your company decide what products to make or what suppliers to choose in a whole different way than you’ve done before. In a way, it opens up that toolbox and gives you a bigger toolkit than you’ve had before.”

One area that AI can especially benefit procurement organizations is in sourcing. In another event from the day, Dr. Elouise Epstein, Partner at Kearney, said the most value in procurement processes comes from sourcing events. Using intelligent technologies can combine different metrics to produce real analysis and recommendations.

“So no matter which category that you’re sourcing, whether it's IT or something more nuanced, or operational, what I'm looking for in a tool is something to bring that intelligence,” Epstein said. “To drive me to the outcome I want. … That’s the secret sauce of sourcing, how are they bringing that competitive landscape together?”

The Bid Ops conference provided case studies and examples of how to use AI and other sourcing tools for procurement individuals to drive value to their organizations. While it might seem daunting, AI can actually be a seamless integration to help an organization derive value from a procurement process. All it takes is one step.

“The best way to think about AI is to define an analysis task, and then produce a self-learning model that answers this question at scale and improves over time,” Zagorin told Spend Matters. “Our AI is separate from our web application — Bid Ops is an RFX and SRM solution built for direct spend and manufacturing — but it helps users of our application answer important questions.

“The first question Bid Ops AI was built to answer at scale was: ‘What’s the most likely pricing outcome of a complex sourcing event based on best value (including quality, lead time, reputation) rather than lowest price?’ Since then, we have built and scaled AI models that perform other quantitative analysis tasks, all geared to boost productivity and shorten cycle time for strategic sourcing and tactical buying.

“If you want to begin your AI journey, make a list of questions that you spend time every day finding answers to manually — comparing quotes, for example, or checking a PO for approvals. This list of questions can become a wish list for capabilities of emerging technologies, so that as the market evolves, you can spot the providers who most match your needs.”

Bid Ops published an on-demand version of the entire day’s events. To learn more about AI and sourcing in procurement, visit the Optimal AI event page.

How do you find the right procurement technology and vendor for your company? Spend Matters’ new 5-step “Procurement Technology Buyer’s Guide” can help — with how-to documents, checklist templates and other tips.

 

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