All posts by Lari Numminen

7 Companies Pioneering Artificial Intelligence in Procurement

With so much written on Artificial Intelligence it’s hard to know where to look. However, there are companies from whom we can take our lead.

artificial intelligence
Photo from Pixabay on Pexels

Artificial Intelligence (AI) is one of the hottest topics in business right now. It’s also a bit like teenagers and sex. Everyone seems obsessed with it, everyone feels left out, few actually know what they are doing, so everyone claims they are doing it.

There is so much hype about AI we recently collaborated with Procurious on a quick AI challenge for CPOs at the Big Ideas Summit in Chicago. From their savvy answers you’ll see that many procurement leaders understand the value of AI. What we need as a community is transparency on how it affects us here and now.

The new book AI in Procurement explores many realistic use-cases for artificial intelligence within procurement. The authors Sammeli Sammalkorpi and Johan-Peter Teppala were among the first to pilot AI solutions in procurement software and scoured much of the literature available today on the topic to write their book.

Don’t worry. We won’t get in to too many details about the mechanics and jargon of AI. Before we go through the examples from procurement, there is just one thing to understand.

Artificial Intelligence in Procurement

Many people have a somewhat distorted view of AI. They may remember futuristic movies where chrome-plated androids interact in human-like ways, or computer systems that have natural language conversations.

In reality, most AI applications today are a lot more boring and inconspicuous. You’re likely to interact with AI when you search for address details on Google Maps, or look up a playlist of music on Spotify. It’s already a part of the software you use every day, but you rarely see it.

This is much the same in business. Most of the applications of AI we see in procurement come as solutions to existing problems humans have a hard time solving. They are enablers, rather than replacements to human expertise.

AI in Procurement presents the concept of “human machine collaboration” to explain how AI builds on the strengths of both humans and machines.

7 Examples of Artificial Intelligence in Procurement in 2019

Now that we’ve covered the background, let’s dive into those fresh AI examples across seven different areas of the procurement cycle.

Supplier risk management

AI can be used to monitor and identify potential risk positions across the supply chain. For example, RiskMethods identifies new and emerging supply chain risk events by handling data gathered from different sources, helping to identify emerging risks faster.

Purchasing

AI can be used to automatically review and approve purchase orders. For example, it allows employees to order office supplies without requests for approval, making the process leaner and more efficient.

To state an example, in Tradeshift’s platform a chatbot called Ada can be used to check the status of purchases or automatically approve virtual card payments, regardless of the user’s location.

Accounts Payable Automation – Machine learning is increasingly used in accounts payable automation. ML assists in identifying errors and potential fraud in large amounts of automated payments. An example of this is Stampli, which leverages machine learning to speed up payment workflows and automate fraud detection.

Spend Analysis

At Sievo, machine learning algorithms are widely used in spend analysis to improve and speed up a number of processes, including automatic spend classification and vendor matching.

For example, if you have DHL, DHL Freight, Deutschland DHL, and DHL Express in your data, the machine learning algorithms are easily able to consolidate these together as DHL for increased visibility and data coherence.

Supplier Information Management

Big data techniques enable new ways to identify, manage and utilise supplier data across public and private databases. Tealbook is one platform that applies machine learning to supplier data in order to create and maintain accurate supplier records across all systems and areas of the business.

Strategic Sourcing

AI can also be used to manage, guide, and automate sourcing processes. Keelvar’s sourcing automation software uses machine learning for the recognition The reality of AI in procurement 59 of bid sheets and specialises in category-specific eSourcing bots such as raw materials, maintenance and repair.

Contract Management

AI has many potential use-cases in contract management. Seal Software uses optical character recognition (OCR) and advanced text analytics to clean up and consolidate information contained in contracts.

We’re likely to see many more successful examples of AI shared across procurement functions in the coming years. The more we share as a community, the better we get.

If you would like to dive deeper into the topic, you can get early access to AI in Procurement as a free download before the printed book comes on sale on Amazon in 2020.

Creating a Procurement Video to Make Your Mum Proud!

Photo by Donald Tong from Pexels

This article was written for Procurious by Sievo. Find out more about them here.

Have you ever had a hard time explaining what you do to friends or family? Do you love your job but get the sense other people find it boring?

We all know sales drives growth, marketing builds brands and the buck stops with finance. Why is it so difficult to explain the excitement and value procurement brings to the table?

According to Wikipedia, procurement is “the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buying decisions under conditions of scarcity.”

Yeah, I know! It sounds boring. Compare it to what we came up with to describe procurement analytics. And we promise you, this is NOT just another boring video about procurement.

Time for a Re-Brand

So why did we break the procurement as we know it and create that simple-fun video? We all know that procurement is often introduced in a boring way – it’s no Sales or Marketing.

But if Sales and Marketing can brand themselves well, why can’t procurement? Why is it that when think-ing about sales, people think of smiling businessmen in suits making deals on lunch dates that increase the company’s revenue, and when thinking of procurement it’s something….well…different.

At Sievo we do procurement analytics. It’s arguably the nerdiest, geekiest, most jargon-filled area of procurement. Analytics is tough to explain on its own. But analytics combined with procurement? I’m not going to even put the definition of that here.

But don’t worry – the fact that procurement is boring is not your fault!

You can choose who and what to blame – the fact that procurement professionals are focusing on savings instead of branding or the lack of knowledge about the subject – but one thing is true: procurement has a branding problem.

Our Procurement Video – Sharing the Excitement

A while back we were looking at YouTube videos about procurement to have some inspiration for future projects. Turned out, we weren’t very inspired at all after watching all of the long and technical videos. In fact, we got a bit worried when wondering what our moms would say if they decided to look into what we do for a living.

We decided we had to do something. Anything. We found that there was a clear demand for an interesting and fun video about procurement. Like the one the sales function has where Leonardo DiCaprio shows how to sell a pen. If for no-one else than to finally explain to our partners and mothers what it really is that we do in a way that they wouldn’t fall asleep halfway.

The thing is, procurement and procurement analytics are actually quite exciting. You should know. Sure, it’s not smiling people out on launch dates all the time, but dang it, procurement is an important function. It’s a function that should be portrayed in the exciting way it deserves.

This subject of changing the way we talk about procurement seemed to be close to the hearts of many since there has been an abundance of comments in response to the video.

Check some of those out:

“Definitely going to show this to my family to let them know what I do at work all day!”

Naavie

“Very cool – this video shows importance of procurement analytics to CPOs, cate-gory managers, compliance officers who look for sustainability in procurement process and even legal department!”

Alexandra Shtromberg

“Shared to my network, great vid… procurement analytics, simply explained and fun to watch… ”

Laura Garcia-Hornell

“Interesting and fun video, really liked it. I am all in for procurement analytics because on the best case it helps to support better decisions which lead to better negotiations… ”

Phil Kowalski

Want more? Read here 14 of some of the most creative definitions of procurement analytics by the ex-perts. Who knew procurement analytics could be explained with Tequila, an Indian wedding, and digging up gold?

Comment what you think about our approach and let us know how YOU would rebrand procurement!