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Let’s check the key use cases of AI in sourcing and procurement.
FREMONT, CA: Many enterprises still see artificial intelligence (AI) with trepidation and doubt in today's technology-driven society. As a result, the actual benefits it provides in terms of sourcing and procurement are mainly unrealized. However, crucial strategic, consumer, and operational insights get buried beneath the plethora of raw data found in internal and external systems.
AI can assist sourcing and procurement teams in illuminating the insights concealed in this data, allowing them to validate or clarify existing assumptions, guide decisions, and design new future courses.
Let’s check some of the key use cases of AI in sourcing and procurement.
Spend classification and enrichment
There is a growing demand for more rigorous systems to oversee compliance with external contracts and internal policies and a better understanding of internal spending. In addition, the establishment of effective category, sourcing, and spend management strategies requires accurate expenditure data.Spend classification tools now allow for even greater analysis and, in some cases, additional data to the data.
Global sourcing insights
When determining their sourcing strategies, chief procurement officers (CPOs) frequently face a maze of data. Businesses may now employ AI to examine high-level sourcing strategies thanks to new technologies. CPOs can use these to determine where to get specific products and weigh the savings possibilities against the risk.
Data-driven product and supplier insights enable organizations to evaluate sourcing options critically, better comprehending the critical industry and macroeconomic trends. It will allow firms to increase supply chain transparency, uncover new sources of supply, and reallocate category spend to a more efficient allocation.
Invoice data extraction
The use of invoice data extraction can help to cut down on both human processing delays and fraud. In addition, these tools can be helpful to process historic invoices to provide further insight into an organization's spend habits in cases when spend data has not been captured at a granular level of detail.
Automated compliance monitoring
Compliance can be a laborious, time-consuming process in firms that haven't implemented a source-to-pay system. Even in businesses that have adopted these solutions, many suppliers get excluded from the system. In these cases, AI can help arrange a contract, invoice, and PO data to identify and highlight non-compliance.
Contract data extraction
Contract data extraction, analogous to invoice data extraction, allows an organization to structure massive volumes of unstructured contract data. At its most basic level, this will enable businesses to input enormous volumes of contracts in PDF, picture, or Word file format and then extract critical information like start and end dates, payment terms, and references to master agreements.
Natural language processing (NLP) to extract crucial information and terminology can aid compliance and speed up the transition to systems for procurement departments without organized contract databases.