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Why AI Unlocks Procurement’s World-Saving Potential

October 25, 2024

Article

Procurement and supply chain professionals today are under enormous pressure. Managing increasingly complex global networks, staying compliant with ever-changing regulations, and navigating unexpected disruptions have all become part of their daily routine. What’s more, they’re overwhelmed with data — too much information, too little time to act.

“All of us as a community feel like we’ve been overwhelmed … too much data, too much information, too many things that we are responsible and accountable for,” says Exiger CEO Brandon Daniels, a keynote presenter at DPW Amsterdam 2024.

[Read our key takeaways from DPW Amsterdam 2024]

However, there is hope. Advanced AI tools can help these professionals gain visibility into their supply chains, prioritize risks, and even turn risk into an opportunity for cost savings and innovation.

The Overwhelming Complexity of Modern Supply Chains

In the global marketplace, companies no longer operate in isolation. They are heavily reliant on an intricate web of external suppliers. As an example, Daniels cites a car maker in which 90% of the cost of building a car is buying the parts manufactured elsewhere. Procurement professionals often have limited visibility into the health, compliance, and performance of their suppliers, which complicates buying decisions.

Daniels highlights this disconnect: “You have to manage this vast supplier ecosystem, but you don’t have their data.” This means that while supply chain professionals are tasked with ensuring on-time delivery and minimizing disruptions, they lack the transparency needed to make informed decisions quickly.

Key challenges procurement teams face:

Fragmented data: Information is often siloed across various systems (ERPs, P&Ls, business spend software), making it difficult to obtain a complete view.
Unabating regulations: A growing set of rules, including the Uyghur Forced Labor Prevention Act, German Supply Chain Act, and Corporate Sustainability Due Diligence Directive, add layers of complexity to compliance efforts.
Global footprints: Companies are managing suppliers across geographies with varying degrees of reliability, risk, and ESG challenges.

AI Can Bring Supply Chain Visibility and Prioritization

So how can procurement professionals overcome these challenges? The answer lies in leveraging artificial intelligence (AI) to enhance supply chain visibility. AI can help turn mountains of data into actionable insights, enabling organizations to see the bigger picture and prioritize what’s most critical.

“I believe supply chain visibility — being able to actually see and measure what changes you need to make — opens up opportunity,” says Daniels. “We can’t change what we can’t measure.”

Visibility is the first step toward solving supply chain problems, and AI plays a key role in creating supply chain transparency. Through risk scoring and AI-powered analytics, procurement teams can identify vulnerabilities, monitor threats, and make informed decisions about where to focus their efforts.

Benefits of AI-driven visibility:

Prioritization: AI helps procurement professionals cut through the noise by identifying high-priority risks that demand immediate attention.
Risk scoring: Advanced analytics can assess the likelihood and impact of various supply chain risks — from financial instability to environmental threats — allowing teams to focus on what matters most.

“You’re managing this convoluted ecosystem of suppliers, and it creates an endless waterfall of risk-weighted decisions. But with AI, you can reduce the noise and prioritize what matters.”

Brandon Daniels

CEO, Exiger

Managing and Monitoring Risks in Real Time

AI not only enhances visibility but also enables supply chain professionals to monitor risks in real time. Whether it’s a supplier on the verge of bankruptcy or a facility threatened by natural disasters, AI can alert teams to potential problems before they spiral out of control.

“You’re managing this convoluted ecosystem of suppliers, and it creates an endless waterfall of risk-weighted decisions,” Daniels says. “But with AI, you can reduce the noise and prioritize what matters.”

This ability to predict and prevent disruptions is critical to maintaining operational continuity and resilience. Exiger’s Proactive Intelligence capability is a powerful aide in this work, helping buyers and supply chain managers make quick, informed decisions and find alternative suppliers.

Some risks that AI helps mitigate include:

Supplier financial instability: AI can flag suppliers at risk of bankruptcy, allowing procurement teams to source alternatives before production is affected.
Environmental and regulatory risks: AI tools can track environmental regulations and human rights issues across global suppliers, ensuring compliance while avoiding potential penalties.

Turning Risk into Opportunity and Cost Savings

Beyond risk mitigation, AI-driven visibility also presents an opportunity for organizations to optimize their supply chain and drive significant cost savings. Daniels cites a case study of a leading aerospace company that used Exiger’s platform to map its supply chain, identify opportunities to aggregate demand for materials like aluminum and steel, and achieve cost efficiencies.

“We’ve seen customers save 7 to 22% in the raw materials they utilize by gaining visibility and taking action,” says Daniels.

Moreover, this visibility isn’t just about cutting costs; it’s about investing in more ethical and sustainable supply chains. By using AI to pinpoint areas where they can reduce spend, organizations can reallocate some of those savings toward ethical sourcing and sustainability initiatives, creating long-term value.

“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,” he says.

How AI drives value in supply chains:

Cost optimization: Identify opportunities to streamline procurement, aggregate spend, and negotiate better supplier contracts.
Ethical sourcing: Reinforce corporate social responsibility (CSR) efforts by identifying ethical suppliers and investing in sustainable practices.

AI Is a Game-Changer for Procurement and Supply Chain Management

The complexities of modern supply chains aren’t going away. But with the right AI tools, procurement professionals can regain control, reduce risk, and even turn challenges into opportunities for innovation and cost savings. By achieving visibility, prioritizing risks, and automating workflows, AI empowers organizations to optimize their supply chain strategy and navigate an increasingly volatile world.

“Together, we can protect ourselves and the world we inhabit with the power of AI,” Daniels concludes. “We can create more informed buying decisions, giving everyone the ability to procure a more ethical, practical, and sustainable world.”

Contact us today to learn how our 1Exiger platform can help you enhance visibility, mitigate risks, and unlock value across your operations. Let’s start solving tomorrow’s challenges — today.

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