You probably think you need a procurement department to really do procurement right. Procurement is the process a company follows to acquire services and supplies. It’s a process that has a lot of moving parts, and requires strategic thinking. When successful, procurement creates systemic controls that can reduce costs and mitigate the risks inherent in conducting business with multiple suppliers and vendors.
Historically, procurement is a complex and time-consuming endeavor, filled with necessary but repetitive tasks and hours of manual effort. The procurement process is so involved and so important, it can often feel like it’s just too much for one person to tackle.
Or is it?
Today’s companies can take advantage of artificial intelligence (AI) advances that allow workers across industries to automate repetitive tasks. AI is reshaping the future of procurement and simplifying the procurement process so any business can do it — whether you’re just one person or you have a dedicated procurement team.
AI automates cost comparisons, helping businesses save money
AI automates the cost-comparison process, which saves your employees time and your company money.
Without AI, cost comparisons are time-consuming and inefficient. Manual cost comparisons and strategic sourcing — i.e., sourcing supplies in bulk or bundling supplies with other products in order to reduce costs — require hours or even days of employee time. With AI, cost comparisons can happen almost instantly. AI automates strategic research that compares costs and identifies savings opportunities, so you can find the best price without wasting your team’s time or risking the possibility of human error.
Moreover, if multiple departments are making purchasing decisions, procurement teams can have a hard time sourcing strategically and reining in spending. By using a single automated system, companies avoid duplicate, unnecessary, or over-budget purchases and add controls to the procurement process.
Mediaplanet used Order’s AI to save an average of 8.8% on the products it purchased, in addition to countless hours of time saved for employees who no longer needed to perform manual cost comparisons. Order automatically scanned sites for vendor and product substitutions that could save the business money.
AI makes vendor relationships easy to manage
AI automates the vendor management process, keeping information up-to-date, products reordered, and invoices completed. Automating the process allows the procurement team to focus on higher-impact areas.
Without AI, vendor management requires frequent attention. Procurement teams must keep all vendor-related information organized and up-to-date, reorder products when supplies run low, and record and pay invoices on time.
AI-driven vendor management systems allow teams to automate orders, so they don’t need to manually order supplies each time. This saves team members time and ensures the company never runs out of needed products.
AI can also automate the invoicing process, which can save hundreds of hours of time per year. A recent Censuswide survey found that 72% of finance teams are spending almost 520 hours per year (10 hours a week) on accounts-payable related tasks that could be automated. From invoice processing, supplier inquiries, and supplier payments execution to PO matching, new supplier registration, and payment reconciliation, teams are wasting time on needlessly manual tasks.
By automating these tasks, team members can reallocate their time to higher-impact projects that require their particular expertise and strategic thinking. According to this same survey, of the CFOs who automated some or all of their finance processes, 40% noted an improved supplier experience.
ZeroCater used Order’s AI to streamline invoices from 200/month to three or four/month. Before using Order, the company’s IT and operations manager spent one to two full days each month manually recording and paying receipts and invoices. By automating, he was able to focus on other tasks, and the company added tighter cost controls to save money in the long run.
AI performs spend analytics, so teams can measure vendor success
AI gathers data and gives automatic insights, so teams can assess the success of their vendor relationships in a more agile way.
Spend analysis — i.e., the process whereby companies analyze their procurement spend and identify opportunities to decrease costs and increase efficiency — is incredibly important to the procurement process. According to APQC research, organizations with spend analysis programs have more efficient and less costly procurement processes. In addition to cost-savings, spend analysis programs result in faster responses from suppliers, a more streamlined procurement process, and a more efficient procurement staff, among other benefits.
Without AI, spend data takes a lot of time to recover and organize. When a spend analysis program is manual, procurement needs to work with multiple teams, dedupe multiple spreadsheets, and manually manipulate the data in order to derive actionable insights.
AI that tracks spend data can automate reports and present near-instant analysis. This saves time for team members and uncovers opportunities for further cost-savings and efficiencies. Identifying such opportunities more quickly increases a company’s agility — aided by AI, employees can make real-time cost-saving decisions and realize immediate benefits.
For example, NY Kids Club uses Order’s Analytics page to assess where it spends the most money and where it can save. Real-time analytics allows the company immediate insight into its vendor spend, so it can make adjustments that save money.
AI simplifies the procurement process, but it can’t do it all
An effective and efficient procurement process is essential — and with AI, it’s attainable for companies of all sizes and all resource levels. AI simplifies the procurement process and, in so doing, identifies time- and cost-saving opportunities for businesses. AI can’t realize these opportunities on its own, however. To add true value to a company, AI needs to team up with the company’s employees.
While AI automates much of the procurement process, operations and finance teams still need to oversee the technology to effectively guard against risk. For example, AI may be able to identify vendors that offer lower prices, but human workers still need to decide whether an affiliation with a particular vendor could tarnish the company’s reputation or lead to a potential security issue.
AI can do a lot, but it can’t do it all. When you use tools like Order, you can empower your employees to leverage AI smartly and strategically — in a way that saves time for them and cuts costs for you.