ARTIFICIAL INTELLIGENCE IN PROCREMENT
AND SUPPLY CHAIN MANAGEMENT
INTRODUCTION
AI DESCRIBES TECHNOLOGY THAT ALLOWS COMPUTERS TO THINK
LEARN, AND MAKE DECISIONS, SIMILAR TO THE WAY HUMANS DO
BUT FASTER AND OFTEN WITH GREATER ACCURACY.
AI in procurement helps organisations solve complex problems using computer
algorithms, minimising the need for manual intervention. AI can be incorporated
into many software applications to help with procurement and supply processes
such as contract management and sourcing., and it has the ability to learn and
adapt behaviours over time and automates time-consuming tasks
TYPES OF AI IN PROCUREMENT
There are many type of AI in procurement but typically fall into the following categories.
Machine Learning
This type of AI uses machine learning algorithms to detect patterns to help predict and make decisions, that the human
brain cannot. For example, machine learning can look at historical purchasing data and market trends to predict demand, which
helps organisations optimise inventory.
Natural Language Processing
This AI interprets, generates and transforms the human language. It can understand how we speak and write and therefore
can extract information from contracts such as terms and conditions, proposals and any customer feedback more quickly.
Robotic Process Automation
This type of AI mimics human actions to cut out repetitive tasks. For example, it helps to automate invoice processing and
purchase orders, resulting in less processing times and less human errors
BENEFITS OF AI IN PROCUREMENT AND SUPPLY
CHAIN
AI can bring value to procurement and supply teams to make better decisions
using analytics and data-driven insights.
It’s able to work through vast amounts of data, meaning it can help teams to
uncover cost savings or opportunities that they may be missing.
1.Spend analysis and forecasting
AI quickly analyses spending data to detect unusual trends and pinpoint
savings opportunities. For instance, it can flag unexpected increases in category
spending, enabling procurement professionals to intervene promptly to control costs.
2.Supplier selection and evaluation
Choosing reliable suppliers can be a complex, lengthy process. AI streamlines
supplier evaluations by assessing factors such as historical performance, quality
metrics, and pricing structures, simplifying decision-making and improving supplier
selection accuracy.
3.Inventory management and demand forecasting
AI systems forecast demand by analysing historical purchasing data,
enabling procurement professionals to optimise inventory levels. This reduces
waste, lowers inventory costs, and ensures stock accurately matches business
demands.
4.Chabot and virtual assistants
AI-powered procurement chatbot quickly respond to common enquiries
from employees and suppliers, reducing workloads and improving
communication efficiency. These virtual assistants handle queries related to
order statuses, company policies, and invoices, streamlining interactions.
HOW TO GET STARTED WITH AI IN PROCUREMENT
Adopting AI might feel challenging, but starting doesn’t have to be complicated. Here’s a
straightforward approach for procurement teams to get started with AI:
Identify areas for improvement
First, think about the biggest challenges or most repetitive tasks in your procurement process. Ask
yourself questions like:
• What takes up most of your team’s time?
• Where do errors usually happen?
• What activities are most costly or inefficient?
Start small and simple
You don’t have to solve everything at once. Choose a small project or one clear
problem where AI can quickly provide results. This approach lets you see the benefits
of AI with minimal risk.
Examples of small projects might include automating invoice checks or using AI to
forecast spending in a specific category.
Explore tools and vendors
Once you know your goals, start researching simple, user-friendly AI tools or
vendors that specifically focus on procurement. At Resolutiion, our AI models are
purpose-built for the procurement/supplier use case, and this is really important
with respect to the quality of output. Ask suppliers to show you real examples or
case studies to see how their tools work in practice.
Train your team
Make sure your procurement team understands the basics of AI and how to use
the tools you’ve chosen. Provide simple training sessions or resources, and
encourage team members to ask questions and share feedback. If you’re not
sure where to go, reach out to any AI company and see if they will be helpful.
Measure and adjust
Track your results to see if AI is delivering the benefits you expected.
Be open to adjusting your approach based on what you learn from your initial
experience.
By taking these practical steps, you can smoothly introduce AI into procurement,
making your processes faster, smarter, and more effective.
MISCONCEPTIONS OF AI IN PROCUREMENT
One common misconception about AI is that it will replace human roles.
This isn’t true. AI actually helps procurement professionals by taking care of
routine tasks, allowing people to focus more on strategic decisions and
relationships. Another misunderstanding is that AI can solve every problem.
While AI is powerful, it still needs accurate data, clear instructions, and human
oversight to work effectively.
CHALLENGES OF AI IN PROCUREMENT
Data quality is critical — bad data leads to bad results. Privacy is another
concern, as handling sensitive information with AI requires careful management,
so ensure that any provider you choose can demonstrate their environment is
secure through certifications.
FUTURE OF AI IN PROCUREMENT
Looking forward, AI will play an even bigger role in procurement. Routine tasks
such as supplier management, spend analysis, and contract reviews will become
increasingly automated. Procurement decisions will become smarter, faster, and
more data-driven. Procurement teams should watch emerging trends, including
more powerful predictive analytics tools and advanced virtual assistants
designed specifically for procurement tasks.
CONCLUSION
LETS EMRACE AI IN PROCUREMENT AND SUPPLY CHAIN
MANAGEMENT
