The Perfect AI Procurement Software for Your Business

Gone are the days when supply chain teams would be drowned in a sea of paperwork. Today, artificial Intelligence in procurement serves as a lifeboat that has propelled procurement teams to higher comfortable grounds. Artificial Intelligence in procurement is used to automate and supplement the process and gives your business an opportunity to make better-informed decisions, allocate the organisation’s funds and resources more efficiently and drive towards operational excellence.

How well do you know about Artificial Intelligence?

When you are taking a chance with Artificial Intelligence in procurement and AI procurement software for your businesses, it is mandatory that you know the technology well, before relying on it. Setting sail without a clear road map, and a clear understanding of the tricks of the trade can be a recipe for disaster.

AI can be classified into three categories based on capability - Narrow AI, Strong AI and Superintelligence. A significant progress has been made in Narrow AI, but by and large General and Superintelligence continues to be theoretical currently.

1. Narrow AI (Weak AI) - This is the most commonly used type of AI designed to perform simple, specific tasks like facial and speech recognition, self-driving cars, virtual assistance, and recommendation systems.
2. General AI (Strong AI) also known as AGI (Artificial General Intelligence) - This AI is a hypothetical one and possesses intelligence like that of a human being and can understand, learn, and apply that intelligence in a plethora of areas.
3. Superintelligence - This AI is a hypothetical AI that possesses intelligence that is beyond a human brain.

Also Read: Leveraging Artificial Intelligence & API Integration in Procurement

Classification of AI Based on Functions

1. Reactive Machines - This responds to current situations and cannot use earlier experiences to boost their decisions.
2. Limited Memory - This can use previous data and experiences to drive their decisions but their memory is limited and short-lived.
3. Theory of Mind - A hypothetical type of AI, this understands human emotions and makes decisions based on them.
4. Self-Aware - This AI is hypothetical; that is conscious and self-aware.

Classification of Artificial Intelligence in Procurement

1. Machine Learning (ML)
2. Natural Language Processing (NLP)
3. Robotic Process Automation (RPA)

To know more about ML, NLP and RPA, read our blog on Artificial Intelligence in Procurement on Nexizo.

Application of Artificial Intelligence in Procurement

Some of the key examples of applications of Artificial Intelligence in procurement are suggested below -

1. Data Analysis and Cost Optimisation - Leveraging Artificial Intelligence in procurement for data analysis and pattern recognition enables the procurement system to gain insights into expenditure, supplier performances and cost-saving opportunities for additional profitability, optimised flow of cash and spend management.
2. Automated Supplier Profiling and Evaluation - Artificial Intelligence in procurement uses algorithms to analyse a range of supplier data like their finances, benchmarks and KPIs, and compliance history and aids in thorough evaluation and selection of suppliers.
3. Automated Contract Review and its Analysis - AI algorithms extract keywords, terms and conditions, specific clauses, complex regulations and contractual obligations making its analysis easier and quicker compared to doing it manually. It also improves contract compliance throughout the procurement process.
4. Predicting Future Demands - Artificial Intelligence in procurement also involves AI-driven forecasting models to help strike the right balance to improve operational efficiency. This includes inventory carrying costs and customer loyalty. Artificial Intelligence in procurement also predicts future demand patterns accurately by studying previous data, market trends and external factors with precision.
5. AI-enabled Risk Management - Artificial Intelligence in procurement can assess risks and mitigate strategies by analysing a wide range of data such as supplier performance issues, market variables, or compliance issues. AI techniques can also be used for detection and prevention of frauds.

Gen AI in Procurement

Generative AI or Gen AI is a crucial tool developed in the AI procurement software sector. It can create different types of content such as texts (marketing copies, emails, letters), images, audio (sound effects, voice-overs), videos, and 3D models from text descriptions. Examples of Gen AI tools are ChatGPT, GPT-4, Gemini, Midjourney, Stable Diffusion, and Dall-E2. Gen AI are thus trained on a large dataset and can create new content based on that.

AI Procurement Software

AI procurement software can save hours of research time and help you make informed decisions as it helps a buyer organisation evaluate the suppliers, analyse the vast supplier data, market patterns, past performances and even help an organisation understand and go through complex contracts. Let’s learn how the AI procurement software helps across the procurement cycle -

1. Market Intelligence - Gen AI is capable of summarising important data by generating insights into the current market situation.
2. Data Classification - Large Language Models or LLMs can help in procurement by data processing such as its classification, supplier normalisation, CO2 mapping and data mapping.
3. Analysis of the Contract - Extracting key clauses using artificial intelligence in procurement from complex contracts and an overall analysis of the contract by gathering key points from it helps save time. It can scan and interpret long legal documents and offer you the key points from them.
4. Communication - Gen AI helps generate tailored communication with vendors helping in the collaboration in a positive way. It can streamline exchange of important information like pricing, lead times and products.
5. Automated Paperwork - Artificial Intelligence in procurement also makes it possible to generate SOWs, RFPs and POs using Gen AI.
6. Capturing Data on Suppliers - The right AI procurement software can gather material from external sources like articles and news and present a summary to you for potential businesses.
7. Identifying New Suppliers - ML can be used to discover new potential suppliers. Big data techniques are capable of identifying, managing and using supplier data across public and private databases.
8. Sourcing Automation Software - This uses ML for identifying relevant bid documents and eSourcing bots like raw materials and repair work.
9. Spend Analysis - It is also possible to find spending patterns and identify cost-saving opportunities via Gen AI.
10. Forecasting Demands - Gen AI is capable of analysing previous data and predicting future patterns and demands in the market.
11. Managing Risks - Gen AI can identify potential risks in the supply chain and help plan a mitigation strategy on time.

Our Take on Artificial Intelligence in Procurement

Successful implementation of artificial intelligence in procurement requires careful planning, smart execution, flexibility, funding and a focus on driving real value. Things that should be taken care of while setting the stage for artificial intelligence in procurement in an organisation include -

• Defining clear objectives
• Identifying challenges
• Fostering cross-functional collaboration to ensure alignment
• Shared goals
• Encouraging open communication
• Knowledge sharing on a transparent basis.

Once implemented, it is important to monitor, evaluate, iterate and refine your AI procurement software based on insights from real-world data. In the end, it is important to minimise biases, regularly audit the AI procurement software and protect data privacy and security.

Why should you choose Nexizo?

Recently we, at Nexizo, offered a customised solution derived from the modular AI/ML powered platform to a paint company and consolidated the most accurate data feeds with a comprehensive understanding of their ongoing projects. Nexizo’s RE helped them get positive feedback from their clients in real-time that fetched them higher sales conversions. With Nexizo onboarding, the team has achieved a 10X jump in their sales leads.

So what are you waiting for? For more information on Artificial Intelligence in procurement and our AI procurement software, log on to Nexizo and grab opportunities early with our AI technology.