{"id":22315,"date":"2022-03-14T15:41:37","date_gmt":"2022-03-14T15:41:37","guid":{"rendered":"https:\/\/www.manutan.co.uk\/blog\/?p=22315"},"modified":"2022-06-30T16:42:27","modified_gmt":"2022-06-30T15:42:27","slug":"what-are-the-benefits-of-artificial-intelligence-for-procurement","status":"publish","type":"post","link":"https:\/\/www.manutan.co.uk\/blog\/procurement\/what-are-the-benefits-of-artificial-intelligence-for-procurement\/","title":{"rendered":"What are the benefits of artificial intelligence for procurement?"},"content":{"rendered":"

\"\"<\/p>\n

As we enter the Fourth Industrial Revolution, new technologies are becoming a powerful performance lever for companies. However, some will play a more important role than others in the digital transformation of procurement. Among them, artificial intelligence (AI) in particular stands out. A strong driver of value-creation, it promises new synergies. However, the concept of artificial intelligence can sometimes seem vague and can encompass a variety of technologies. A recent study by<\/span>\u00a0<\/span><\/a>GEP<\/span><\/a>, the world\u2019s leading provider of digital procurement and supply chain solutions, sheds a welcome light on the concept of artificial intelligence as it applies to the procurement and logistics sectors. Discover the definition of AI and the eight key benefits of implementing it in procurement.<\/span>\u00a0<\/span><\/p>\n

Artificial intelligence: origin and definition<\/span>\u00a0<\/span><\/h2>\n

Although the idea of a \u201cthinking machine\u201d dates back to Greek Antiquity, the notion of artificial intelligence only really emerged in the 1950s. Its foremost pioneers were the mathematician’s Alan Turing and John McCarthy and the psychologist Frank Rosenblatt.<\/span>\u00a0<\/span><\/p>\n

As a performance driver,\u00a0<\/span>AI has more\u00a0recently\u00a0been\u00a0applied\u00a0to\u00a0procurement<\/span>. By\u00a0definition, the\u00a0term\u00a0\u201cartificial\u00a0intelligence\u201d (AI)\u00a0encompasses\u00a0<\/span>a range of applications, techniques and\u00a0processes\u00a0that\u00a0can\u00a0act\u00a0\u201cintelligently\u201d<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

To\u00a0better\u00a0grasp\u00a0the ins and\u00a0outs\u00a0of AI,\u00a0it\u2019s\u00a0worth\u00a0knowing\u00a0that\u00a0it\u00a0incorporates\u00a0two\u00a0subfields.<\/span>\u00a0<\/span><\/p>\n

Machine Learning (ML)<\/span>\u00a0<\/span><\/h3>\n

Machine Learning\u00a0is\u00a0the process of\u00a0teaching\u00a0computers to\u00a0learn\u00a0by\u00a0themselves. This\u00a0subfield\u00a0of AI\u00a0aims\u00a0at\u00a0continuous\u00a0performance\u00a0improvement. This\u00a0tool\u00a0enables\u00a0decision-making\u00a0that\u00a0is\u00a0autonomous,\u00a0appropriate\u00a0and free\u00a0from\u00a0human\u00a0intervention. Natural\u00a0Language\u00a0Processing\u00a0(NLP), a\u00a0branch\u00a0of Machine Learning,\u00a0aims\u00a0to\u00a0assimilate\u00a0human\u00a0language\u00a0into\u00a0computer programs.<\/span>\u00a0<\/span><\/p>\n

Deep Learning (DL)<\/span>\u00a0<\/span><\/h3>\n

Deep\u00a0Learning\u00a0is\u00a0based\u00a0on\u00a0processing\u00a0vast\u00a0amounts\u00a0of data. It relies on\u00a0mathematical\u00a0approaches\u00a0that\u00a0mimic\u00a0the\u00a0way\u00a0in\u00a0which\u00a0humans\u00a0acquire\u00a0knowledge. A\u00a0subfield\u00a0of Machine Learning,\u00a0Deep\u00a0Learning\u00a0seeks\u00a0to automate\u00a0predictive\u00a0analysis.\u00a0Based\u00a0on an\u00a0artificial\u00a0neural network,\u00a0it\u00a0makes\u00a0AI more\u00a0powerful\u00a0and\u00a0dynamic.<\/span>\u00a0<\/span><\/p>\n

In short,\u00a0this\u00a0means\u00a0that\u00a0these\u00a0machines can carry out\u00a0tasks\u00a0that\u00a0would\u00a0otherwise\u00a0require\u00a0<\/span>capacities\u00a0inherent\u00a0to the\u00a0human\u00a0brain<\/span><\/b>,\u00a0such\u00a0as\u00a0reasoning,\u00a0autonomy, information\u00a0retrieval\u00a0or\u00a0learning.<\/span>\u00a0<\/span><\/p>\n

What\u00a0differentiates\u00a0artificial\u00a0intelligence\u00a0from\u00a0conventional\u00a0programming\u00a0is\u00a0this\u00a0<\/span>cognitive dimension<\/span><\/b>, in the\u00a0psychological\u00a0sense\u00a0of the\u00a0term, i.e.\u00a0which\u00a0concerns\u00a0the\u00a0means\u00a0and\u00a0mechanisms\u00a0of\u00a0knowledge\u00a0acquisition.<\/span>\u00a0<\/span><\/p>\n

Artificial\u00a0intelligence technologies are\u00a0indeed\u00a0capable of handling\u00a0<\/span>unstructured\u00a0scenarios<\/span><\/b>\u00a0and\u00a0developing\u00a0a\u00a0<\/span>continuous\u00a0learning<\/span><\/b>\u00a0process.<\/span>\u00a0<\/span><\/p>\n

Artificial intelligence: eight key benefits for procurement<\/span>\u00a0<\/span><\/h2>\n

For\u00a0several\u00a0years\u00a0now,\u00a0procurement\u00a0has been\u00a0undergoing<\/span>\u00a0a\u00a0<\/span>digital transformation<\/span>\u00a0that\u00a0increasingly\u00a0involves\u00a0the use of\u00a0artificial\u00a0intelligence. Indeed, the application of AI to\u00a0procurement\u00a0<\/span>offers\u00a0tangible\u00a0benefits<\/span><\/b>,\u00a0which\u00a0can\u00a0be\u00a0divided\u00a0\u2013\u00a0following\u00a0the\u00a0logic\u00a0of the GEP\u00a0study\u00a0\u2013\u00a0into\u00a0eight\u00a0categories.<\/span>\u00a0<\/span><\/p>\n

Information<\/span>\u00a0<\/span><\/h3>\n

AI\u00a0makes\u00a0it\u00a0possible to mine\u00a0vast\u00a0amounts\u00a0of\u00a0complex\u00a0big data. It\u00a0provides\u00a0more information in real time,\u00a0facilitating\u00a0and\u00a0improving\u00a0decision-making\u00a0by\u00a0procurement\u00a0teams.\u00a0Powered\u00a0by\u00a0artificial\u00a0intelligence,\u00a0predictive\u00a0analysis\u00a0enables projections to\u00a0be\u00a0made\u00a0based\u00a0on\u00a0historical\u00a0data collection.\u00a0However,\u00a0this\u00a0requires\u00a0databases\u00a0to\u00a0be\u00a0properly\u00a0organised\u00a0in\u00a0advance.<\/span>\u00a0<\/span><\/p>\n

Productivity<\/span>\u00a0<\/span><\/h3>\n

AI can\u00a0reduce\u00a0the\u00a0average\u00a0processing\u00a0time of\u00a0procurement\u00a0processes\u00a0by 25-60%,\u00a0especially\u00a0as\u00a0it\u00a0can\u00a0operate\u00a024\u00a0hours\u00a0a\u00a0day, 7\u00a0days\u00a0a\u00a0week. Indeed,\u00a0artificial\u00a0intelligence\u00a0helps\u00a0to\u00a0drastically\u00a0reduce\u00a0time-consuming\u00a0tasks\u00a0such\u00a0as tender\u00a0selection.\u00a0Combined\u00a0with\u00a0Machine Learning, AI\u00a0improves\u00a0the\u00a0productivity\u00a0of the\u00a0entire\u00a0procurement\u00a0and\u00a0supply\u00a0process.\u00a0With\u00a0the help of AI,\u00a0procurement\u00a0teams can focus on\u00a0higher\u00a0value-added\u00a0tasks.\u00a0<\/span>\u00a0<\/span><\/p>\n

Implementation<\/span>\u00a0<\/span><\/h3>\n

The\u00a0implementation\u00a0of AI\u00a0typically\u00a0is\u00a0profitable in about 8\u00a0weeks\u00a0(provided\u00a0that\u00a0the data\u00a0is\u00a0properly\u00a0defined\u00a0and\u00a0organised). For\u00a0its\u00a0successful\u00a0implementation,\u00a0it\u00a0is\u00a0best to\u00a0proceed\u00a0in stages, as\u00a0follows:<\/span>\u00a0<\/span><\/p>\n

    \n
  • Identify\u00a0use cases for AI\u00a0within\u00a0the\u00a0procurement\u00a0department;<\/span>\u00a0<\/span><\/li>\n
  • Pinpoint\u00a0the\u00a0most\u00a0appropriate\u00a0technologies for data\u00a0analysis\u00a0and management;<\/span>\u00a0<\/span><\/li>\n
  • Handle\u00a0the change\u00a0through\u00a0clear\u00a0and\u00a0reassuring\u00a0communication.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

    Once\u00a0artificial\u00a0intelligence has been\u00a0integrated\u00a0and\u00a0adopted, the\u00a0benefits\u00a0are\u00a0passed\u00a0on to the\u00a0entire\u00a0company.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Savings<\/span>\u00a0<\/span><\/h3>\n

    AI can\u00a0deliver\u00a0between\u00a05% and 40%\u00a0additional\u00a0savings\u00a0through\u00a0spend\u00a0and supplier panel\u00a0analysis. A\u00a0true\u00a0performance driver, AI\u00a0targets\u00a0priority\u00a0areas for optimisation and\u00a0facilitates\u00a0decision-making\u00a0for\u00a0buyers.\u00a0Generally\u00a0speaking,\u00a0artificial\u00a0intelligence supports the\u00a0deployment\u00a0of effective\u00a0strategic\u00a0action plans to\u00a0ensure\u00a0greater\u00a0profitability.<\/span>\u00a0<\/span><\/p>\n

    Quality<\/span>\u00a0<\/span><\/h3>\n

    AI\u00a0ensures\u00a0consistent\u00a0quality\u00a0by\u00a0reducing\u00a0manual\u00a0tasks. It automates and\u00a0improves\u00a0time-consuming\u00a0tasks\u00a0while\u00a0limiting\u00a0the\u00a0risk\u00a0of\u00a0error. At VAS\u00a0level, AI enables\u00a0better\u00a0analysis\u00a0of\u00a0returns\u00a0and\u00a0promotes\u00a0optimal complaint management.\u00a0From\u00a0procurement\u00a0to\u00a0<\/span>supplier relations<\/span>\u00a0and transport, AI\u00a0improves\u00a0the\u00a0quality\u00a0of the\u00a0entire\u00a0supply\u00a0chain.<\/span>\u00a0<\/span><\/p>\n

    Costs<\/span>\u00a0<\/span><\/h3>\n

    AI can\u00a0reduce\u00a0processing\u00a0costs\u00a0by 30-40%. For\u00a0example, simple\u00a0tasks,\u00a0such\u00a0as\u00a0level\u00a01-2\u00a0technical\u00a0support, can\u00a0be\u00a0handled\u00a0by\u00a0chatbots.<\/span>\u00a0<\/span><\/p>\n

    Security<\/span>\u00a0<\/span><\/h3>\n

    By\u00a0helping\u00a0buyers\u00a0select the best\u00a0suppliers, AI\u00a0reduces\u00a0the\u00a0risk\u00a0of\u00a0fraud\u00a0and\u00a0late\u00a0payments.\u00a0When\u00a0used\u00a0to manage\u00a0procurement\u00a0contracts,\u00a0it\u00a0ensures\u00a0greater\u00a0legal\u00a0protection.\u00a0Artificial\u00a0intelligence\u00a0therefore\u00a0helps\u00a0make\u00a0procurement\u00a0more\u00a0secure.<\/span>\u00a0<\/span><\/p>\n

    Competitiveness<\/span>\u00a0<\/span><\/h3>\n

    Artificial\u00a0intelligence\u00a0creates\u00a0value,\u00a0fosters\u00a0innovation and\u00a0helps\u00a0increase\u00a0the\u00a0overall\u00a0competitiveness\u00a0of the\u00a0company\u00a0among\u00a0its\u00a0customers\u00a0and prospects.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Just like\u00a0other\u00a0key technologies (RPA<\/span>1<\/span>, IoT<\/span>2<\/span>,\u00a0chatbots,\u00a0<\/span>blockchain<\/span>, etc.),\u00a0artificial\u00a0intelligence\u00a0offers\u00a0a\u00a0glimpse\u00a0of a new\u00a0<\/span>future for\u00a0procurement\u00a0departments<\/span>:\u00a0a\u00a0<\/span>strategic\u00a0shift<\/span><\/b>\u00a0and high value-added\u00a0tasks\u00a0that\u00a0rely\u00a0on\u00a0uniquely\u00a0human\u00a0skills\u00a0(interpersonal, influence,\u00a0creativity, etc.).<\/span>\u00a0<\/span><\/p>\n

    \u00a0<\/span>\u00a0<\/span><\/p>\n

    \u00a0<\/span>\u00a0<\/span><\/p>\n

    \u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    As we enter the Fourth Industrial Revolution, new technologies are becoming a powerful performance lever for companies. However, some will play a more important role than others in the digital transformation of procurement. Among them, artificial...<\/p>\n","protected":false},"author":9,"featured_media":22426,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[58],"tags":[124,123],"yoast_head":"\nWhat are the benefits of artificial intelligence for procurement? - Manutan UK Blog<\/title>\n<meta name=\"description\" content=\"Productivity gains, cost reductions and the elimination of time-consuming tasks. 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