AI in Procurement - Programming Line

Introduction :

The purchasing process of goods and placing them at the sales point involves procurement logistics. The procurement logistics involves techniques used to retrieve contractual data and information of product suppliers, list price, discounts offered, purchase of raw material, terms and conditions used to deliver items. This procurement process is supported by tools based on artificial intelligence-based technologies. These tools are used in purchasing and other procurement-related processes. In addition, the tools are used to display the procurement processes in the form of virtual information flows and deliver automated transactions.

Different procurement technologies are available, such as spending analytics, technologies used in sourcing, managing contracts, and technologies used in e-Procurement. In addition, procurement technology is evolving and is replacing existing solutions used across different supply chains. The results of these solutions are being used to develop innovative solutions. The innovative solutions are designed to bring transparency to the procurement process and improve reporting capacities of the supply chain.

There is a large shift in the technology that is used to reduce the cost of computing, storing data, searching required information, bringing accuracy in predicting the procurement process, providing data that is accurate with time and space, and projecting the performance of the suppliers to be used in the procurement process.

Technology is evolving and projecting different processes used in the procurement process. With the help of evolving technologies, push communication is conducted with the vendors, and collaboration with the vendors located at different geographical locations is done in outbound procurement. In the case of inbound procurement, technology is used to maintain communication within the organization. In addition, the technology is also used to maintain customer networks.

The evolving technologies such as Big Daa, Robotics, Internet of Things, Blockchain, and other associated smart contracts are used in the procurement process. In addition, these technologies are being used in different types of procurement functions. As a result, these technologies are reshaping the procurement processes and improving the organization’s efficiency, effectiveness, and profitability.

These technologies potentially influence different procurement processes and thus improve the business’s overall performance. As a result, the procurement process is improving with the digitalization of technology and thus improving the overall efficiency of the procurement process.

Emerging Technologies used in the Procurement Process:

The procurement process has evolved during the last decade. The evolution is achieved by bringing digitalization into the procurement process and increasing effectiveness. Earlier, the information related to different procurement processes was gathered by establishing the communication channel between the buyer and the supplier. However, the communication channel between buyer and supplier has evolved with different evolving technologies.

The evolving technologies have made it possible to establish multiple communication channels between the buyer and the supplier. This made it possible to automate different production processes and use different information communication technology channels in inbound outbound procurement processes, in different production systems, and establish different marketing channels between organizations.

The procurement process involves different buying processes, need analysis, different technical specifications, evaluation of different suppliers, and deciding on the purchase. The procurement process involves different factors to be considered such as estimating the timeline and duration, estimating the human resources to be used in the procurement processes, using appropriate methodologies to be used in the procurement process, establishing communication with different suppliers, using well-establish techniques that help in making decisions, estimating the risk involved in the business, evaluating the post-purchase statistics to be used in future procurement processes.

The procurement process involves different activities such as obtaining the required information, retrieving required information, analyzing the collected information, and providing required information used to make purchases. The procurement process also involves different activities used to complete the purchase processes. As information technologies evolve, they are being used to assess the risk involved in the procurement processes. Thus emerging technologies are being used to establish communication between firms and suppliers.

Big Data:

Firms are producing voluminous data that is stored in large data storage. The data stored in large databases is often unstructured. This unstructured data is processed so that it can be used in decision-making. The valuable information is extracted from this large storage of information databases. The extracted information is used in different business sectors such as human resource management, scheduling and planning, and optimizing the supply chain.

The techniques used in Big Data are used to process large datasets within a short interval of time with high precision. The procurement business is distributed over a distant geographical location, fulfilling the procurement needs of different organizations. The procurement organization transactions are stored, and information related to pricing is stored—different types of attributes are stored to reflect the supplier’s performance. The Big Data techniques assess the stored raw data and produce desired and required information.

Big Data techniques are used to explore the large unstructured datasets to produce useful insight into the information. This useful insight of the information assists in decision-making improves forecasting capabilities, and reduces the turnaround time of the process. In addition, intelligent techniques optimize different procurement processes using real-time information. Intelligent techniques are used to manage customer orders and vendor orders.

Use of Robotics in Procurement:

Robots are used to automate mechanical processes. For example, artificial Intelligence-based robots are used to automate the procurement process of the supply chain. In addition, machine learning algorithms are used to accomplish different functions involved in the procurement process.

Artificial Intelligence-based algorithms are used to mimic human thought processes used in managing total expenditures incurred in the procurement process, the contracts undertaken to accomplish the procurement process, and maintaining and managing data related to different suppliers. For example, intelligent techniques such as different learning algorithms extract useful information from skeleton designs, Bills generated for different types of materials, and contracts used to accomplish procurement processes.

The artificial intelligence-based tools are efficient and can extract useful information from price tables, payment tables, and associated termination blocks. However, extracting information from these tables using old technologies would take longer.

The robots as guided vehicles within the production plant help in the inbound and outbound procurement processes. In addition, the robots are synchronized with different stocks used in the supply chain to avoid stockouts. Thus, technology is being used to maintain different stock levels of raw materials.

Use of IoT in Procurment:

The Internet of Things (IoT) is used to design and develop sensing devices that can collect different types of data used in the procurement processes. The Internet of Things devices can get connected with other devices used in the procurement processes. The IoT is the built-in technology device used to sense and communicate data with other devices available in the procurement processes. The IoT-enabled sensor-based devices can read tags from a distance and use wireless sensors networks and GPS to track other devices used in the procurement processes. These IoT-enabled devices track different objects and trace their location concerning the procurement processes.

The data collected by IoT-enabled devices is stored on the cloud and thus accessible across distant geographical locations. Thus the volume of data produced by different devices at distant geographical locations requires big data analysis and cloud storage. As a result, the IoT-enabled devices reduce the procurement center size and operational complexity.

The IoT-enabled devices can monitor the operation of the production machine and, using the gathered information, maintain and replenish the stock level. Thus, IoT-enabled devices can calculate the throughput of the functioning devices used in the procurement processes. The devices are also used to trace the good movements, maintain inventory, and record and maintain audit trails. Furthermore, since the collected data is stored on the cloud, different procurement centers located at distant geographical centers can access it in real-time.

The IoT-enabled devices can track orders under the shipment, trace their geographical location, and influence climatic conditions on the shipment. Thus IoT enabled devices to reduce risk involved in the procurement business and make it possible to communicate information across different procurement centers.

Use of Blockchain Technology in Procurement:

A blockchain is a system capable of exchanging information and corresponding values across different computers. A blockchain can store records and maintain immutable transactions, time-based, and can be accessed by different partners located at distant geographical locations.

The information collected using Blockchain is stored in a logically connected block and chronologically maintained. The blockchains are used to design and maintain smart contracts in the procurement process. Blockchains are also used in cryptography and maintaining the distributed ledger.

The blockchain can maintain and manage shared databases used in the different procurement processes. For example, supply chain companies used blockchain to maintain separate agreements and portfolios of vendors and associated suppliers.

Blockchain technology can be used to maintain supplier details, maintain procurement documentation, maintain information related to logistics, develop and maintain smart contracts and data related to different settlements and associated payments.

Blockchain technology streamlines the supply chain processes. The blockchain is used to support decision making in the procurement process and help in choosing correct suppliers. The blockchain maintain the record of different suppliers available and associated attributes that specify the reputation of the suppliers, there past performances and risk factor associated with the suppliers as well as vendors.

Blockchain technology is replacing paper-based work. For example, blockchain maintains time-stamp activities, warranties, product usage guidelines, and different attributes used in the procurement processes.

Blockchain maintains records associated with different vendors, complaints against vendors, and maintaining records of disputes. Blockchain also maintains the record of inventory. The blockchain also maintains the records that provide the ownership details and service contracts. Blockchains also maintain audit trails. With the use of blockchain, payment details can be maintained.

Use of smart contract in Procurement:

Smart contracts are used to maintain the transaction protocols. For example, smart contracts are made to maintain bonding and loan agreements. In addition, smart contracts are scripts maintained using blockchain. These scripts are used to release funds, transfer required information, and use contracts for product purchases.

Smart contracts are also used to maintain records of cargo delivery and maintain track records of delivery of goods and products.

Difficulties in using Technologies :

The organization uses new technologies in the procurement processes to maintain transparency and reduce associated risks. The procurement process uses blockchain technology, cryptography, distributed ledger, and maintaining and establishing smart contracts.

IoT is also used to maintain procurement processes in different industries and is used to retain and maintain temperature sensors that are useful in maintaining the quality of perishable products. Sensor-based devices check incoming perishable products, and if the required temperature is not maintained, then the perishable product is rejected.

The use of emerging technologies is expensive. Thus traction is observed in the use of emerging technologies in the procurement process. Thus the use of emerging technology leads to change in the structural organization of the procurement process.

Emerging technology must be done after establishing awareness of the used emerging technologies. Thus humans involved in the procurement processes must be aware of the emerging technologies and how to use them to get the best from them.

Thus, emerging technologies are maintaining the industrial revolution and improving procurement processes. Therefore, Internet connectivity is a must to use emerging technologies in the procurement processes. Furthermore, in association with internet connectivity, digital literacy is also required to use artificial intelligence-based technologies in the procurement processes.

Artificial intelligence-based technology in the procurement process reduces the risk involved in procurement operations. However, the main challenge posed in using artificial intelligence technologies is the lack of working with these technologies.

Conclusion :

Modern technology has influenced supply chains across the globe. There exists a vast disparity in geographical locations, which increases complexity in operating the supply chain. The dynamic behavior and uncertainty in the supply chain are increasing with time. The supply chain must maintain and respect different cultures, different types of languages spoken in different geographical locations, and the rules and regulations followed in different locations.

Emerging technologies of artificial intelligence are automating procurement decision-making. For example, the artificial intelligence-based search techniques extract useful information from many existing digital resources, thus, in turn, providing strength to the procurement market.