Technology
Can large language models really revolutionise procurement?
Global Banking & Finance Review®
Company
By Konstantin Von Bueren, Co-founder of Procure Ai
“Write me a short article on how AI can revolutionise procurement…”
Pun fully intended, I think it’s become quite clear how a technology like ChatGPT can be used to gain a competitive edge in many industries. We observe marketing copywriters using Ai to generate content for them, software engineers leaning back in their office chairs as Open AI checks their code for any errors; the possibilities are endless. However, in the procurement space, artificial intelligence is a relatively new phenomenon. As with other technologies, AI promises to revolutionise decision-making processes by infusing them with a dose of smart enhancement. Initial experiences have, however, have left some in the field with raised eyebrows; questioning whether it’s all just smoke and mirrors in their pragmatic world of urgent widget acquisition.
It’s clear that companies across other industries are arming themselves with AI; McKinsey’s Global Survey reveals a significant 25% increase in AI adoption within a single year, and IBM suggests that the majority of companies are either already on the AI bandwagon or planning to hop on soon. On the flip side, procurement professionals have been somewhat hesitant, lagging behind their colleagues in other sectors such as sales and marketing. However, as we’ll discuss below, perhaps it’s time for procurers to embrace the potential of AI.
When we envision applied Ai, including the groundbreaking technologies provided by OpenAI, as the Swiss Army Knife of procurement, we aren’t taking this analogy lightly. ChatGPT’s multifaceted capabilities act like the numerous, invaluable tools folded within the pocket-sized marvel. It equips procurement teams with advanced solutions for various aspects of their operations, from vigilant monitoring and sophisticated forecasting to intelligent automation. In doing so, it offers the tantalising promise of increased efficiency, reduced risks, and significant cost savings.
Take, for example, market monitoring and forecasting, two crucial elements of procurement. Models of applied AI act as a vigilant procurement radar, meticulously tracking market trends, identifying price fluctuations, and exploring new supplier opportunities. Unlike a traditional monitoring system, this AI-powered solution never sleeps. It continuously scans a vast array of data sources, leaving no stone unturned. It doesn’t just present raw data either; using historical data and advanced analytical algorithms, it transforms into a superior forecaster, providing invaluable insights that are practically pre-packaged procurement strategies.
Automation is another area where artificial intelligence shines. It takes over time-consuming tasks that often plague the procurement process, enabling procurement professionals to focus on high-value, strategic work. An advanced AI assistant can transform critical business processes with efficiency and objectivity; it is adept at crafting routine contracts, answering technical queries, and most notably, handling initial negotiations with suppliers. This is a pivotal step in procurement where an AI application can significantly enhance outcomes. Unaffected by human emotional biases, it provides unwavering rationality and valuable prioritisation advice, promoting clear-headed decisions and reducing the chance of escalated conflicts.
Importantly, the benefits of applied AI go beyond the mere execution of tasks. It also acts as an excellent knowledge repository and training tool. Procurement teams can use it to store and retrieve important information, learn from past negotiations, and improve their negotiation skills by role-playing with this AI-powered adversary. This machine learning tool grows and learns with every interaction, becoming smarter and more helpful over time.
Artificial intelligence isn’t a threat to procurement; it presents a golden opportunity for the industry to embrace its power. Utilising procurement intelligence providers, such as ProcureAi, allows procurement professionals to unlock new levels of efficiency, enhance decision-making, and lay the groundwork for a more technologically advanced and innovative future in procurement. The potential for transforming procurement into a strategic, value-adding function is immense, and embracing AI professionally doesn’t just keep procurement professionals on pace with technological advancements; it propels them to the forefront. After all, the art of procurement lies in staying ahead.
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines programmed to think and learn like humans, enabling them to perform tasks such as decision-making and problem-solving.
Decision-making in business refers to the process of selecting the best course of action among various alternatives to achieve organizational goals.
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