When you look beyond the hype, what value does AI actually have in procurement? Find out, with insights from our recent webinar in partnership with CASME.
AI has been front and centre in the news throughout 2023, and for good reason. The introduction of tools like ChatGPT-3 catapulted the technology into the mainstream, making it even more accessible to consumers and companies alike.
Now, many organisations are trying to figure out the implications of the technology, and every Chief Procurement Officer has one question on their mind: How can AI practically benefit my operations?
This is exactly what we covered in our recent webinar with CASME. We took a step back from the hype that’s built over the past year, looked to the practical reality of AI applications in procurement, and asked two procurement leaders their perspectives on the future of the technology.
If you missed the session, you can find an on-demand recording at the end of this blog. But in the meantime, take a look at some of the main highlights below.
Panel attendees:
- Ashish Gupta, Director of Procurement, The Clorox Company
- Raoul Grӧning, Head of Procurement & Operations, Allianz
- Omer Abdullah, Co-Founder, The Smart Cube
- Graham Crawshaw, FCIPS, Procurement Content Director, CASME
The current state of AI in procurement
The session kicked off by looking at where organisations are at with AI today. While many attendees had an appetite for AI tools, a significant 71% of attendees reported being only in the exploration phase or preparing for AI adoption.
This wasn’t surprising to see. As Omer pointed out, when ChatGPT-3 first launched to the public, many people encountered a lot of perceived and genuine issues with it. Some people worked to overcome these, but others were put off completely. Now, many organisations are hesitant about how the technology can be used effectively.
This idea certainly resonated for Ashish, who explained: “We’re very much still in the exploration phase in our organisation. We’re curious but cautious. When you think about traditional technology stacks, they require a period of adjustment. But with ChatGPT, it was available to 100 million users within two months. Now, we’re looking at what real applications it can actually have.”
On the other side, there are leaders like Raoul, who have embraced AI completely and are already using it across their operations today. “AI is already enabling us to do certain tasks we couldn’t before, such as analysing huge databases in a matter of seconds,” he explained.
Raoul’s team has even built its own generative processing technology (GPT) chatbot that supports people in their roles – such as briefing stakeholders before they enter a negotiation with a new supplier. “From a single prompt, we can get a structured report about a new supplier that we can read in just a few minutes – we no longer have to do the investigations ourselves and we can go in more prepared.”
The potential of chatbots in 2024
While leaders like Ashish may be cautious about the application of AI right now, it sounds like many are starting to prioritise AI investments over the next year.
“We’re actively keeping track of what innovations are happening, the issues popping up with them, and how we can use some of these technologies to achieve our business objectives,” says Ashish. “Many people are mentioning more intelligent chatbots, which could help with contract analytics, spend analytics, and pulling different processes together to make sense of them. Not just improving efficiency, but extracting real insight from data.”
Raoul also shared a similar enthusiasm for chatbots, and spoke to their potential value for his team. “I think in the next 12 months, every one of us could have our own assistants, whether it’s for specific tasks or broader help,” he explained. “If you could have a chatbot that knows your procurement guidelines better than any other employee in the company, you’d be able to start building guided buying bots that can support customers.”
Graham also highlighted that in the CASME community, he’s seeing similar short-term applications of AI. “We’re finding that chatbots are right at the top of our list at the moment – they seem to be the most cost-effective way to support procurement and many other areas,” he explained. “We’re also seeing AI used for other activities such as invoice processing, compliance, and supplier onboarding. These short-term tactical use cases are definitely good places to start.”
AI has a significant role in risk management for procurement
As the discussion switched to the medium- to long-term, the panel expected many organisations to embrace more data-heavy use cases in the future.
When polled, the majority of the audience highlighted spend analytics as a medium- to long-term goal for AI, with contract management and supplier discovery following shortly behind.
“I think AI will start growing at a really rapid pace and I anticipate there to be a lot of innovations, especially in the procurement space,” explained Ashish. “For me, I’m particularly interested in supplier risk management – specifically looking at how you manage your supply chains, see the risk, and manage the risk. And ultimately looking at what’s happening in the global market.”
From the perspective of The Smart Cube, this is an area where AI has always had a clear role and already plays a big part today.
“We’ve already embedded AI into risk management because of the value it can help us deliver when creating risk management content, processing huge volumes of data, and generating insights,” explained Omer. “It’s all about finding those needles in haystacks from a risk point of view. Multi-tier visibility is a tricky problem to solve – but AI can really help.”
As always, we’ve only begun to scratch the surface of what was covered in the session. There are lots of valuable insights we haven’t touched on here, including personal advice and anecdotes from the leaders on how they’ve implemented AI in their workflows.
Watch the session on demand to see what’s possible with AI today – and what the future looks like for procurement.