HOW COGNITIVE PROCUREMENT IS GOING TO SHAPE THE FUTURE?

Organizations are looking to CPOs to take on broader and deeper strategic initiatives to create a future proof supply chain. What Covid-19 did to firms globally is no secret. So, apart from cost savings, there are several other goals like innovation, digital transformation, sustainability that have become part of CPO’s agenda. Hence, the biggest question is how to cater to these varied objectives that are there on CPO’s plate?

To answer it in one word is – Digitalization! In other words, the electronic Procurement system is the paradigm shift in the Procurement function. In bringing about this disruption, AI plays an indispensable role.

Learn more: Start Your Cognitive Procurement Journey with Zycus

In a Survey reported by Deloitte, 51% of the respondents indicated they are now using advanced analytics in Procurement. So using AI, analytics, and automation, organizations are able to evaluate opportunities through data-driven insights, allowing them to understand the macro factors even more clearly. However, the question arises, does this pose a threat to the future of procurement jobs?

To answer this, I would like to quote Len Prokopets, Managing Director of KPMG’s procurement practice notes, most AI procurement solutions are “not reducing headcount, but driving improved results.”

The journey of digital transformation of Procurement can be broadly divided into 3 stages:

Strategic Procurement: With globalization, there was a need to manage third party relationships and mitigate risks associated with cross-border transactions. Thus, a need to develop ERPs came into existence
E-Procurement: In this phase, the role of procurement augmented from being transactional in nature to strategic business value driver. Software tools were used to capture, process, and store data
Cognitive Procurement: There is a need of using technologies like AI, NLP, predictive analytics, and data mining to draw insights and adapt frameworks to increase process efficiency, manage supplier relationships and thus create a coherent value chain

The magic of AI lies in its ability to analyze data, predict and draw pivotal insights in terms of decision making. The benefits of embracing digital procurement for a firm are manifold. It enables supplier centricity and greater visibility, sustainable sourcing, innovative category management techniques and all this culminates to make it a more customer-centric organization. However, technology’s impact on a business is more a function of people’s willingness to adapt, thus organizational culture plays a crucial role is the process of transition of procurement function first to e-procurement and then to cognitive procurement.

In spite of the challenges that lay in the path of this metamorphosis, it is of utmost importance that an organization devise ways to overcome them. In the recent 2021 CPO Survey, conducted by Deloitte, it can be noted that there has been a drastic shift in procurement priorities. The need for Digital Transformation has increased by 20% as compared to 2019.

In addition to this, the survey also states that the adoption of next-gen technologies is a strategic lever to make procurement agile since front runners are 18x more likely to have fully deployed cognitive capabilities.

Learn more: AI and ML for Cognitive Procurement in the Value Chain

STEPS FOR IMPLEMENTING AND STRENGTHENING THE DIGITAL CORE OF PROCUREMENT

The first step to begin your journey of procurement transformation is gathering data. Data become the main fuel and storing it at every touchpoints that generate procurement related data is of utmost importance
The second step is to determine the right set of technologies to be used to clean, analyze and process these data to bring about insightful messages that will impact better process efficiency, supplier relationships and mitigate risks
The third and the last step is to build an operating model with policies, procedures, and the right skill set. To leverage technology, it is essential to define the roles and responsibilities of all the stakeholders

Zycus’ AI-based Merlin for eProcurement can free you from the tactical buying process, is capable of flipping a requisition to PO using just a single click. With its out of the box intelligence, it is able to make cost management, compliance, checks, and controls simple and easy to use.

With such easy to use digital procurement tool, your team can now focus on strategic initiatives, new product development, and nurture better third party relationships. Check out this less than 2 mins video to understand more about the features and benefits of Merlin AI Suite for eProcurement.