The world today cannot function without the help of technology. As a matter of fact, Artificial Intelligence development has empowered several industries to modify the way they used to operate. Artificial Intelligence has had a slow absorption within the procurement segment, and several players have begun to realize the potential of AI in procurement as well as supply chain processes.

Although AI in procurement is a new concept there is much interest in Artificial Intelligence when we look at procurement as a whole. Being a new concept AI has generated too much commotion for its commendable abilities. However, Artificial Intelligence is now a revolutionary technology which renders countless benefits for procurement businesses.

Artificial Intelligence in procurement is nothing but self-learning. It is also smart algorithm software solutions which replace manual tasks. Artificial Intelligence not just simplifies this remedial process, it also decodes complex systems & solve several problems by implementing computer software. Tasks such as procurement assistance, contract management, spend analysis and strategic sourcing, can be incorporated into an algorithm that does all the leverage & heavy lifting.

Moreover, AI is enabling procurement professionals to gain insights into humongous amounts of data analytics at a faster pace & this is something that no humans can replicate easily.

Types of AI in procurement

Cognitive procurement is a actually a new term which defines technologies which possess the ability for mimicking human behavior by using self-learning tasks. Cognitive procurement is meant to help in the management of procurement by processing humungous data volumes and comprises Artificial Intelligence processes that include NLP, pattern recognition, Machine Learning, & automated data extraction.

Challenges with Cognitive Procurement

There is significant buzz around the topic, stating that it is the magic solution for all procurement issues with many Artificial Intelligence providers stating that their software mimics human intelligence.

Different kinds of ML/Artificial Intelligence are implemented during the whole process of procurement and these are being supervised learning ML, Unsupervised learning, as well as reinforcement learning & deep learning as well.

Natural Language Processing in procurement

The main focus of Natural Language Processing is to interpret & understand the human language and this kind of Artificial Intelligence technology may help in developing insights from data or render new processes which enable in improving the efficiency in procurement.

Contract Management

The reason why contracts are highly critical aspect of the procurement process is since they comprise critical data. Conventionally, this data was not easily accessible for procurement professionals however it can only be accessed via several channels.

Natural Language Processing is a game changer that lets this valuable data to be extracted by leveraging text parsing algorithms. And this Artificial Intelligence technology will scan as well as interpret volumes of contracts & decipher critical data. A few Artificial Intelligence can take it one step further. This includes the optical character recognition software. This Artificial Intelligence leverages Natural Language Process for identifying the texts from images/physical contract copies.

Word Embedding

Word embedding is another outstanding use for Natural Language Processing in procurement. The Artificial Intelligence is capable of mapping words & bridging the gap between human language & ML of which the Machine language normally consists of numbers. Word embedding enables Artificial Intelligence for classifying & analyzing texts in purchase orders & determining purchase items in a particular category.

How does Artificial Intelligence fit in the procurement sector

In the procurement landscape, several processes were conventionally carried out manually. Artificial Intelligence solutions not just simplify these kinds of tasks, they can also decode systems as well as solve problems by implementing computer software. Processes such as strategic sourcing, contract management, procurement assistance, as well as spend analysis can be incorporated into an algorithm which conducts all the heavy lifting & renders all the required actionable insights. Furthermore, Artificial Intelligence is enabling procurement professionals with data management assist with gaining insight into humungous amounts of data at a faster rate.

Data is a most valuable asset in the procurement industry. Without any accurate or sufficient data, it should be difficult for procurement teams to both track as well as spend & manage supplier & vendor relations. Hence, rising the amount of precise data facilitates in controlling costs & enables in discerning supplier/vendor performance risk.

In a nutshell

while purchasing decisions are most frequently made in a scarcity environment a majority of procurement teams, making sure that you are taking the right decisions on the basis of the data you trust will facilitate in delivering quality goods as well as services at a cost where customers will appreciate. This provides a competitive advantage over the others in the sector. Artificial Intelligence is the right fit for procurement in this regard however as we have stated earlier, it can render useful insight that is helpful in decision-making.