The digitisation of business is taking hold. From machine learning, artificial intelligence (AI) and the Internet of Things (IoT) to blockchain, cloud and networks, digital technologies are opening the door to new, more efficient and intelligent ways of operating. And nowhere is this more evident than in procurement.
Machine learning and AI have made their way into procurement applications and are fueling smarter, faster decisions. A new breed of cognitive technologies promises to push things even further.
Digital technologies drive simplicity and automation that can help procurement create advantage for their organisations today. But the future of procurement is all about intelligence. And cognitive technologies are the key to unlocking its potential.
Cognitive technologies present new opportunities to predict and respond more effectively to customer and market demands. They also open new approaches to connecting people and information – all of which will fundamentally change how buying and selling get done:
- Take sourcing. A digital procurement assistant combined with machine learning can transform sourcing events by helping with tasks such as defining the correct Request for Proposal type, identifying appropriate suppliers to participate based on commodity category, region or industry and delivering intelligence on market signals and pricing pressures to optimise results.
- Contracting can also become smarter and more comprehensive with applications that automatically identify relevant terms and conditions matched to legal library and taxonomy, uncover similar contract terms for a specific commodity by industry or region based on benchmarking data and suggest optimal prices to target based on expected volume and contractual discounts.
We are already working on such next-generation applications. Leveraging SAP Leonardo, IBM Watson technologies and SAP Ariba, the solutions will bring intelligence from procurement data together with predictive insights from unstructured information to enable an even more intelligent source-to-settle process for managing all categories of spend.
And procurement is ready to embrace them. We recently conducted a global survey of procurement, finance and supply chain functions executives in partnership with The University of Applied Science Würzburg/Schweinfurt. And the top priorities for the year ahead among those polled were clear: big data and predictive analytics (72 per cent) followed by AI (including machine learning) and cognitive computing (22 per cent).
Like the rest of the world, procurement has gone digital. It’s now ready to be smart. In embracing intelligent applications and the technologies underlying them, procurement can reimagine their supply chains and take insight driven actions that beyond savings and efficiencies, create broad business value.
Marcell Vollmer, Chief Digital Officer, SAP Ariba
