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Why Conversational AI Tools Will Make You Rethink Your Procurement Strategies

Conversational AI Tools
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Procurement professionals everywhere will generally concur on one thing – they’re always at war. Coordinating between and managing requests from suppliers, internal teams, finance, approving authorities and several other stakeholders is difficult.

In a world where instant gratification is valued, conversational AI tools are gradually becoming ubiquitous, helping fulfill myriad tasks in a few seconds. Siri, Alexa, Google Assistant, etc., have pervaded our lives; it is time organizations adopted the technology too. Simple rule-based chatbots can help simplify critical business functions like procurement, which involves a plethora of transactions on a day-to-day basis. Imagine what an AI-powered chatbot can do!

This blog explores how you can use conversational AI tools to help you rethink your procurement strategies.

What is Conversational AI?

Conversational AI is the technology that powers a chatbot or virtual assistant and enables automated conversations between a machine and human via text or speech. A concoction of various technologies such as Natural Language Processing (NLP), Deep Learning and Machine Learning, Natural Language Understanding (NLU), Automatic Speech Recognition (ASR), and Natural Language Generation (NLG) make this simulated human-like conversation possible.

1. NLP– Identifies synonyms, interprets grammar, corrects spellings, recognizes the sentiment, and cracks down the request received in a format that a virtual assistant can easily understand.

2. NLU– NLU is made up of algorithms, data sets, and features that enable it to analyze and decipher the meaning and intent of the input received.

3. NLG– Once the data received is decoded, NLG creates a response.

4. Deep Learning & Machine Learning– As the AI receives / is trained on more inputs, deep learning, and machine learning algorithms recognize patterns and help refine responses over time.

Conversational AI & Procurement

Conversational AI has certain unique characteristics that sets it apart from other technologies:

  • First is the ability to understand the context, decode commands and respond to queries.
  • Second is to learn from past interactions to enhance future interactions.
  • Lastly, 24×7 availability and a rapid TAT (turnaround time) ensures queries are answered in real-time, which helps enhance user experience and make processes agile.

Procurement professionals spend a considerable amount of time in transactional activities like prolonged negotiations, responding to suppliers and internal teams, follow-ups, tracking orders, manual PR/PO interventions, etc. As a result, business users are often one of the impacted parties, needing to wait for significant periods of time on approvals, receiving goods, and processing of payments. This leads to some disgruntlement on the business users’ part leading to lower adoption of e-Procurement tools.

So, procurement leaders now need to focus on what appears to be several different problems, which are just several symptoms that can be solved by one solution.
One solution for –

  • Improving the users’ buying experience and driving spend through compliant channels, and to compliant suppliers.
  • Improving the procurement team’s workload by helping them refocus on more strategic activities.

Enter conversational AI.

Benefits of conversational AI tools in procurement

Guided buying:

Currently, procurement is highly manual and technical, requiring users to have a level of knowledge about preferred suppliers, organizational purchasing policy, and tools & processes. An AI chatbot can analyze historic buying behavior for each user and catalyze the buying process by creating one-click repeat purchase options. AI chatbots can also guide users throughout the buying process by highlighting key steps, prompting them about using preferred vendors and buying channels.

Real-time error identification:

An AI chatbot can identify duplicate orders, vendors and invoices, study spend patterns, put products into different catalogs and more. It can also highlight erroneous prices, quantities, and more, based on contract & invoice data.

Integration intelligence:

Chatbots can be integrated with a host of backend systems within the organization such as ERP tools, and business & market intelligence systems. This enables chatbots to perform repetitive tasks on behalf of the users such as conducting a search, filling out forms, creating a new purchase order with pre-fed instructions and more. They can also alert the user of supply disruptions, order delays and failures.

Automated personalized interactions:

A key benefit of conversational AI is the ability to transcend platforms – you’re no longer interfacing with a non-responsive platform. You’re conversing & getting work done. Conversational AI can ‘talk’ to business users helping them procure, and respond to suppliers’ queries, order updates, etc.

Asynchronous communication support:

Digitization has blurred geographical boundaries which also means most businesses have employees, business partners, and suppliers peppered across the globe. This poses a unique challenge as people are working in different time zones. AI chatbots can streamline communication by responding to queries in real-time 24×7.

Work on the move:

With evolving technology it is now possible to integrate chatbots on multiple platforms such as web, instant messaging, chats, wearable devices and more. Users can now make decisions, place PO requests, track orders, and do pretty much everything related to procurement anytime and anywhere.

In a nutshell, conversational AI tools when leveraged to their full potential for the procurement function can ensure an agile and streamlined purchase process.

What does this mean for your procurement strategy? Traditional tools vs. Conversational AI

Traditional procurement tools range from basic spreadsheets to specialized procurement software. These systems are predominantly rule-based and require manual intervention at various stages, be it requisition approvals, order placements, or supplier evaluations.

1. Challenges – Time-Consuming, Error-Prone, Unscalable, Inflexible. Integrating Conversational AI into your procurement strategy signifies a paradigm shift from manual to automated, from reactive to proactive, and from isolated to integrated.

2. Optimized Workflow: AI can help prioritize and execute tasks based on urgency, ensuring that your team focuses on what matters the most.

3. Data-Driven Insights: Real-time analytics via integrations can help in making better informed decisions.

4. Supplier Relationship Management: Conversational AI can also help in maintaining better relationships with suppliers by facilitating automated transparent and timely communication.

5. Compliance and Risk Mitigation: Guided buying ensures that employees are following organizational purchasing policies and using preferred vendors, thereby reducing compliance risks.

6. User Engagement: Simplifying the purchasing process increases user adoption of procurement tools, thus consolidating expenditures and improving visibility into spending.

7. Faster Decision-Making: Historic buying data guides users to make quicker, more informed decisions, thereby reducing procurement cycle times.

Traditional Tools vs. Conversational AI: A Comparative Snapshot

AspectTraditional ToolsConversational AI
EfficiencyModerateHigh
AccuracyModerate (Error-prone)High
ScalabilityLimitedExcellent
Flexibility/AdaptabilityLowHigh
User ExperienceRequires TrainingIntuitive

Zycus’ Merlin Assist: The front door to procurement

Zycus’ Merlin Assist, a cutting-edge conversational AI tool is feature-rich, and is poised to revolutionize the way you procure. Some of its noteworthy capabilities: –

  • Facilitates a comprehensive guided buying experience
  • Elevates user experience & adoption by simulating B2B ecommerce
  • Drives spend and contract compliance by ensuring key suppliers are preferred, and contract terms are adhered to
  • Simplifies communication and collaboration within and outside the procurement team

With Merlin Assist, procurement can be made agile, manual tasks automated, and procurement leaders can finally focus on crafting robust strategies.

Experience the front door to procurement at Merlin Experience Center.

Related Reads:

  1. How Conversational AI Chatbots Drive Procurement Adoption
  2. Challenges of Conversational AI in Procurement And How CPOs Can Overcome Them
  3. Bringing Conversational AI in the Flow of Procurement Work
  4. Chatbot Solutions for Procurement
  5. Zycus Procure to Pay Software
  6. White Paper – Unraveling Cognitive Procurement: Unlocking Efficiency With AI
  7. Press-release – 2015 Pulse of Procurement Survey Now Open
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