Is there more that AI could in and for procurement?
We’re thinking about what innovation in supply chain could really look like.

Progress on the application of Generative AI has been markedly accelerating in most fields of endeavours, notably education, marketing, arts and production. Energy procurement, and supply chains in general, should also be benefiting from the exponential advances in AI. In this Industry Trends article we take a look back at a recent session that helped shed light on how our industry can keep moving forward as we collectively pursue efficiency and optimal service delivery.
We’ll review some of the benefits, some (comparatively) easy wins that can be pursued, and opportunities to deliver on the promise of on time, in full delivery of products and services – thanks to the current AI state of play. All this by answering the question from the title – by the way, the answer is, “yes but only by leveraging our collective curiosity, identified needs and ingenuity.” But let’s start with the “why?”

A reminder about why AI needs us (humans) and how we can benefit
It makes sense that the difference between human intelligence and artificial intelligence is the trajectory of progress. The fact of the matter is that even the as-yet untapped ability of AI can outstrip, outproduce and outright outperform task realisation and production parameters of human capability. However, at this point in time AI outputs are still heavily dependent on human inputs. This means that to achieve satisfactory results we still need filters, nuance, and applicable “beyond the next horizon” thinking to achieve any sustained benefit.

The second requirement is also a uniquely human trait. We need to stay focused and stay open two possibilities. That is the challenge.

A previous industry trends article gave a general overview of AI and how its applied applications may affect and or benefit our industry. Building on that, here are 4 chief benefits that should be pursued as we become more efficient and effective in our collective service offering.
1. Reduction in time spent searching for suppliers’ information
2. Increased ability to define suppliers’ reputation and therefore assess their suitability
3. Rapid execution of specific text searches and related tasks
4. The resulting establishment of good governance, once set up with the appropriate prompts, means trustworthy supply chains can benefit enormously

Reaffirming needs, exploring gaps and pursuing opportunities
A really effective way of identifying and understanding opportunities is to reduce the challenge down to its most fundamental pieces and identify the gaps. Now, we understand that there are 6 clearly defined steps in the procurement cycle:
1. The identification of needs
2. Vendor on boarding – AI can assist with guided vendor onboarding
3. Raising of purchase orders – AI can fulfil the role of smart procurement advisor
4. Goods delivery
5. Invoice verification – AI can do the heavy lifting associated with 4-way invoice matching
6. Payment – AI limits contract leakage

As you can see AI can positively contribute to ensuring that the procurement cycle runs smoothly – to an extent. In terms of gap identification, you can also see that “identification of needs” and “goods delivery” points to an opportunity if only we can conceptualise how best to lean on AI.

The identification of needs
Even within this section there are at least 5 areas where AI would be of assistance:
1. Demand analysis – the more detail the better – remember data volume is not an issue for AI.
2. Specification development – the important tip here is to be very precise and invest some serious time into this task when relying on AI.
3. Market research – again, AI is geared to collect analyse and process vast amounts of data.
4. Risk assessment – these assessments may be drawn from generated prognostications based on available data
5. environmental and social factors – again AI’s can help make best use of available data.

Of course, the capabilities of generative AI can also be of benefit in the areas of documentation and presentations as part of the approval process.

Goods delivery
At this point of the six-stage procurement cycle it may be tempting to say, “thank you AI, we’ll take it from here.” But consider how AI may lend yet more benefit to the process. We are already seeing generative AI contribute to the important steps within document delivery including summarisation and confirmation; extracting the key information from received documents; classification of the documents accompanying the delivery; and of course, translations which may be necessary when dealing with overseas functions of international supply chains.

Concluding thoughts on unending possibilities and benefits of generative AI
It’s understood that the guiding principles for success around using generative AI to benefit supply chain include:
1. Responsible content generation
2. Reliability
3. data security
4. transparency
5. resource efficiency
6. open this and flexibility

If these principles help ensure success in strengthening and optimising supply chains, we must also recognise the impacts on other partnerships while managing risks. Effective risk mitigation and management means that particular focus must be placed on outputs, precision, inputs, and especially training.
The integration of AI into our supply chain process is of course a no-brainer however, what is worth thinking about are the endless benefits that simply require us to remain curious and courageous as we embrace the future and its opportunities.