Thinking Big with AI in Procurement
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Key Takeaways
⇨ AI adoption is a top digitalization priority for procurement, with 44% of executives identifying its integration into invoice automation and process improvements as critical.
⇨ Leading procurement organizations are implementing Generative AI (GenAI) to enhance workflows in areas like contract management and spend analytics, resulting in significant time savings.
⇨ Procurement leaders are under pressure to deliver measurable outcomes from AI initiatives, and focusing on high-ROI use cases is essential for demonstrating the value of these technologies.
In a recent Economist Impact report, adoption of an AI strategy stands at the joint top of executives’ list of digitalization priorities for procurement, alongside spend analytics, both cited by 44% of respondents. As artificial intelligence progresses, procurement practitioners have begun exploring AI to identify its potential to tackle smaller, focused projects like invoice automation. This forms part of a comprehensive overhaul of processes to better align with organizational goals and a transformation in how procurement teams engage with internal stakeholders and vendors. AI has arguably become a critical enabler in this journey, automating repetitive tasks and improving efficiency. For example, AI systems can pre-fill GL codes based on historical purchases and machine learning and optical character recognition (OCR) tools can continually process invoices and automate small repetitive tasks associated with minor situation handling.
In a recent webinar co-hosted by SAP on the subject of AI in procurement, Lisa Harding, Global Vice President of Product Marketing for SAP Ariba’s strategic procurement portfolio, reports that leading procurement organizations have already deployed Generative AI, better known as GenAI. With it, areas such as spend dashboards, RFI generation, contract summarization, help desk management, and intake management with guided buying demonstrate the practical ways AI is reshaping procurement workflows.
Harding also notes the adoption of AI comes with high expectations from business stakeholders, and as such procurement leaders are under pressure to demonstrate tangible outcomes. To support these efforts, she provided several examples: which
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- Onboarding time for category managers can be reduced by as much as 56% with SAP Ariba Category Management.
- Creating sourcing events using unstructured Microsoft Excel spreadsheets within SAP Ariba Sourcing can save up to 50% of the time typically required.
- Users can load their shopping carts in SAP Ariba Buying up to 60% faster than the usual time.
- Organizations can save as much as 15% of their time by avoiding engagement with candidates flagged with a “do not hire” status with SAP Fieldglass.
SAP extends its support further with offerings such as the Spend Control Tower, which leverages AI to consolidate and analyze spend data across diverse sources, including SAP’s cloud ERP solutions, SAP Ariba, SAP Fieldglass, SAP Concur, other SAP applications, and third-party systems.
“We bring all the data together to really help uncover cost savings opportunities and to drive process improvements,” Harding commented.
Returning back to GenAI, SAP co-pilot Joule can assist in creating requests for proposals, while the newly launched SAP Ariba Intake Management solution automates procurement requests across multiple systems. These tools highlight the expansive opportunities to generate savings and actionable insights in procurement.
An SAP case study cited by Harding reveals a large cooperative comprising 850 growers and 2,000 suppliers integrated AI into their invoice management processes. The result has seen the co-op save 33 hours each month and the cost of processing each invoice reduced from $1.33 to $1.
What SAP Insiders need to know
- Time for action
Procurement is currently focused on building out specific Al use cases on paper, but now is the time to accelerate implementation.
- Don’t let perfect data be the enemy of good Al
While there are significant benefits to investing time and money in making data easily accessible by Al tools, can you afford to wait for that to be completed?
- Focus on use cases with demonstrable ROI
There are many potential ways to use Al in procurement and much internal competition for investment. Demonstrate value by focusing on areas with high potential returns. As SAP’s Harding commented: “Now is the time […] I would encourage you to really think big and think about the use cases across source-to-pay, upstream and downstream, that can really have that demonstrable ROI.”
- Democratize the digital roadmap
Functions are investing in specialist roles and while technical skills are invaluable for deploying Al, the whole procurement workforce has a role to play.
Stay on SAPinsider for the next part on this topic, looking at the importance of data for the development of AI in procurement, alongside the automation roadmap ahead in 2025 for procurement practitioners.
