Artificial intelligence (AI) and more recently Generative Artificial Intelligence (AGI) has started to transform our daily lives. From ChatGPT, to customer support chatbots, to AI-generated headshots, we’re starting to use the technology without even noticing it. It’s also started to make its mark across various industries, and procurement is no exception.
From solving data-related challenges to automating supplier data management, AI has the potential to revolutionize the procurement landscape.
In this blog, we recap our Founder and CEO Stephany Lapierre’s main stage session at Amazon Reshape about how AI can help build a strong supplier data foundation that allows for greater automation in procurement.
You’ll discover:
- Why a strong data foundation matters
- How quality data and AI go hand in hand
- How AI improves supplier data quality
- Cost savings uncovered with AI
- The path forward with AI and procurement
Building on solid ground: Why a strong data foundation matters
Having a strong data foundation is crucial. Imagine buying a beautiful house, with a great kitchen and all the bells and whistles. But what if the foundation of that house is sitting on unstable swamp land? Soon, the problems will start to emerge, and before you know it, you’ll have to spend a fortune fixing the house. You might even have to redo the entire foundation.
The same can be said for an organization’s procurement function. All of the processes and latest software can be put in place for automation and efficiency, but without quality supplier data flowing through the tools, they just turn into a Frankenstein-like architecture. By solving the problem of inaccurate and outdated data, procurement teams can unlock countless opportunities and deliver more value to the organization. And, AI can help.
How quality data and AI go hand in hand
With AI and machine learning, information can be gathered and analyzed from various sources simultaneously, eliminating the dependencies that come with supplier portals or the need for one-time data enrichments. This approach allows businesses to access better quality data in real-time and sets the stage for introducing technology that allows for further automation.
Quality supplier data, powered by AI
As a procurement team leader, imagine that your CEO comes to you ahead of an important meeting and asks, “How much are we spending with supplier XYZ?”
Here’s how it unfolds with supplier data across disparate systems:
- You quickly realize you have to access several systems across the organization to track spend
- Throughout the process, you end up finding duplicate records of the same supplier
- You tell the CEO you need more time to gather the information and won’t meet your deadline
- Once you’ve finally tallied the information, it ends up taking weeks and you aren’t confident with the data
Here’s how it unfolds with quality supplier data, powered by AI:
- Duplicate supplier data is consolidated into one supplier profile, making it easier to analyze spend without having to worry about data inaccuracies
- You’re confident in the data because it’s been refreshed and updated in real time
- You can hand over the information to the CEO, confirm its accuracy, and adhere to the deadline you committed to
Cost savings uncovered with AI
One of the biggest challenges in procurement is not having access to comprehensive spend data. This situation happens a lot because of inaccuracies in supplier data. As a result, contracts sometimes get completed with different company names or addresses, even though they actually belong to the same supplier. This makes spend data difficult to understand, and without this crucial information, you may unknowingly make decisions that can lead to significant financial losses.
For example:
- A company realized that they had multiple contracts with the same supplier, resulting in a total spend of around $1.3 million.
- Once they had validated supplier data they were able to consolidate the multiple contracts into one Master Services Agreement (MSA).
- This reduced their spend down to approximately $200,000.
- The simple consolidation saved them hundreds of thousands of dollars with just one supplier.
However, the benefits of spend analytics extend far beyond cost savings. With access to comprehensive spend data, procurement teams can:
- Rapidly identify alternative suppliers that are similar to those they currently work with.
- Propose new sourcing options, reducing the time it takes to find suitable suppliers from weeks, to minutes or hours.
- Ensure that contracts are not blindly renewed with expensive suppliers.
- Provide opportunities to explore other cost-effective alternatives.
The path forward for procurement and AI
It can be difficult for procurement teams to make a business case for themselves, but in the era of digital transformation, positioning procurement as the overseer of significant spend and a driver of corporate value will help them gain the necessary investment and access to AI technology.
TealBook’s Supplier Data Platform allows organizations to build a better, more digitized procurement function with a solid data foundation, providing the flexibility to implement new tools, adapt to changing technology, and make a transformative impact for the whole organization.
