TL;DR:
- The first half of 2023 has brought uncertainty to the business world, with geopolitical tensions and domestic challenges in key markets slowing the return to sustained growth.
- The adoption of AI and automation in the business world has slowed due to economic uncertainty, with organizations focusing on core drivers such as resilience and efficiency.
- Automation can optimize procurement processes by establishing a central source of truth for procurement data and utilizing AI to streamline processes and identify potential issues.
- Microsoft’s integration of AI into its productivity suite shows the potential for AI to automate mundane tasks and augment human workers.
- Digital is seen as the future of procurement, with enterprise software needing to be consumer-grade and easy to use.
- The concept of machines making purchasing decisions autonomously is already happening with some products, but there is a cultural barrier to overcome in terms of people being comfortable with AI making purchases on their behalf.
- The automation of procurement starts with a clean data store that holds a single version of truth for supplier management and enables simple automation scripts to manage exceptions, predict demand, and make smart purchasing decisions.
Main AI News:
The first half of 2023 has brought with it a newfound level of uncertainty in the business world, as highlighted by KPMG’s Global Economic Outlook. Despite a positive shift in the global economy with the easing of inflationary pressures, KPMG predicts that ongoing geopolitical tensions and domestic challenges in key markets will impede the return to sustained growth.
According to Regina Mayor, Global Head of Clients and Markets at KPMG International, the current challenge facing organizations and political leaders worldwide is the attainment of sustainable, long-term growth. Mayor notes that proactive political measures, particularly in the area of energy prices, have helped to mitigate some of the biggest inflationary concerns of late. Additionally, easing commodity and food prices provide some relief to consumers and business owners facing financial strain.
However, companies are grappling with rising material costs by either cutting jobs or increasing the prices of their products and services, exacerbating the cost-of-living crisis for consumers. The economic uncertainty has also led to a slowdown in transformation projects, particularly in the adoption of AI and automation, as organizations focus on core drivers such as resilience and efficiency.
According to Forrester’s Predictions 2023: Automation and Robotics Report, process improvement projects will center around data-driven use cases, and organizations that double down on automation will reap an overwhelming competitive advantage. Automation can also optimize procurement processes, helping organizations to address their outgoings without resorting to more drastic measures.
In order to fully utilize the potential of automation in procurement, it is essential for businesses to establish a central source of truth for their procurement data. This involves normalizing and standardizing information from various ERP systems into a single, unified system. This centralized system will then enable the implementation of process control and automation of specific procurement processes.
One key factor in achieving this centralization is having a consolidated store for procurement data, serving as a system of record with a single version of truth for all procurement activities, as highlighted by Karolina Hagberg Chinell, Chief Procurement Officer at Ahlsell. This not only simplifies the work of procurement teams but also enables them to identify discrepancies and take advantage of volume purchases from the same supplier.
Artificial intelligence (AI) also holds great potential in streamlining manual processes and identifying potential issues in procurement. As noted by Karl Poulson, Chief Procurement Officer at Hiscox, AI can flag differences between an order and its receipt and, through coded logic, prompt the supplier to collect surplus or adjust future orders.
It is important to note that automation in procurement is not just limited to streamlining processes and identifying discrepancies. Automation can also be used to optimize procurement operations and achieve greater efficiency and cost savings. By utilizing AI and establishing a centralized source of truth for procurement data, businesses can improve their procurement processes and gain a competitive advantage in the market.
Microsoft’s integration of generative AI into its Office 365 productivity suite showcases the potential for AI to automate mundane tasks, such as reading and summarizing documents and emails and producing action points from meetings. Many experts believe that such AI systems can augment human workers and lead the way for business software.
Cyril Pourrat, who leads procurement for BT Sourced, believes that digital is the future of procurement and that enterprise software should be consumer-grade and able to be accomplished with just a few clicks or through natural language queries.
In a book co-authored with Don Scheibenreif, Gartner analyst Mark Raskino explores the concept of machines capable of making purchasing decisions autonomously. This is already happening with products like office printers that automatically reorder ink from suppliers when they are running low. Raskino believes that much of the technology for machine-based purchasing is already in place, but there is a cultural barrier to overcome in terms of people being comfortable with AI making purchases on their behalf.
The automation of procurement starts with a clean data store that holds a single version of truth for supplier management. A clean data store enables simple automation scripts to manage exceptions, highlight discrepancies in orders, and predict demand to take advantage of volume discounts or supply chain issues. The experts agree that the cultural barrier is the only remaining obstacle to machines making smart purchasing decisions on behalf of people.
Conlcusion:
AI and automation are revolutionizing procurement processes by streamlining manual processes and enabling organizations to optimize procurement operations for greater efficiency and cost savings. The adoption of AI and automation in the business world has been slowed due to economic uncertainty, but organizations that double down on automation will reap a competitive advantage.
The integration of generative AI into productivity suites, such as Microsoft’s Office 365, showcases the potential for AI to automate mundane tasks and augment human workers. The future of procurement is seen as digital, with enterprise software needing to be consumer-grade and easy to use. The concept of machines making purchasing decisions autonomously is already happening, but there is a cultural barrier to overcome in terms of people being comfortable with AI making purchases on their behalf.
The key to successful automation in procurement has a clean data store that holds a single version of truth for supplier management, enabling simple automation scripts to manage exceptions and make smart purchasing decisions.
