OpinionThe significance of AI-integrated procurement in an era of uncertainty
Opinion
The significance of AI-integrated procurement in an era of uncertainty
“Only organizations that adopt the required agility will withstand the storm and see it as an opportunity and leverage for fulfillment, development, and growth,” writes Boaz Gilad, founder and CEO of BizWatch
It is no secret that many enterprises and organizations, and procurement chain managers within them, had to change their worldviews during the last two years and produce new and agile responses and action plans to meet their business objectives.
The current and visible reality will continue requiring adjustments in work processes, tools, and how professional elements get ready to answer needs and challenges, alongside continuing uncertainty and fluctuations in internal and external environments.
The dynamic and fragile state of the differfent markets, including failure of suppliers to meet delivery deadlines; critical shortage of raw materials, components, and products; significant price fluctuations; all these, and more, impact the enterprises' ability to meet demands and remain profitable, demanding course recalculation while understanding that the old and familiar trajectory of procurement processes and supplier relations must change.
In the resulting complex, even chaotic state, enterprises have become more and more dependable on the suppliers' performance quality. This situation has caused many enterprises to tighten their connections with the existing suppliers if it decreases risks and prevents compromising the continuity of activities. Additionally, enterprises increased the safety stock in their warehouses to avoid a shortage of raw materials and/or components. Seemingly, this is the natural action taken by elements that recognize the existing supplier's quality, the complexity of the market, and the difficulty of sourcing and setting up a new supplier in organizational procurement systems.
But this is precisely the essence of the problem. By doing so, enterprises deepen their dependence on existing suppliers, diminishing their flexibility and their business latitude, consecutively finding themselves constrained against their interests by a reduced number of suppliers.
That is not to doubt the suppliers' quality, reliability, and integrity for the record. But in a competitive business environment, we must always be one step ahead, understand the challenges facing us and prepare accordingly.
In addition to analyzing and understanding current and future challenges, preparedness with suitable tools, methods, people, and processes is required to enable an appropriate response.
Due to the market situation during the last two years, procurement professionals found themselves increasingly busier, trying to source and analyze potential quality suppliers. Still, this is an almost impossible task without end-to-end advanced and supportive technology.
Since before the Coronavirus pandemic and more intensely after its onset, there has been a significant change in trade, especially in B2B transactions. Social and travel restrictions, along with social distancing, unprecedentedly catalyzed the development and integration of advanced technological systems and tools in procurement processes. Market analysis indicates that even now, enterprises pay over $15 billion dollars yearly for systems supporting procurement processes, especially for data analysis, risk analysis, CRM systems, and more. It is estimated that this scope will keep increasing because of the inherent advantages and challenges facing elements dealing with procurement, export, and import of products and raw materials. However, it must be noted that real change is not necessarily in the capacity for data processing (BI) of procurement processes, as was common until now.
The real revolution and disruption of the existing state are to be found in the combination of the ability to collect and process up-to-date, dynamic, and objective data from multiple data sources throughout the web and the addition of AI-based capabilities in procurement processes. The correct integration of advanced technologies provides the benefit of numerous advantages and capabilities, such as collecting extensive up-to-date data about market trends on the one hand and analyzing needs and demand on the other hand. Technology integration facilitates the automatic, efficient, fast, and advanced location and analysis of potential, previously unknown suppliers, fast and automated application for quotes or raw material data, prices, stocks, and availabilities, automatically analyzing the answers, thus facilitating procurement elements with the ability to function in digital trade arenas against a broad and dynamic range of quality suppliers.
Only organizations that adopt the required agility will withstand the storm and see it as an opportunity and leverage for fulfillment, development, and growth. In the last two years, CEOs, supply chain VPs and procurement managers have increasingly realized that the entire chain of value must go through digital upgrade and transformation since an upgrade of core production processes alone isn't sufficient, and they must bring supporting processes to the fore of technology, i.e., procurement.
This would allow procurement professionals to be proactive, manage and support production processes out of maximal flexibility, systematic data-based view, optimization, and implementation of a new automation-based procurement process out of a dynamic mix of quality suppliers
Boaz Gilad is the founder and CEO of BizWatch LTD, a portfolio member of i4Valley
