4 Benefits of Strategic Sourcing Processes Using AI and Machine Learning
Many are referring to the growing presence of artificial intelligence (AI), machine learning as they continue their journey into The Fourth Industrial Revolution.
The rise and exponential improvement of these technologies has left many wondering what exactly is made possible with the integration of these tools, especially in industries that have long trusted manual processes to run tight ships.
If you’re left wondering how, if at all, AI and machine learning can be leveraged in procurement and sourcing processes, you’ve come to the right place. Here’s what you need to know.
How machine learning and AI can streamline sourcing processes
Increased efficiency
To keep up with a fast-paced, competitive global market, it no longer makes sense to stick to traditional, manual processes. Yet we still see so many companies who continue to rely on these practices due to FOMU, the “fear of messing up.”
Analog systems are not only inefficient when it comes to time and manpower, but they can ultimately be costly, too. This not only comes from limited financial strategies but also redundancies and expenses associated with unplanned manufacturing downtime.
AI makes it possible for businesses to analyze decades of data collection faster than ever before. This reduces the risk of human error during input and increases efficiency, accuracy, and speed. It gives management and team leads the bandwidth to take on more complex tasks while simultaneously streamlining category management and sourcing processes.
Unlike disparate manual systems, new tools that leverage the power of AI can quickly harmonize and interpret data to identify critical shortages or costly overages of MRO materials and spare parts. This makes it possible for these tools to return meaningful insights that can be implemented on both a micro and macro level.
Automation and notification systems make it easy for teams to always be in the know about the next best step, no guesswork needed.
More visibility means less downtime
Manufacturing supply chains are complex, interconnected systems. This makes them notoriously difficult to manage, especially if teams are using outdated optimization strategies.
With limited visibility and discordant data collection processes, procurement and operations teams can’t become more efficient with their materials management strategy. Worse yet, it leaves them vulnerable to potential failure.
Harnessing the power of AI and machine learning can help businesses consolidate information. Housing everything from existing inventory levels, supplier performance data, and market-related risk in a single location makes it possible for holistic optimization, rather than fragmented strategies that are equally as inefficient as the system itself.
This sort of visibility makes it possible to pinpoint inefficiencies and identify corrective actions preemptively, minimizing the occurrence of costly events such as unexpected production downtime or annual write-off events due to material overages.
Not only this, but these robust systems even offer the best strategic next step. Powered by predictive analysis capabilities, historic data, and current statuses are put in conversation to identify demand factors that can reduce the risk of failure, cut costs through min/max configuration, and increase the lifespan of assets.
Keep procurement relationships strategic
Healthy, strategic procurement partnerships are the backbone of strong MRO strategies. Cultivating and maintaining these relationships, however, is no simple task.
Natural language processing (NLP) can help manage vendor contracts and identify opportunities for more strategic partnerships.
This tool translates existing contracts into measurable key performance indicators that can be used to keep vendors accountable while helping to reduce tail spend. Not only this, but centrally housed contracts make it that much simpler to eliminate rogue spending and redundant purchases.
Having these insights by your side at the negotiation table can transform the way your procurement team leverages supplier relationships. NLP does the hard work of catalog alignment and analysis for you, all that is left is crossing the t’s and dotting the i’s.
Leaner operations
Rogue spending and invoice fraud tank profit margins, and they can be challenging problems to solve without tools that make it possible to get to the root of the problem.
An intelligent MRO platform to streamline your procurement system makes it possible to track purchasing end-to-end. This not only makes it easier to control where money goes, but it makes it possible to generate reports and better understand where it is going.
It keeps purchasing strategies consistent so that all sites are leveraging the most cost-efficient procurement strategy. It’s the best first step towards a “right-sized” operation that procurement teams can take without the hassle of manual auditing.
Not only this, but smart MRO tools can identify cost-saving opportunities, such as bulk discounts and other cost-reducing strategies that don’t introduce new risk into your operations.
Make the most of cutting-edge technology with Verusen
Advancements in technology have changed the supply chain landscape so much that it’s hard to ignore the potential for MRO optimization that it unlocks.
Although these tools are technologically complex, the advantages and opportunities they offer are simple to see and implement. Find out how you can make the most of these cutting-edge tools.