HOW TO GET AHEAD WITH THE AI FAST TRACK

SECRETS OF SUPPLY CHAIN SUCCESS: HOW TO GET AHEAD WITH THE AI FAST TRACK

ai and automation, Supplier Relationship, SUPPLIER RELATIONSHIP MANAGEMENT, SRM
Rules, Blogs, 3. Reshape Supplier Relationships

OVERVIEW

There are few areas in the business world where AI has not shown its applicability.

But, in the context of supplier relationships that rely heavily on people interacting with people, can AI really add value? This is the question posed to leading industry changemakers as part of our latest Reshape Supplier Relationships eBook.

This blog shares their insights on how AI can be used to rapidly transform traditional methods of managing supplier relationships.

Read on… or Download the eBook now!


HOW IMPORTANT IS AI?

Sundar Pichai, CEO of Google’s parent company Alphabet, feels AI is, “The most profound technology humanity is working on. More profound than fire, electricity, or anything that we have done in the past.”

Jensen Huang, founder of semiconductor giant Nvidia, predicts, “Accelerated computing and AI mark a reinvention of computing.”

“Fire, farming and electricity have all been inflection points for humans. And now, ‘AI = An Inflection Point’.” Jeremy Gutsche from leading trend advisory firm Trend Hunter AI.

Gutsche goes on to explain “Before the inflection point, AI was conceptual, inaccessible and low impact. During the inflection point [2022/2023], AI became realistic, accessible and impactful. And after Inflection Point [the near future], AI will be powerful, disruptive and polarised.”

“AI has brought the 4th industrial revolution to an inflection point and manufacturers must choose a path forward: innovate, accelerate, or follow fast.” McKinsey & Company 

The AI Inflection Point

AI is an ‘Inflection Point’ for human evolution

But this isn’t the world of tech companies, this is procurement! 

Let’s kick things off with a reality check. Procurement, like the rest of the business world, is evolving faster than you can say ‘supply chain revolution’.

In the midst of the chaos wrought on supply chains over the last few years, lies opportunity. And that opportunity comes in the form of AI-powered solutions that will turn procurement upside down (in the best way possible, of course).

With AI at your side, you have the power to disrupt the status quo and pave the way for a future where procurement isn’t just about cutting costs—it’s about driving innovation, fostering collaboration, and unlocking value at every turn.

While the more attention-grabbing AI applications such as Chat-GPT4, Gemini, Dall-E and Midjourney dominate the headlines, there are many, more routine and operational areas of business that will also benefit from AI advancements.

For Procurement, this centers around data, specifically the ability to process large volumes of complex internal and external data. And to do it faster, more accurately than humans.

But in the context of supplier relationships that rely heavily on people interacting with people, how can AI add value?

STREAMLINING OPERATIONS

Freeing up time to be more human

Hackett Group predicted that procurement’s workload increased by 10.6% in 2023 but with little increase in headcount or operating budget.

Freeing up people’s time from performing manual, repetitive tasks is the first tangible, and accessible, use case for AI in the procurement function.

Whether that’s time saved manually building RFx events, comparing tenders, reviewing contracts, analysing data—time and labour intensive tasks now can be performed by AI tools.

“AI needs to take some of the more manual activity away, freeing up people to climb the value ladder; to do more of the creative engagement; to work in the nuance. That’s what we’re good at. That’s where supplier relationships flourish.” Sheldon Mydat, Suppeco

Learn more about the powerful AI functionality in Market Dojo Sourcing that can reduce time spent on building supplier questionnaires by 50% or more.

EXPEDITING DATA ANALYTICS

Using data to build stronger relationships

It may seem counterintuitive but data can actually help build stronger relationships with suppliers.

While people excel in many areas, we are prone to biases, judgement and error. Conversely, AI can see patterns and spot opportunities with exceptional speed and precision. And this is exciting!

AI is an ally, not an enemy, in managing supplier relationships.

“If you don’t have to spend as much time chasing your data, cleaning it, and finding insights, you have more face time with your stakeholders to say, ‘Hey, we’ve noticed the following spend patterns with that supplier. What do you think we should do?’ Less data work means more time engaging with your stakeholders and suppliers so you can understand your relationships and what is causing the patterns. If there are issues, these conversations will help you find and solve them.” Pierre Laprée, SpendHQ

“Advanced spend analytics is about surfacing patterns in your spend data that you would not have seen otherwise.” Pierre Laprée, SpendHQ

Supplier data contains valuable data such as performance trends, risk indicators, and areas for improvement. By using AI to extract these insights, procurement teams can engage with suppliers in more meaningful discussions, identifying mutual goals and opportunities for growth.

“AI provides a powerful tool in terms of analysing vast amounts of information and gives deeper insights into supplier performance and potential risks.” Temeena Hussain, Market Dojo

Furthermore, AI promotes transparency in supplier relationships by providing objective assessments based on data-driven metrics. This transparency encourages greater trust between parties and facilitates open dialogue, leading to stronger partnerships built on mutual understanding and accountability.

“AI will bring procurement and stakeholders closer, and it will also bring them together in front of suppliers more often. Procurement’s success is all about relationships and the more time you spend with stakeholders and suppliers, the stronger the bond you can make.” Pierre Laprée, SpendHQ

BOOSTING PERFORMANCE

Utilising unstructured data

Another key area for AI-driven data analysis is processing the ‘unstructured’ data layer. 

The International Data Corporation (IDC) found that unstructured data—customer contracts, product specs, employee handbooks, and more—makes up 90% of business data. Furthermore, as that content is often spread across systems and siloed, it’s full of untapped value.

“Think of email, documentation, voice, chat, all this different stuff is unstructured data and there’s loads and loads of value inherent in it, but it’s haemorrhaged because it’s not utilised. We spent years focusing on the numbers, looking down at the systemic data. Things are changing very, very fast.” Sheldon Mydat, Suppeco

Most procurement teams will never have the available bandwidth to manually sift through all the communications that take place with suppliers. 

But imagine using a few simple commands in an AI tool and being served up individual preferences, needs, and behaviours, enabling personalised supplier engagement strategies and being able to tailor your interactions based on these insights. 

This approach is far more likely to strengthen the connection between buyers and suppliers than weaken it. 

“Look at your average supplier relationship or supply chain ecosystem, with all those different mediums of data, that’s all unstructured data. Think about what GenAI can do with that level of unstructured data in a compartmentalised, relevant way… If we could organise that data into something that we could then manage and measure, the opportunities are huge; huge!” Sheldon Mydat, Suppeco

PROCURETECH MATURITY

As a result of AI, procurement—like the rest of the business world—is evolving fast.

But for many procurement teams, AI is further widening the technology and skills maturity gap.

Moving from emails and spreadsheets to implementing AI into procurement’s day to day workflow is too big of a leap to make. 

Procurement leaders who find themselves in this situation need to start at the beginning by first identifying what ‘success looks like’ for their company, for example what processes need to be supported; what data needs to be collated; what metrics and KPIs are required; what new skills are required.   

To revisit and redefine your procurement strategy, download the first eBook in the New Rules series, Rule 1: Reimagine Strategy

The AI Skills Gap in Sourcing Maturity

The AI Technology and Skills Gap in Sourcing Maturity

SUCCEEDING WITH AI

Choosing curiosity over fear 

In a department where technology can be met with scepticism or suspicion; where using spreadsheets and emails are seen as having done ‘digital transformation’; taking the leap into AI may seem daunting.

But the time has come for Procurement leaders to move away from the ‘if it ain’t broke, don’t fix it’ mindset; to make it easier for their team to succeed by focusing their time on more valued work, and AI is the enabler for this.

“Choose curiosity over fear. Get your team on board early, allow your employees to experiment with AI tools. I think it’s really crucial to invest in training. And with that in mind, assess and reassess your AI needs; AI is evolving and advancing every minute, learning to work with AI will be a continuous process not just a one-time training session.” Temeena Hussain, Market Dojo

Leading innovation expert and author, Jeremy Gutsche cites seven key obstacles that need to be addressed within organisations for AI to succeed

7 Key Obstacles to AI Innovation

Seven Key Challenges to Leveraging AI Innovation in Organisations

Furthermore, Gartner states that top performing supply chain organisations are investing in artificial intelligence and machine learning (AI/ML) to optimise their processes at more than twice the rate of low performing peers.

Leaders must commit to continuous learning, experimentation and adaptation. Only by confronting these challenges head-on can organisations unlock the full power of AI innovation. 

Take the first step

Every company will have a different starting point based on technological maturity and culture, but what’s important is to take that first step.

“Figuring out your pain point is the best place to start. What issues are limiting your impact? Start by understanding what could work better or where you want to step away from preparation to free up time for your relationships.” Pierre Laprée, SpendHQ

“With any adoption of new technology, the key here is change management. Embrace the need for change management and first and foremost identify your goals and metrics of successfully implementing and adopting AI. Keep in mind that every department, discipline, role will have a different need when it comes to AI.” Temeena Hussain, Market Dojo

“It’s the digital infrastructure that you first create with your supplier relationships in order that you can use GenAI to actually analyse that data; to harness the value that lies within it.” Sheldon Mydat, Suppeco

Get to know your options

Next, research and assess the AI tools appropriate for your situation.

“It’s important to understand what ‘AI’ is, because there’s a lot of ‘portmanteau words’ and clichés around it. Everybody’s talking about GenAI but that’s just one application of the technology. Until you understand what ‘AI’ means; what it can do, what it cannot do, and what it should not do; you can’t form an educated opinion on how you can use it. You might not need GenAI. You might need to invest in advanced neural networks or large language models instead. Spend some time, meet some vendors, watch some YouTube videos, however you do your research, understand what AI is before doing anything else.” Pierre Laprée, SpendHQ

Align solutions with situation

Just as every company has a different starting point, every company will have a different end goal. 

“We all want to use AI in one way, shape or form. But the right way depends on how your company ticks and what it can stomach. That’s probably the most important piece of advice.” Pierre Laprée, SpendHQ

If your company is in the business of exploration then taking this explorative approach to finding the right AI solutions might work best. 

If your business is in the financial or insurance sector then a less risky, more ROI defined approach will be appropriate.

“Ask yourself, what is my team’s DNA; what is my company’s DNA? Do we have a DNA of exploring and trying stuff or a DNA of whatever we do has to work? The way you approach the embedding of AI into your workflow needs to match that DNA.” Pierre Laprée, SpendHQ

AI NEXT STEPS

1. Commit to getting started today — complacency and delay could leave you at risk. Create an action plan, even if it needs to change in the future

2. Understand the technology — what are the options and what are the benefits of the AI solutions available for your needs 

3. Educate internal stakeholders at all levels — demystify AI by allowing people to try out AI tools for themselves; give people ownership, time and resources to explore ideas of how AI can help them ‘level up’, not replace them

4. Plan for different scenarios — as the pace of AI developments shows no signs of slowing down, plan out alternative, even opposite, scenarios to what you currently expect in order to take some of the pressure off current decisions

5. See AI as an opportunity not a threat — this is an exciting time so take advantage of the numerous free AI tools available on the market or collaborate with technology vendors to shape the future of procurement AI

Our Sourcing Specialists are on hand to help you develop your AI roadmap. Contact your Market Dojo Account Manager or book a demo of Market Dojo’s solutions to learn more about the AI functionality and discuss future opportunities.

In the next blog in this series, we’ll explore the Death of Strategic Suppliers—why it’s time to move on from strategic versus non strategic suppliers.

Can’t wait…? Download your copy of the Reshape Supplier Relationships eBook now!

Download How to Reshape Supplier Relationships eBook by Market Dojo

MORE FROM THE NEW RULES:

Rule 1: Reimagine Strategy

Rule 2: Reevaluate Sourcing

Join the movement at the New Rules Hub

 

May 16, 2024
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