- Procurement teams are increasingly constrained by the limitations of traditional ERP & BI systems.
- Executives see a great deal of potential in advanced digital technologies like AI and machine learning.
- The right machine learning-led procurement solution can help industrial buyers to unlock 8 big benefits.
Powering up your procurement strategy
Just like the businesses they buy for, direct procurement teams are starting to adapt to a radically transformed landscape.And recognising that traditional ERP systems aren’t built to meet new decision management challenges, like the need for more flexibility or the connection to external market data, procurement innovators are looking for ways to work more efficiently, drive greater savings and prove their value to the business.
According to a recent Gartner study, procurement executives are excited about the potential of new technologies like AI & machine learning. The executives surveyed appear confident that advanced digital procurement capabilities could help to deliver greater cost clarity (54% of respondents), faster execution (47%) and larger cost savings (21%).
Getting ahead with the right digital solution
How could a purpose-built solution, powered by machine learning, help your team to simplify the procurement process?
Here are 8 key benefits that purchasing innovators can expect to gain.
1. Sharper market and price insights - on demand
Most industrial raw material buyers subscribe to price updates and market analyses from professional information providers. That is valuable information, but quite low speed and qualitative. That information is much more useful when combined with real-time data from raw material and financial markets, with the power of machine learning to unearth profitable correlations - as shown by our own experience.
2. Easier integration of non-financial objectives
Industrial buyers are increasingly required to factor non-financial objectives into their decisions: compliance rules, impact of raw material mix on carbon footprint and industrial yield, ethical guidelines... The right solution should help buyers build an integrated picture of these requirements and "trade around their assets" – systematically connecting the dots between procurement and production, supply chain management and compliance.
3. Smarter decisions
"Continuous intelligence" mixes multiple data streams, coming from multiple internal and external sources, and leverages multiple types of analytical and predictive models to transform insights into actionable recommendations. With continuous intelligence, your procurement team can make more informed buying decisions – underpinned by clear, compelling evidence that will ensure your business leaders are on board too.
4. Stronger bargaining positions with suppliers
Industrial buyers often fear being outgunned by sellers in the information war. Tech-driven analysis of market conditions, supply/demand dynamics, and your own historical purchasing patterns, can finally give procurement teams a much-needed advantage in supplier negotiations.
5. Sustainable cost savings
There’s a simple but significant reward for being able to make the most informed procurement decisions at the best possible time: cost savings. By upgrading the quality of each purchase, procurement’s marginal gains add up – improving the health of your business as a whole. For raw materials and energy, our experience is that machine learning can help industrial buyers shave 3-5% off their annual spend.
6. Faster execution
The continuous analysis of market conditions and optimization of the relevant internal costs and constraints has the potential to accelerate the procurement process. So your team can react confidently and decisively when the right opportunities arrive, even when markets are volatile.
7. Time to add more strategic value
Speeding up data analysis, cost/constraint optimization, and ultimately the buying process as a whole will give your team the time and C-suite buy-in they need to focus on larger and more complex procurement strategy considerations – and add even more to the wider business.
8. Modernized and more powerful procurement function
Instinct and experience are invaluable. The right digital solution can help lift natural ability to the next level – fuelling a stronger competitive advantage, an improved reputation within the business, and greater rewards for procurement team members.