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Cognitive procurement is a hot topic in the business world today. But what exactly is it?
In simple words, cognitive procurement is the process of using disruptive technologies such as artificial intelligence (AI) to assist with procurement. In broader terms, cognitive procurement can augment all parts of procurement, such as identifying potential suppliers, automating the contract management process, and creating a touchless procurement experience. Where the traditional view of procurement focuses on achieving the lowest possible price for goods and services, cognitive procurement is based on the premise that procurement is not just about obtaining the best possible price but also about creating value for the organization. Thus, to create value, procurement professionals must consider the full range of factors that impact cost, quality, and risk. By using data and analytics to understand these factors, they are in a better position to make much more informed decisions that eventually results in improved outcomes. But why is cognitive procurement becoming so popular, and what impact does it create on businesses?
Cognitive procurement enables business users to achieve organizational excellence by:
Improving decision making
Making procurement decisions is a complex task that requires considering a wide range of factors such as price & quality, delivery times, and terms & conditions. Even experienced procurement professionals arenโt equipped to make the best choices, especially when the stakes are high. A wrong decision can lead to monetary loss, missed opportunities, or even legal issues. With so much at stake, itโs no wonder why many businesses are turning to AI to help improve the accuracy of their procurement decisions. By considering a more comprehensive range of data points, AI helps identify the best suppliers and negotiate the best terms. Moreover, AI helps to reduce the risk of fraud and corruption in procurement by flagging suspicious activity.
Increasing procurement efficiency
When organizations procure manually, it often involves extensive paperwork and lengthy delays. However, businesses are now turning to cognitive procurement to speed up the process. AI is revolutionizing the way that data is analyzed and contracts are created. Today, AI has enabled the auto-creation of contracts that can be reviewed, modified, and approved with the application of blockchain technology. As a result, procurement teams are able to operate at a higher level of efficiency and accuracy, improving the overall quality of the products and services they purchase.
Ensuring better compliance
The source-to-pay (S2P)ย process is fraught with risks that can lead to compliance violations and financial losses for organizations. As a result, companies are now evaluating cognitive procurement solutions to help mitigate these risks. By automating repetitive and time-consuming tasks, such as RFX creation and invoice processing, cognitive procurement can help to improve compliance with procurement regulations. Additionally, by providing real-time visibility into supplier risk and performance management, cognitive procurement has helped organizations predict and prevent potential compliance violations even before they occur.
Connecting the virtual and physical world seamlessly
Companies are developing new strategies for utilizing technology to their advantage as the world gets increasingly digital. From the time an order is placed, procurement teams can track its status with real-time updates powered by geotagging and RFID technology. In the event of a delay or damage, they receive instant updates and alternative suggestions. Additionally, more data is available now for in-depth real-time analysis thanks to the Internet of Things (IoT), which assists in monitoring each productโs state, and provides information about its location, temperature, and structural integrity. Technological advancement enables procurement teams to function more productively and effectively.
Cognitive procurement is a cutting-edge technology that can revolutionize the procurement function in organizations of all sizes. By leveraging vast volumes of data, cognitive procurement can improve supplier assessment tools, revolutionize analytics capabilities and elevate customer support standards. Additionally, businesses can reduce the risk of compliance issues by automating essential tasks and providing real-time visibility into the S2P process. Cognitive procurement can help organizations optimize spending, improve supplier relationships, and drive operational efficiencies by leveraging data and analytics. In todayโs competitive business landscape, these are critical success factors.
Additionally, cognitive procurement can help surface potential risks and opportunities, ensuring that organizations always make the best possible decisions. As businesses increasingly embrace data-driven decision-making, cognitive procurement will become an essential tool in their arsenal.
Real-World Success Story: Regeneronโs Experience
Regeneron experienced significant benefits with Zycusโ quick turnaround time on customization, enhancing their procurement efficiency.
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So, if youโre not already using cognitive procurement in your business, now is the time to start!
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