Procurement may not immediately jump to mind when we think about high-tech functions in the back office, but it’s time that it does. Sourcing and procurement are more complex and multifaceted than ever, which means digitalization and advanced technologies aren’t “nice-to-haves,” they’re critical to operations. Industry leaders recognize this, and in a recent survey, 57% said digitalization is procurement’s top strategic priority.

Digitalization today means moving from surface-level efficiency to deeply integrated, intelligent systems. Leveraging AI is increasingly essential for businesses to optimize operations and stay ahead of volatile market conditions. This technology also frees up staff to focus on higher-value tasks and can address worker shortages in procurement.

The potential benefits are therefore immense, but the challenge lies in successful implementation. What are the key procurement functions where AI can make a meaningful impact, and how can companies make it a reality? Let’s explore how:

Automate standard procurement tasks

When asked about their top procurement priorities, leaders cited the basics: cost savings and supply chain reliability. These core activities are still the foundation on which procurement bases its value to organizations.

Rather than replacing these functions, AI-powered tools provide much-needed relief to procurement staff by increasing efficiency and allowing them to focus on more complex, high-value work. For example, generative AI (genAI) can analyze contracts and quickly provide insights that employees can leverage. These tools can compare terms, identify risks and produce time-saving summaries for employees, empowering them to handle more strategic tasks such as supplier negotiations and communications with internal or external stakeholders. 

Relatedly, genAI tools can develop contract language, which supports the consistent inclusion of compliance information and other key contract components. These capabilities can mitigate the risk of text errors while saving time for procurement staff.

Automated ordering is another core procurement task where AI can work alongside employees, particularly for departments facing staff shortages. Setting up automated solutions to source key items or materials can prevent things from falling through the cracks. Online procurement solutions like Amazon Business are ideally placed to dovetail with automated ordering solutions, which help employees do more with less and keep vital goods and services moving for businesses. 

Gain insights into spending

AI-powered tools can do much more than automate tasks, and genAI’s ability to analyze large datasets is one of its most powerful capabilities. These solutions can identify patterns and anomalies for spend analytics, bringing potential issues to light. For example, it can review tail spend and identify opportunities for cost savings to achieve procurement’s core functions, like improving sourcing efficiency. These insights are generated more quickly and efficiently with AI-driven tools, rather than human employees sifting through years’ worth of data, offering a promising outlook for cost savings.

Clean, consistent data is necessary to complete these types of analysis successfully, and implementing these AI solutions can spur more standardized data collection and processing for organizations across industries. While this data cleanliness can be a hurdle initially, it results in greater savings in the long run.

See around corners for better forecasting

Beyond analyzing what has happened, i.e., spending, AI tools can also predict what could happen based on numerous data inputs. GenAI develops predictive analytics based on buying history, weather patterns and geopolitical risks, among many other data points. These capabilities can inform potential supply chain disruptions and demand forecasting, providing a helpful tool for organizations to plan their operations. It also supports greater accuracy in inventory management, which can help drive down unnecessary costs.

Another key predictive capability is maintenance, repair and operations (MRO). For manufacturers and other industries, predictive analytics inform when equipment will require service. This facilitates orders for parts ahead of maintenance-related issues, increasing cost savings and minimizing production downtime.

Gaining these types of efficiencies and financial savings is one of the best value-adds procurement brings to an organization, and leveraging AI-powered tools can grow that value proposition even further, even if a team is shorthanded.

AI and the future of procurement  

AI and advanced digital technologies are not the future of procurement — they’re a vital part of the present and already making an impact today. Organizations that embrace these solutions and utilize them in a way that makes sense for their business will be positioned to thrive in a changing environment. Not every use case will be needed by every company, but the opportunities to streamline operations are manifest and ready to impact businesses. 

Learn more about Amazon Business solutions for your procurement department.