AI is one of the most discussed topics across the world today. As with any popular topics myths are created and often used as reasons to not apply theory to practise. As a result, AI in procurement has developed a few myths along the way.
According to a Hackett group report, 46% of procurement leaders plan major investments in AI to improve their procurement processes.
While organisations in North America are ahead of the curve in terms of tech adoption, we find procurement organisations in other parts of the world such as Asia are not too far behind with the rising interest in AI.
In a recent study conducted by ISMand Zycus, it was noted that among the companies surveyed (USA centric), about 22% had deployed AI already with the majority of these organisations having adopted AI with the last year.
For those organisations who are currently in the early adopter stage or just beginning to start on their AI journey, we identified some common misconceptions around procurement and AI.
- AI WILL REDUCE THE WORKFORCE
AI can do many things efficiently, but it doesn’t have the human ability to develop interpersonal relationships. Having people who can manage internal stakeholder’s requirements and expectations or external relationships with strategic suppliers is essential in a procurement role. With the AI data, analytics, and intelligence on hand, there will be a premium on strategic thinking, creating a requirement of people who can interpret data and use it in decision making.
What AI can do is take away mundane tasks, AI will put more time back on to the plate of procurement professionals. Although we could possibly see a reduction in some tactical roles, this will be offset by increased resources deployed in strategic areas – relationship management, statistical, and data analysis. In the long run, AI could increase the number of resources required by the procurement function.
- AI WILL INVOLVE A BIG LEARNING CURVE
The learning curve, big or small, will differ from organisation to organisation, depending on their existing processes. If the procurement function is making the jump from archaic processes to streamlining the entire operation this may mean a larger learning curve than if they were just updating their current systems.
However, the overall result is that AI will deeply enhance the learning and understanding of procurement professionals’ function. Thus, AI makes procurement one of the most exciting places to be in business and driving strategic direction.
- AI USAGE WILL BE TIME CONSUMING AND EXPENSIVE IN NATURE
It is quite the opposite. AI has proven to cut down significantly on time taken for procurement tasks overall. It is a significant enabler for faster decision-making. The job of analysing high volumes of data and the extraction of key facts and figures, predictions, number-crunching, and more can be accomplished. All of these can be achieved without having to spend countless man-hours, which without automation would have been unavoidable. This results in immediate direct savings in terms of time and cost.
- IT IS BEST TO WAIT AND WATCH RATHER THAN TO JUMP ON TO THE AI BANDWAGON
In 2020 due to COVID-19, many procurement organisations have seen a complete overhaul of the way things are being done now. The organisations that already had implemented futuristic technologies such as AI have seen the benefits. They are better prepared to combat changes and disruptions in the future. It is the right time for forward-thinking organisations to shift from existing processes to AI-driven processes. This will ensure the organisation has a competitive edge.
- AI WILL REPLACE ALL EXISTING PROCUREMENT TECHNOLOGY
AI can blend in seamlessly with your existing platforms and does not require the disposal of existing infrastructure or create new processes from scratch. AI bots can add to current technologies in use and can be tagged on to the existing platform.
While the AI focus will have an impact across the entire organisation, the potential for realising significant benefits is much higher for the Procurement function when compared to other functional areas.
So, with these myths now dispelled there is no reason why an organisation should hang fire and wait to adopt AI technology.