With the advent of technology, business in the last few years has also undergone an extensive digital transformation. As an obvious outcome, it is no surprise that artificial intelligence (AI) is bringing paradigmatic shifts in spend management and procurement. Taking into consideration the instrumental relationship between procurement and digital transformation, experts all over the world are looking forward to ways AI can help procurement intelligence and foster the enterprises.

In the current age of digital transformation, there is no area of business operations exempt from discussions of the potential benefits of technologies like automation and artificial intelligence. Given the scenario, the chance to rise into a more strategic role is a big opportunity for procurement. As procurement grows into a new role as a provider of strategic insight and foresight, the procurement organization must adapt its culture and make use of the full spectrum of IT tools, including artificial intelligence.


Artificial Intelligence and its Impact on Digital Transformation of Procurement

Artificial intelligence (AI) is a wide-ranging branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence. AI is an interdisciplinary science with multiple approaches, but advancements in machine learning and deep learning are creating a paradigm shift in virtually every sector of the tech industry. In the business world, artificial intelligence is enabling businesses to work smarter and faster. As technology and society continue to advance, more organizations are looking for powerful, sophisticated solutions that will improve and streamline operations.

The application of AI spans across many corporate functions. Starting from improvement in forecasting to optimization and automation of operations, including the development of target-marketing and pricing initiatives, AI’s contribution has been known to drastically improve the forecasting accuracy of end-customer demand for finished goods and material requirements. The trends and patterns that AI brings to the table are not evident in traditional forecasting methods relying largely on historical data. The accuracy of demand for as-yet-to-be-ordered finished goods generated by AI based on data it is fed helps procurement organizations satisfy those requisitions in an efficient manner. Besides, Accurate and repeatable inventory projections generated by Artificial Intelligence render a clear competitive advantage when compared to traditional forecasting unsuitable for processing and analyzing a vast quantity of data. And talking about data, product descriptions, inventory mapping, product seasonality, customer brand perception arising of product quality, advertising campaigns, local conflict and labor strikes, media coverage, and a lot more, are all well harnessed by AI technology to the benefit of the entire supply chain.


Current Role of AI in Procurement

Artificial intelligence has been a field of academic study since the 1950s, but only recently has it found concrete applications within Procurement functions. Typically, AI software is developed to solve complex tasks better or more efficiently than humans. It allows procurement organizations to solve complex problems more efficiently or effectively using smart computer algorithms. However, it can be further embedded into a number of software applications from spend analysis to contract management and strategic sourcing.


Future of Artificial Intelligence in Procurement

Despite the wave of digital transformation in various aspects of business, procurement at many enterprises is still largely a manual process. Historically, procurement managers negotiated with hundreds of vendors. The goal was to be as lean as possible and limit inventory supply and cash outlay. Artificial intelligence (AI) is streamlining this procurement process, reducing human error to achieve the lowest cost and the most efficient solution. The goal is still to have a pull system in place, where components are delivered for product creation at the same pace of consumer demand, avoiding costly inventory build-up and cash outlays. Experts forecast that AI can bring significant changes in activities related to procurement in the near future. AI can analyze large amounts of data, identify patterns and then apply what it has learned to new data. Allowing AI to do this should free-up time for procurement staff to take on a more strategic role, like identifying opportunities to improve operational efficiencies. AI also can capture data and help make sense of it. This is why it is considered as the most effective tool to revolutionize procurement intelligence in the coming years. It also is capable of integrating with an array of other systems so that the data is easily transferred and visible across the organization. Procurement can use this knowledge as leverage to improve cash management.

Benefits of AI in Procurement

  • Preventing Supply Chain Disruption: The primary goal of implementing AI in procurement is to prevent supply chain disruption. Using analytic tools and AI, procurement teams can easily detect any anomaly at the suppliers’ end and notify them right away, so that the potential interruption does not affect the supply chain.
  • Predicting Consumer behavior: Using the feature of deep learning, AI can effectively help businesses by predicting consumer behavior more accurately. Further, by combining big data with deep learning, AI can help businesses by creating personalized marketing approaches that will appeal to anyone who might buy their product. This is considerably a boost for procurement intelligence as well, since uncovering new markets will contribute to acquiring more data for the market research.
  • Detecting Fraud: Supply chain fraud can hamper your business in more ways than you can imagine. But, it is rather difficult to detect every potential fraud in a manual process. Through machine learning, AI can help prevent such inconsistent activities.
  • Ensuring Higher Efficiency: Like most technological solutions, AI and analytics can help save Procurement teams a lot of time, thereby freeing them to focus on capturing savings.


Smart procurement professionals understand the benefits of forging a symbiotic relationship between human talent and technology as part of the digital transformation process. Given its perceived instrumentality in procurement intelligence as well as various other aspects of procurement management, AI is likely to allow procurement professionals to spend more time performing tasks that add value and improve overall efficiency. Therefore, artificial intelligence, aided by the spectrum of IT tools, is going to be the most significant driver of digital transformation in the coming future.

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