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How AI Transforms Procurement: Takeaways from DPW Amsterdam

October 11, 2024

Article

The power of AI to change procurement for the better and deliver major impact was a major theme at this year’s DPW Amsterdam, one of the leading tech events for procurement and supply chain professionals.

Exiger’s presence at the event included a keynote from CEO Brandon Daniels, “The Missing Ingredient: Why AI Unlocks Procurement’s World-Saving Potential.” Other members of our team attended to learn more about the digital transformation of procurement, and here are some main takeaways:

Procurement Leaders Are Playing Catchup as AI Surges

A DPW study predicts that 2025 will see a concerted drive towards a digital revolution in procurement, forecasting a 187% increase in AI adoption, signaling a shift from operational technologies to more strategic, relationship-driven solutions. But only 20% of teams currently use AI at scale.

“Technology is advancing at the speed of light — but procurement leaders are struggling to drive change at the same rate,” said Matthias Gutzmann, founder of Digital Procurement World.

Procurement Needs an Extreme Automation Makeover

“Procurement will look very different in a year, a year-and-a-half from now,” said Remko van Hoek, a professor of supply chain management in the Sam M. Walton College of Business at the University of Arkansas. “It requires an across-the-spectrum rethink.”

He believes that rethink involves the adoption of advanced technologies, particularly large language model artificial intelligence, or generative AI.

One possibility he advocates is having a bot take care of some negotiating tasks with relatively small suppliers so that you can negotiate with those you normally don’t have time to negotiate with. This allows the buyer to spend more time on the things that are most important to that business.

“What we’re able to do is extract out of our supply chains the visibility we need to start to see the underlying areas where we can consolidate spend, consolidate supply, and actually achieve change.”

Brandon Daniels

CEO, Exiger

Supply Chain Visibility Drives Opportunity to Make Change

Think about AI-driven supply chain risk management and visibility as a value driver instead of cost driver, says Exiger. CEO Brandon Daniels.

Many companies today think about supply chain risk management mostly to achieve compliance with the many regulations that are part of doing business globally. With AI you can gain multi-tier visibility into your supplier ecosystem to not only comply with laws and monitor risk but also to open opportunity. This can mean, for example, saving 10% on materials, and reinvesting 2% on a more sustainable supply chain. Or choosing an alternative supplier that is not tainted by forced labor.

“It’s not just about where we spend our money, it’s about your power,” he concludes. “It’s about being able to ensure that your spend — even a small fraction of it — is spent in a way that increases the ethical standards of our global supply chain with each little buying decision that we have.”

Use Data Assets to Drive Business Value

Spend Matters Founder and CEO Jason Busch shared the next imperative for procurement is building and leveraging data assets to drive business value. Busch alluded to Exiger’s CEO Brandon Daniels’ keynote about how difficult reliable data — especially risk data — can be to acquire. But early, smart movers can capitalize on unique datasets and assets for monetization, strategic insights, and growth — especially when paired with generative AI.

Exiger is aligned with Busch’s remarks that data is the new oil and believes the key to leveraging data for procurement lies in simplifying data, not complicating it. The future of procurement will be enabled by a new, simplified common data schema that allows a single digital thread to extend beyond organizational boundaries.

By leveraging artificial intelligence, proprietary data, and open-source data, we can help organizations draw this digital thread into the multi-tier infrastructure that represents their delivery capabilities. This thread combines the criticality of parts, supplier vulnerabilities, and potential threats to empower procurement to drive business value in their organizations by turning risk into reward.

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