Purchasing processes have to adapt to various influencing factors, including protectionistic moves of certain countries, currency fluctuations and vulnerable supply chains in uncertain times. These factors have implications for global value chains, product-group management, and cross-company as well as cross-divisional collaboration between manufacturers and suppliers.
Current challenges in purchasing
The purchasing departments must meet these challenges without jeopardizing the company’s competitiveness: Today’s role of purchasing is no longer just to reduce costs in supply chains, but it acts as an important partner of product development and builds a network to suppliers, which eventually increases the company’s bottom line profit. To achieve this, purchasing has lots of hurdles and challenges to overcome.
Ensure consistently high data quality in purchasing
Purchasing generates large amounts of data – every single day. Especially with internationally operating companies, purchasing is partially decentralized, controlled by branches in the respective country, so that databases and processes are not always consistent within the company. By harmonizing the data, a consolidated and consistent database can be created to identify potential savings (including volume bundling) and cost drivers (including Maverick buying and bottlenecks) to generate competitive advantage.
High responsiveness as a success factor in purchasing
Due to the increasing external dynamics, including currency risks and volatile commodity prices, purchasing must react quickly without being inattentive or erratic. With the help of a networked database, crucial information from different locations and business units can be used in real time, so that the reaction speed in purchasing can be increased.
No purchasing without predictive planning
The purpose of purchase planning is to forecast the future and taking risks into account (including currency risks) and to consider these in the purchasing behavior of the company. This enables the company and its suppliers to plan and predict with more confidence, in order to build sustainable relationships. With the help of reliable, data-driven purchasing planning, relevant key figures can be reliably derived within the company and can, therefore, be used proactively within predictive procurement.
Purchasing as a field of application for a digital assistant
Purchasing is changing as it has become more efficient and strategic. For this purpose, it uses new, digital technologies and builds on existing data in the purchasing process. This allows purchasing to better link existing information and thus develop more accurate forecasts of customer and market conditions in order to respond to them accordingly. A new approach with emerged, digital technologies and making sense of huge amounts of data is the use of digital assistants in purchasing.
Fields of application in the purchasing process
With the help of a digital assistant, a new link between man and machine (or information and data) is created, which is also possible in purchasing. The connected cooperation between the purchaser and a digital assistant can be beneficial in most steps within the purchasing process. In the following, potential applications of our digital assistant “Neo” in the purchasing process are drawn out.
Through the use of a digital assistant like Neo, the purchasing staff can be supported almost throughout the whole purchasing process. In this case, the accompaniment of the digital assistant “Neo” can be helpful even before the operative purchasing process starts – for example in the requirements specification. Doing so, data quality can be increased at the very beginning of the purchasing process and the necessary specification can be clarified to an extent that allows further automation. The AI-assistant consolidates purchase requisitions and the associated data in a dedicated system.
Neo can then suggest relevant suppliers to the purchasing employee and, at the same time, the employee can supplement or update supplier information. By catching up on quotations (semi-)automatedly via defined and connected channels, the reaction time in purchasing increases since parallel inquiries can be made simultaneously at various suppliers at the same time, instead of sequentially via an employee.
If necessary, the offers are made available to the purchasing staff, so that they can select the best possible / best-suited offer. Through full automation, the selection of the offer can also be made by Neo, if the relevant criteria for the selection have been defined.
Finally, Neo can also place the order directly with the supplier, so that even more time of the purchasing staff is freed up. If the purchasing process is carried out often enough with Neo, a corresponding data model can be set up, which can enable predictive planning in the context of predictive procurement.
As a result, purchasing can seek new ways of working with suppliers through the use of digital technologies and the enormous amount of data.
If Neo is involved early in the purchasing process, it can reduce employee utilization and processing time. Cost savings can also be achieved by saving employees time with tedious tasks. Also, the degree of standardization in the purchasing process increases and Maverick buying can be avoided.
Based on the “Value-Profile Methodology” by Professor Dr. Orestis Terzidis (KIT), the use of the digital assistant Neo in the purchasing process can be evaluated. It should be noted that the use of a digital assistant with Artificial Intelligence requires a training or learning phase (blue line) before the maximum potential in full-rollout (purple line) can be unleashed. The following image makes a distinction between the current solution (manual purchasing in grey), the training phase (blue) with Neo in training mode, and the vision solution (purple).
Neo, the AI -assistant in purchasing
Our digital assistant Neo can be used as a native application via text and voice and is connected to existing systems and services in order to integrate seamlessly into the purchasing process. Potentially, Neo can take over the entire purchasing process: From the request to the final order, fully automated – thus, significantly supporting the purchasing staff. If you would like to use Neo also in your company in purchasing, we look forward to your request!