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1、T u r n i n g V i s i o n I n t o R e a l i t yID E N T IF Y IN G U S E C A S E S F O R A I IN P R O C U R E M E N T the bigpictureIDENTIFYING USE CASES FOR AIIN PARTNERSHIP WITHPROCUREMENTLEADERS.COMTURNING VISION INTO REALITY1INTRODUCTIONUNLOCKING A NEW AGE OF VALUECan the world of business keep u

2、p with the AI hype?According to Gartners AI hype cycle,generative AI is at its peak of expectations which means disillusionment is to follow.Narrowing the trough and coming through the other side more enlightened and crucially,productive,is the key.AIs sandbox nature and seemingly limitless potentia

3、l could be viewed as a challenge,giving rise to more questions than answers.Where does an organisation start?Who will control AI?Who will use it?Who will regulate its use?Procurement supports strategy,drives efficiencies and manages risk.The function undertakes these through data-driven decision-mak

4、ing while building relationships.Can AI be pivotal in unlocking insights and enhancing procurements value?We walk through the procurement use cases.SOURCE Gartner Hype Cycle for Emerging Technologies,2023Source:Gartner80%+More than 80%of organisations will haveused generative AI-powered applicationp

5、rogramming interfaces or models by 2026ZOOMING OUT:DISRUPTION AND INTENTION2DISRUPTION AND INTENTIONIn a world where regulation often attempts to catch up to market disruption,the sheer power and almost unlimited potential of advanced AI has led to several major governance declarations.In October 20

6、23,US President Joe Biden issued an executive order to“ensure that America leads the way in seizing the promise and managing the risk of AI”.The Bletchley Declaration,made one month later,saw leaders from Europe,Africa,Asia and the Middle East release a joint statement on cooperation and the sharing

7、 of best practice to mitigate the risks associated with AI.In December,meanwhile,the European Union agreed provisional rulesgoverning AI from the perspective of transparency obligations,copyright and riskevaluations.LinkedIn cofounder and former OpenAI board member Reid Hoffman told Wired in Decembe

8、r 2023:“Just because you can build the technology doesnt mean that necessarily has a good outcome.You have to shape it.You have to direct what youre doing be an intelligent shaper of it and drive in the rightdirection.”Procurement professionals are waking up to this,too:some 94%of respondents to Pro

9、curement Leaders CPO Compass 2024 survey said they expect AI to transform the function in some way.Whether dreamers or narrow-minded,positive or negative,the world is moving very quickly as is procurement.ZOOMING OUT:DISRUPTION AND INTENTION3SOURCES WiredProcurement Leaders CPO Compass 2024ZOOMING O

10、UT:DISRUPTION AND INTENTION“The thing I worryabout most is humanslosing capabilityover the machines”Rene Haas,CEO,Arm“AI is a game-changer because it can learn fromunstructured data.It can continuously adapt;getting smarter more quickly.Models trainedfor one task can be finetuned and appliedin other

11、 areas.We can all create a promptand get results it democratises theuse of data and AI because anyonecan make arequest”Lalith Nambirajan,VP consulting,GEP4REAL-WORLD USE CASES16%The proportion of administrative and datamaintenance tasks already affected bythe use of generative AI in procurementSourc

12、e:Procurement Leaders CPO Compass 20245REAL-WORLD USE CASESPUTTING AI INTO ACTIONProcurement policy:You have a huge workload caused by the number of approvals to be made.You could ask AI to tweak the thresholds and track spendhistory going forward.Category management:Spend analytics can be undertake

13、n with much more depth because AI will be able to read and analyse a broader range of information.For example,asking which raw material indicators are moving:what is happening to supplier markets;are there mergers occurring among suppliers?Spend analysis becomes more enriched.Source to contract:RFX

14、support the ability to summarise responses quickly.You may have sent out a 100-line RFP to five suppliers:which ones are L1,and what would be the right way to differentiate or divide them?You can then suggest the supply share by 30%,and the lowest-cost supplier takes 70%.Purchase-to-pay:One of the b

15、iggest issues is low usage of catalogues because theyre not easy to search.So,youll be able to build rules that create more targeted results and,therefore,encourage higher usage.Supplier relationship management:Gauging vendor performance requires buyers to gather lots of data across multiple databas

16、es,and then analyse it.Being able to ask simple questions would accelerate and steamline this process:What are the suppliers obligations?How well has it met them?Gauging vendor performance across multiple sites and providing a more targeted improvement response while comparing similar suppliers may

17、also soon be an option that is open to procurement teams.6REAL-WORLD USE CASES“We have looked at AI ata corporate level in termsof how to make it work andare also working with our techpartners in a centre they havebuilt for this kind of thing.Wevealso looked at it in our procurementleadership team m

18、eetings”CPO,energy company“I have the data,what are the use cases?Its about understanding the fundamental requirement for a buyer or decision-maker and saying:I need this sort of data,this sort of logic and triggers and then publish this information and lead to a call to action”Lalith Nambirajan,VP

19、consulting,GEP7RESHAPING THE ORGANISATION1.5%AI could grow global productivity by 1.5percentage points over a 10-year period8Source:Goldman SachsRESHAPING THE ORGANISATIONADAPTING TO THE AI AGECompanies need to focus on data engineering and ensuring high-quality data aggregation and provisioning.Pro

20、curement organisations need to look beyond the main ERP platforms and towards other on-premise systems,such as warehouses and transport management,which will also need to be integrated.Then theres market data indexes,weather forecasts,news alerts;how do functions incorporate these?Plus there are fin

21、ance and risk management solutions,too,alongside supplier intelligence and direct suppliers.Then theres upskilling employees within the function.Procurement will remove monotonous tasks of drafting and communication what can staff do with this spare time?There will be a lot more interaction with dat

22、a streams.Data engineers will flex the information through to the processing side,then data scientists will provide insights.Operations professionals and translators will watch over and interpret the responses that come from the AI,how to refine this data further and embed into business decisions.Th

23、ere may also be dedicated AI infrastructure and third-party partners to fill specific gaps.9“As long as you can amalgamatedata from systems via APIs,it doesnt matter how manysystems you have.You just need to be thoughtful abouthow youre extracting that data,and how youre feeding it through”CPO,busin

24、ess services organisation“We need a workforce thats able to use AI andscale up and use the time available to undertake value-added work.New rolesand capabilities need to be brought into procurement to use and shape this data to inform decision-making”Lalith Nambirajan,VP consulting,GEPRESHAPING THE

25、ORGANISATION10ILLUSTRATIVE AI USE CASES,PART ONELalith Nambirajan,VP consulting,GEP,offers insight into the areas in which procurement teams should seek to deploy automationTAKEAWAYS11Procurement strategyReview performance,recommend improvements and changes based on communication,data,trends and ben

26、chmarks.Procurement policySuggest regular updates to policies(thresholds etc.)based on spend history and evolvingmaturity.Procurement reportingStreamlined natural language interface for dashboarding and reporting across all procurement data sources.Capability developmentAssist and provide tailored t

27、raining for individual team members,onboarding,performance metrics,roles andresponsibilities.Category strategyPrioritise categories based on external and internal data,offer real-time performancemetrics.Budgeting supportSupport budgeting with real-time spend,realised savings and market information t

28、o adjustbaselines.Spend analyticsEnhancing analytics by capturing info from all internal and public sources to improvecategorisation.Pipeline planningBased on review of sourcing plans,contract expiries,email exchange and calendars,providereal-time suggestions of resource availability to plan project

29、 pipeline.CATEGORY MANAGEMENTSTRATEGY ANDPLANNINGILLUSTRATIVE AI USE CASES,PART TWOTAKEAWAYS12Supply market researchEnhanced supplier research(internal data and online),automated outreaches,expressions of interest and nondisclosure agreements.RFX supportAutonomous RFXs for repeated purchases;support

30、 in drafting documents;summaries of responses,and so on.ContractingAutomated purchase-specific templates;summarising contract services and risks;search and audit,and so on.Automated onboardingSupplier-specific onboarding approaches,materials,reviews.Performance and risk managementGenerate performanc

31、e reports,track service level agreements,calculate credits and offerinnovation suggestions.Emissions and auditReal-time monitoring of emissions based on ongoing spend with suppliers.SOURCE TO CONTRACTAutomated cataloguesAutomated translation of contract to price catalogues and regular monitoring for

32、 updatesto catalogues.Automated spot buysAutomated spot buys for low-risk purchases,automated supplier research and outreach.Requisition supportNatural language-based purchasing for end users,automated requisition and purchaseorders.PURCHASETO PAYSUPPLIER RELATIONSHIP MANAGEMENTABOUT OUR PARTNERPROC

33、UREMENT LEADERSHead of partnerships and digital engagement:Ian LawlessSenior editor:Peter EllenderArt director:Salvatore SpagnuoloWriter:Kevin ReedW:T:+44(0)20 7501 0530Partnership opportunities:Matt DiasT:+44(0)20 7819 1029E:Published by:Procurement Leaders LtdProspero House,241 Borough High Street

34、London,SE1 1GA,UK A Procurement Leaders publication in association with GEP.All rights reservedPERMISSIONS AND REPRINTSReproduction in whole or part of any photograph,text or illustration without written permission from the publisher is prohibited.Due care is taken to ensure that the content of this

35、 publication is fully accurate,but the publisher cannot accept liability for errors and omissions.GEP helps global enterprises operate more efficiently and effectively,gain competitive advantage,boost profitability and maximise business and shareholder value.Fresh thinking,innovative products,unriva

36、lled domain and subject expertise,and smart,passionate people this is how GEP creates and delivers unified supply chain solutions of unprecedented scale,power and effectiveness.With 18 offices and operations centres in Europe,Asia and the Americas,Clark,New Jersey-based GEP helps enterprises worldwi

37、de realise their strategic,operational and financial objectives.To learn more about our comprehensive range of strategic and managed services,please visit:FURTHER RESOURCES FOR PROCUREMENT LEADERS MEMBERSlHow procurement teams are using ChatGPTl Report:CPO Compass 2024lGenAI:The terms,use cases and pitfalls you need to knowGEP RESOURCESl Whitepaper:The big picture:The AI imperative procurements nextevolutionary stepl On-demand webinar:Adopting an AI-First Approach in Procurement:What,Why and Howl On-demand webinar:From procurement vision to AI implementation a step-by-step guide