Artificial intelligence (AI) and machine learning tools have become indispensable to fuel procurement and sourcing efforts at the Atlanta-based global beverage leader, according to Brett Fultz, director of global analysis, global procurement and supply chain at Coca-Cola. For any company that manufactures or sells goods, buying and sourcing are integral functions of supply chain management. Sourcing, an early stage of the buying process, is about identifying and assessing potential suppliers of goods or services, negotiating terms, and selecting vendors. Procurement, however, goes further, and is about getting supplies and payment from suppliers who compete for business by submitting bids and negotiating contracts. But challenges abound in a supply chain landscape full of constraints and risks - from issues related to the COVID-19 pandemic and the war in Ukraine to climate change.
Artificial Intelligence (AI) is one of the digital technologies progressing rapidly and is a current topic of broad interest. AI has contributed to a more efficient and intelligent way of streamlining business operations, which helps companies achieve cost reduction, improve efficiency and productivity and improve responsiveness to market demand. This article aims to look into the crucial applications of AI in procurement, namely in the area of spend analytics, strategic sourcing and contract management, supplier risk management and robotic process automation (RPA) in procure-to-pay workflow. The chart below shows the applications of AI across Procurement Cycle. Artificial intelligence (AI) is a technology capable of performing tasks that typically require human intelligence by learning, coming to its own conclusions, understanding complex data, engaging in natural dialogues with people, enhancing human cognitive or replacing people on execution of non-routine tasks.
While AI in its most basic form of "assisted intelligence" is readily available in many modern procurement and sourcing platforms, as evidenced in our previous briefings (AI in Procurement and AI in Sourcing), it has not yet creeped into optimization. The most advanced platforms have limited themselves to easy constraint creation, data verification and detection of hard constraints that prevent solutions -- as in the case of Coupa -- or easy data population, wizard-based scenario creation (using standard model templates), and automation -- as in the case of Keelvar. In the former case, the underlying statistical algorithms can be found at the heart of some modern machine learning technologies (but aren't quite there), and in the latter case, the robotic process automation (RPA) is nothing more than an automated, manually defined, workflow.
Covid-19 has focused businesses more and more on their supply chains, said fast-emerging Cork business Kwayga's CEO Martin Fitzgerald. "Right now, businesses are seeking new solutions to help buyers diversify their suppliers, and suppliers to diversify their markets." Kwayga is a B2B matching platform for buyers and suppliers in the food sector designed around trust and security. Using the platform buyers and suppliers discover, verify, match, connect, communicate in any language and trade. "Kwayga focuses on democratising international trade for mid-sized businesses by putting the right buyers with the right suppliers at the right time. Trust is the key component. We use AI to verify company profiles, we protect buyers from unsolicited approaches by giving them strong privacy controls, and we make a promise to suppliers that the deals posted on our platform are from real verified buyers."
In the context of purchasing goods and/or services by an organization for its operations, the words sourcing and procurement are often interchangeably used. While the two terms are indeed related, there are definite differences between them. In this article, we'll see what procurement sourcing processes are, how they are different and how they work together to enhance the overall operational efficiency of an organisation. Procurement is the placement of orders with suppliers, confirming the orders, making the payment, and ensuring correct and timely delivery of the ordered product/service. It is the foundation of supply chain management.