Suppose procurement leaders are to keep their heads above water amid an impending recession. In that case, they must invest in new technologies that make their processes faster and more efficient, like AI, ML, Blockchain, and IoT, says Matthias Gutzmann, CEO of DPW.
In today’s economic climate, procurement leaders must embrace tech innovations like AI, ML, Blockchain, and IoT to thrive. Here’s how these technologies can enhance efficiency and mitigate supply chain challenges.
Driving Innovation in Procurement
Procurement is now at a critical inflection point. While the industry has started to bounce back from the impact of the pandemic, it’s now up against yet another set of supply chain roadblocks: an impending economic recession, inflation, talent gaps, and ongoing global disruption. As we stare down the barrel of these challenges, I know procurement professionals are hungry for solutions to help prevent the massive supply chain meltdowns we saw in 2020 while safeguarding (and perhaps even increasing) their bottom line.
As many teams now have tighter budgets than ever, the natural reaction during this period may be to slash spending and cut back on any innovations. But the opposite is true for procurement teams who want to thrive during this time: right now presents a prime opportunity for businesses to ramp up innovation. Emerging technologies can significantly streamline and optimize your day-to-day operations. Not only does this help cut costs, but it also bolsters your existing team to close any talent or skills gaps in the organization.
Here are some of the top emerging technologies that procurement professionals should look to as they prepare not just to survive but thrive through the recession:
1. Artificial intelligence (AI)
I’m well aware that AI is a bit of a buzzword. As tools ranging from AI Chatbots to virtual Spotify DJs and even â€œsmart ovensâ€ take over public discourse, many consumers are now just becoming aware of AI’s capabilities. But AI can do far more than write you a poem or curate your favorite playlist; when it comes to procurement, AI has the potential to tackle some of the biggest challenges threatening to derail post-pandemic growth.
For instance, AI can help automate many tedious aspects of the procurement process, like purchase orders and invoicing. This dramatically increases efficiency by freeing up valuable time for procurement professionals to focus on higher-level tasks. Particularly as the tech skills gap becomes ever more prevalent, automation will be an increasingly vital tool for procurement teams to lean on. Automation also cuts down on inevitable human error, avoiding potentially costly mistakes.
2. Machine learning (ML)
Machine learning is a subset of AI that develops algorithms that can learn from data and make predictions or decisions based on that data. These algorithms can quickly sift through vast amounts of data to identify patterns and insights that would be incredibly challenging and impossible for humans to detect, especially in such a short timeframe.Â
One of the most significant applications of this technology is spend analysis. Artificial intelligence can help procurement professionals analyze their spending patterns to note areas where they can optimize their budget, ranging from redundant or unnecessary purchases to outdated supplier contracts.
Supplier risk management is another area where ML can be advantageous. Machine learning algorithms can identify potential risks by analyzing suppliers’ financial stability and performance. Some platforms can even alert procurement professionals and prescribe actions to mitigate those risks. This asset is valuable as we teeter on the edge of a global recession and supplier volatility increases.
See More: Top 10 Machine Learning Algorithms
3. Blockchain technology
When most people think of Blockchain, cryptocurrencies like Bitcoin come to mind. But blockchain also has massive potential in procurement.
One of the most pointed benefits of blockchain is its ability to provide transparency and security in transactions. Through decentralized, immutable ledgers, blockchain technology can keep track of your supplier transactions, meaning that procurement professionals can better ensure they receive everything they’ve ordered and that payments are made on time.Â Â
Blockchain can also help procurement departments manage their supply chain more effectively. Procurement professionals can identify potential bottlenecks and find solutions that prevent delays by tracking the movement of goods from the supplier to the end customer.
By helping to increase transparency and accountability of the supply chain, blockchain is also assisting companies to improve supply chain sustainability and combat human rights issues such as forced labor (Coca-Cola is one example of a company doing this).
4. Internet of Things (IoT)
IoT refers to the network of connected devices that can communicate with each other and the internet. IoT technology can greatly improve supply chain visibility and efficiency when used in procurement.
IoT sensors can track the movement of goods, helping procurement professionals monitor the status of their shipments in real-time and identify potential delays. What’s more, IoT sensors can also help procurement departments optimize their inventory management. By tracking the usage of products and materials, procurement professionals can identify areas where they can reduce waste and optimize their purchasing decisions.
Procurement in a Changing World
Whether they know it or not, consumers worldwide rely on procurement teams operating effectively and efficiently to get the needed products. The pandemic provides a prime example: as global disruptions took hold of the supply chain, we saw shortages of everything from toilet paper and diapers to gasoline and eggs. It’s clear that procurement can’t afford to sit back and return to â€œbusiness as usual.â€ As these global threats become ever more real, adopting new technology isn’t a â€œnice to haveâ€; it’s an imperative.
In the face of economic challenges and supply chain disruptions, procurement professionals must seize the opportunity to innovate and leverage emerging technologies. AI, ML, Blockchain, and IoT offer significant advantages, from automating tedious tasks to improving spend analysis, supplier risk management, transparency, and supply chain visibility. By embracing these technologies, procurement teams can enhance efficiency, optimize operations, and ensure long-term success in today’s economic climate. Embrace the future of procurement through technology and secure a competitive edge.
Have you considered using immersive technologies to enhance efficiency and mitigate supply chain challenges? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . We’d love to hear from you!
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