In this special guest feature, Arnold Liwanag, TealBook‘s Chief Technology Officer, highlights the top three reasons to utilize AI when searching for new and diverse suppliers in the ever changing marketplace. Arnold brings an impressive background to TealBook’s C-suite. In prior roles, he led the Artificial Strategy and Transformation practice at PwC/ Strategy&, and has also held technical leadership positions at Scale AI, Hewlett Packard and Sybase. He is a talented and coveted speaker at industry events that include CogX, Elevate Toronto and AI4. Most recently, Arnold served as the CTO at IVADO Labs, where he served as the technical authority for the company.
Entering 2023, inflation and supply chain issues will likely continue to complicate supplier sourcing. Accordingly, accurate and robust supplier data is more important than ever for procurement leaders, and finding diverse, cost-saving suppliers is a critical piece of that puzzle. Diverse suppliers help improve agility and brand reputation, drive innovation, increase competition and enable procurement leaders to maneuver through supply chain obstacles.
This is where AI and machine learning (ML) come in. AI/ML tools can deliver highly sought-after, accurate data and jumpstart processes that save both time and money. Additionally, AI and ML present chances to increase business agility. Moving forward, these business advantages will be necessary for procurement. Here’s why:
1. AI/ML optimize data accuracy and enhance supplier diversity
Manual data is usually inaccurate considering it is not updated as often as it should be and quickly becomes outdated. And this outdated data is problematic. It creates sourcing inaccuracies and often causes significant delays in the project timeline. Manual processes also introduce the possibility of human error, and mistakes are both time-consuming to correct and costly if missed.
AI/ML remove the possibility of human error, increasing data accuracy. AI analyzes data and brings disparate spend categories from the same supplier into a single grouping, providing procurement leaders with an accurate view of the supplier-procurement relationship and easing the accounts payable and contracts processes. When a data platform is cohesive and up-to-date, AI tools are able to scour its database to compile complex information and simplify the backend of the payments and contracting processes. Similarly, during the analysis stage, AI is more efficient at searching the web at scale, after which it can then use relevant data to create more accurate supplier profiles. This process increases accuracy across the board.
Using these same functionalities, AI can provide suggestions for new suppliers based on characteristics laid out by a procurement leader. In this process, AI/ML search through thousands of sources to identify suppliers that meet specified criteria, such as compliance requirements, sustainability initiatives and self-certification levels. This creates a much more diversified pool of suppliers, including small-business enterprises (SBEs), minority-owned enterprises (MBEs) and woman-owned enterprises (WBEs). The presence of diverse suppliers raises competition and decreases consumer discontentment when there are supply chain obstacles by providing other options if the principal supplier fails. Additionally, supplier diversity likely aligns with companies’ core values, such as Diversity, Equity, Inclusion, and Belonging (DEIB) initiatives.
2. Automation reduces risk and saves time
Automation mitigates risk by extracting supplier information directly from public and proprietary sources, such as the amount of time in business, corporate relationships and associations. AI can even go one step further by registering if a supplier is going to fall out of Environmental, Social, and Governance (ESG) compliance. It can then alert procurement professionals, ensuring that suppliers’ values remain in line with an organization’s priorities. AI also provides a holistic view of the contract process, lessening the burden of manual compliance verification, which can be complicated and time-consuming.
Furthermore, the procurement industry especially benefits from automation. While manual supplier sourcing takes an average of five weeks — with the majority of that time devoted to sourcing supplier information — AI can automate much of the process. This leaves procurement professionals more time for more strategic initiatives that require more skill, knowledge and critical thinking. Automation is also integral for operational efficiency, a top business priority for over three-quarters of CPOs, according to Deloitte.
3. AI allows for smooth business functions
Half of employers expect rising inflation to lead to job cuts, and operational efficiency is crucial to leaders looking to do more with less. AI maturity is a hallmark of half of “high performing” CPOs, according to Deloitte, suggesting that AI-backed flexibility is crucial to function at the top of an organization’s abilities in uncertain times.
Business agility increases with AI. From highly accurate data to more diverse suppliers to saving time with automation, AI allows procurement professionals to enhance their business agility and adapt when needed. AI also sets the stage for easily adding new suppliers to reduce costs or take advantage of new business opportunities. Finally, AI speeds up rote processes like onboarding, contracts and accounts payable, expediting crucial procurement processes and ensuring better delivery timelines.
In other words, AI / ML provide a competitive advantage over those who have not digitally transformed their procurement processes. These are the tools of the future, and those who do not implement them soon will find navigating the procurement space to be increasingly difficult, especially as supply chain issues exacerbate. On the other hand, procurement leaders who choose to deploy AI/ML-based tools will be able to rise to future challenges, separate themselves from the pack, and revolutionize procurement for good.
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