We are pleased to welcome this guest post on our Hot Topic for April (Procurement Technology) from Andrew Nichols, Tungsten Analytics lead and Head of Procurement at Tungsten Network, global eInvoicing and analytics firm.
The term Artificial Intelligence (AI) often conjures up images of a futuristic world where robots live amongst humans. What many of us don’t realise is that highly sophisticated and intelligent computing engines are already being used today, for example in video games, online customer service support and most recently driverless cars.
AI is a fascinating subject and it’s so interesting to see how it’s being used: by the military, that use satellite photo interpretation capabilities to identify potential targets and threats; in communications, where speech recognition systems are able to recognise words and sentences; we’ve even personified AI by giving human names to software like Windows’ Cortana or Apple’s Siri, which (or ‘who’, depending on how you see it) can complete tasks on command.
AI is already part of our daily lives and in the not so distant future it will play a major role in the international supply chain, supporting businesses to solve a number of very contemporary problems.
In procurement for example, AI could soon help tackle some of the big challenges facing the industry, like identifying new markets, managing supply chain risks, tracking exchange rate volatility and finding the best value without compromising on quality.
Making the most of big data is another area on which procurement leaders are focusing. An example of how this can be achieved is spend analytics software, which has been helping procurement departments identify where cost savings can be made.
We’re now at a turning point where AI is coming of age and reaching new levels of sophistication and efficiency. With the rise of digital business, where the amount and accuracy of data available is growing, there is a huge opportunity to leverage this data in order to cut spending waste in business.
A pertinent example hit the headlines last year, when an analysis of NHS spending identified that while some trusts paid less than £4 for a box of needles, others paid £31.68. Clearly, if this had been spotted sooner, huge sums could have been saved. When staff are based across multiple locations and in different departments it’s easy for duplications to occur. This means that teams can miss crucial opportunities to negotiate on consistent pricing and economies of scale, which could add up to hundreds of thousands of pounds.
At Tungsten Network, we see spend analytics as a crucial area for our customers to reduce spend and improve efficiencies in their procurement strategy. In the near future, we see a huge opportunity for AI to continue playing a key role in cutting costs and reducing over-payment. We have partnered with Goldsmiths University in London to launch the Tungsten Centre for Intelligent Data Analytics (TCIDA) where a dedicated team of academics are charged with researching and developing Tungsten Analytics to reach the next level and crucially, use state-of-the-art artificial intelligence to do it.
We can expect the technology to evolve to achieve greater levels of trend analysis, using financial modelling to predict future pricing patterns and assess supply chain risks. Software will be able to assist with the buying decision process by checking prices online against existing deals with suppliers. It will also be able to offer a risk analysis of suppliers. By way of illustration, late submission of invoices could represent an internal problem, and would therefore trigger a search of the internet for red flags, such as court orders and share price dips.
The next generation of spend analytics will also see computers programmed to cross-check each and every invoice as they are being entered and spot any inconsistency or error. For instance, if stationery items are entered at 100 times their normal price, flags can be raised so it can be checked by a real person, who can immediately rectify the mistake – currently a process that can take days.
The TCIDA will support three senior Professors and fund PhD and post-doctoral research programmes. Our hope is that we can begin delivering new artificial intelligence software for commercial applications within a year.
Data analytics technology has a lot to offer and so far we have only scratched the surface. Who knows what the future of procurement technology will look like, but we can say with certainty that AI will be a big part of it.