Data & Analytics

5 Ways GenAI is Changing Procurement

As GenAI continually progresses, what seemed futuristic yesterday is today's reality. Here, we demonstrate 5 applications of GenAI in procurement that are changing the paradigm of actionable analytics. 

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Updated: Mar 27, 2024

Traditionally, procurement has been dominated by structured data, such as purchase orders and invoices. However, this represents just 1% of the information available for decision-making.

Until now, most valuable data has been buried in unstructured formats, requiring human effort to unlock its potential.

This has left 99% of the data on the table, unexplored.

In this article, we'll explore five ways GenAI is changing procurement and how companies like Sievo implement these technologies.

Want a deeper dive? Watch the full recording of our Webinar with Sammeli Sammalkorpi, CEO and Co-founder, and Sergey Zakrytnoy, Product Manager - AIML:

 

Download the webinar handout and slides!

 

5 Ways GenAI is Changing Procurement

Here's our summary of the five (+ 1) applications of GenAI that are revolutionizing procurement.  

 

1. AI-Powered Material Harmonization

Material harmonization stands out as an area where GenAI is making its mark. GenAI can identify and harmonize material data across global inventories by leveraging LLMs trained with company-specific data.

This process ensures data consistency and uncovers opportunities for cost savings by revealing duplicate materials that were previously hidden in data silos.

 

AI-powered Material Harmonization Sievo

Image: Slide from Webinar presentation

 

2. Supplier Intelligence 

Procurement functions can struggle to leverage supplier data due to its volume and complexity. GenAI, with its ability to process unstructured data, can provide a view of supplier performance, sustainability practices, and risk profiles.

Platforms like Sievo are embedding these insights into analytics to empower procurement teams with informed decision-making capabilities.

 

 

"If we believe data is the new oil, then procurement sits atop an oil field. The implementation of GenAI to capture and manage that data is what will set companies apart."

- Sammeli Sammalkorpi, CEO and Co-founder of Sievo

 

3. Revolutionizing Spend Classification

Spend classification has always been challenging due to the need for high accuracy and granularity. GenAI can transform spend classification by automating the process, significantly reducing the time and effort required.

This extends to tail spend management, uncovering hidden savings opportunities in areas traditionally overlooked.

 

4. Automated Decision Making

The ultimate promise of GenAI in procurement lies in automated decision-making. While humans can make a limited number of decisions per day, a machine's decision-making capacity is virtually limitless.

 

“A world where decisions are not bottlenecked by human limitations but enhanced by the scale of AI. That's the world we're stepping into, where GenAI enables decisions at a scale we've never seen—millions made daily.”

-- Sergey Zakrytnoy, Product Manager - AIML, Sievo

 

GenAI can process information, make decisions, and execute actions based on pre-defined criteria with a speed and scale far exceeding human capabilities. This includes everything from routine procurement decisions to more complex, strategic choices that traditionally require human intervention.

 

 

5. Value Through Actionable Insights

GenAI does not stop at automating decisions. It can also deliver insights through a dynamic feed, focusing on what's relevant for the user. This approach ensures that teams focus on impactful actions, significantly increasing efficiency and effectiveness.

Personalized insights are becoming increasingly relevant in Sievo as we aim to offer more targeted, efficient, and effective decision-support tools.

 

procurement AI insights and negobots sievo genai

Image: Slide from Webinar presentation

 

Bonus: Self-Service GenAI Assistant and The Negobot 

Introducing self-service GenAI assistants enables users to engage in conversational-style analytics, lowering the barrier to sophisticated data analysis and enhancing decision-making processes.

Emerging tools like the Negobot represent the next wave of GenAI applications in procurement, automating negotiations with suppliers for routine purchases.

Sievo's continuous integration of these technologies showcases a commitment to pushing the boundaries of what's possible in procurement.

 

AI & Insights campaign - Gen aI

Learn how Sievo brings insights from GenAI to your procurement analytics workflows

 

Conclusion

From AI-powered material harmonization to the advanced analytics offered by self-service GenAI assistants, the potential to transform procurement processes has never been more accessible.

By making sense of structured and unstructured data at an entirely new scale, GenAI integration signifies a paradigm shift towards strategic, data-driven decision-making. 

Discover how Sievo AI can turn your insights into action with GenAI. Explore our solutions and take the first step towards a smarter, more efficient procurement strategy.

Meri Tuominen

Meri Tuominen is a Marketing Specialist at Sievo.

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