Emerging technology such as artificial intelligence (AI) is slowly gaining momentum across industries and processes. Companies worldwide are embracing this technology to realize efficiency and increase productivity in their procurement processes. AI algorithms can assist in analysis, prediction, and automation, thus helping to streamline the entire procurement process. However, organizations must understand the best use cases of implementing AI. In addition, the adoption of this technology across geographies remains uneven, where developed countries are moving ahead, while the developing ones are still taking cautious steps.
As the post-pandemic era finally emerges, the development of technological capabilities and digitalization of processes are here to stay. Among the new-age technologies that are changing the world, AI is making waves across industries. The technology is mainly based on advanced usage of statistics, algorithms, and fast computer processing; hence, it has the potential to bring about sectoral transformation.
AI finds application in procurement as it can make the process data-driven and systematic. It can be built into software solutions to streamline and automate processes, as an AI system runs on algorithms that are programmed to perform analysis, automate repetitive tasks, and detect anomalies.
The key use cases of AI in procurement are:
Geographical Presence of AI
While technological advancements are generally more evident in the Western world, AI has made significant inroads in Asia as well. According to Oxford Insights, Singapore tops the list for being most willing to implement large-scale AI applications.
AI is expected to provide a 10–18% boost to GDP across Southeast Asia by 2030; this would be equivalent to USD1 trillion. Of the various processes that AI could be applied to, procurement would have a significant share, with a potential value-add of 20–25%.
Future
AI is transforming processes and industries and bringing about a technological revolution. Within procurement, it can be used for inventory and parts optimization, resulting in a 21–30% reduction in stockouts. Developed countries are already implementing AI across value chain and simplifying procurement processes through this technology. Meanwhile, developing countries are also building infrastructure and processes to adopt AI as it can help streamline the procurement process and increase efficiencies.
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