Posted:
July 5, 2024
Updated:
August 28, 2024
As procurement continues to expand its scope across organizations, new technologies and methodologies have arrived to maximize impact.
AI and procurement orchestration were considered buzzwords just a few short years ago, but now they are essential components of the modern procurement tech stack.
In this article, we’ll take a look into why every procurement leader should prioritize these technologies, and provide the knowledge required to advocate for and implement AI-driven orchestrations at their organizations.
The role of AI in procurement
The evolution of procurement
Procurement has come a long way in just a short amount of time. Imagine the early days of a startup, where procurement might be as simple as someone whipping out a company credit card to make a quick purchase online.
This ad-hoc approach, while effective in the short term, quickly becomes unsustainable as the company grows. What starts as a straightforward process can soon spiral into chaos, with multiple departments making uncoordinated purchases, leading to inefficiencies and wasted resources.
Formalizing procurement is not just about imposing structure—it's about reaping the benefits of visibility, control, and long-term efficiency. As procurement processes evolve from informal to structured, organizations can significantly reduce errors, ensure compliance, and gain a comprehensive view of their spending patterns.
This transformation is about laying a solid foundation for sustainable growth and operational excellence for years to come.
AI and Orchestration defined
Before going deeper, let’s clarify what we mean when we talk about AI and procurement orchestration.
- Artificial Intelligence (AI) in procurement refers to the use of advanced algorithms and machine learning to automate routine tasks, analyze vast amounts of data, and provide process guidance and predictive insights.
The recently expanded Zip AI can handle everything from processing invoices to intelligently guiding stakeholders throughout the procurement process, making workflows faster, more efficient, and aligned with organizational goals.
- Procurement Orchestration involves the complete integration of all procurement activities through automated workflows and coordinated systems. It ensures that procurement processes are streamlined, efficient, and aligned with organizational goals.
Case study: Miro
Miro, a leading AI-powered visual workspace platform, faced a challenge as they scaled. They found themselves unable to keep up with the pace of growth, with scattered information and disjointed manual processes keeping procurement’s hands tied. They found what they needed with Zip.
“We were looking for something that had a ton of transparency and above all else was super easy for users and approvers,” said Grace Larrea, Miro’s Global Procurement Manager. “With Zip it’s just very simple for someone to hop on the computer, look at the UI, and say ‘Oh, I know exactly what I should do now.’”
Implementing Zip’s AI-powered procurement orchestration platform led to a remarkable 33% reduction in cycle times, along with millions of dollars of vendor payments efficiently processed, with full transparency and control.
“Zip AI has automated processes that used to take a lot of manual effort, helping us avoid human error and ultimately allowing us to focus on more strategic value-added activities.” — Peter Bloom, Head of Strategic Sourcing and Procurement at Miro
Read the full story of Miro’s procurement orchestration transformation with Zip.
Why every procurement leader should care about AI and Orchestration
Business is evolving fast, and so too must the face of growth. AI and Orchestration is not just a fancy technological upgrade—it’s an essential part of keeping up with the pace of global business.
Here’s why:
Automation of routine asks
One of the most immediate benefits of AI is the automation of repetitive, time-consuming tasks.
Imagine a world where your team no longer has to manually process invoices, chase down approvals, or track supplier performance. AI takes care of these tasks, allowing your procurement professionals to focus on strategic activities that drive value.
For instance, AI can automate the approval workflow for purchase orders. Instead of a manual, time-consuming process that can bottleneck operations, generative AI ensures that approvals are swift and compliant with company policies.
The result? Time and cost savings, along with a significant reduction in errors.
Enhanced decision-making
AI empowers procurement leaders with data-driven insights that enhance decision-making. By analyzing vast amounts of data, AI identifies trends, patterns, and anomalies that might go unnoticed in traditional procurement processes. This capability is crucial for making informed decisions that optimize procurement strategies.
Predictive analytics, a subset of AI, takes this a step further by forecasting future trends and demand. This foresight allows procurement leaders to anticipate market changes, manage risks, and make proactive decisions that align with organizational goals.
Optimized spend management
Effective spend management is at the heart of procurement. AI helps optimize spend by providing real-time visibility into spending patterns and ensuring that expenditures stay within budget. With AI, procurement leaders can track spending against budgets in real-time, identify cost-saving opportunities, and ensure that every dollar spent contributes to the company's strategic objectives.
Identifying and mitigating risks
Risk management is an essential aspect of procurement.
AI enhances risk assessment by continuously monitoring the supply chain and identifying potential risks. Whether it's a supplier's financial instability or geopolitical issues affecting supply chains, AI provides real-time insights that enable procurement leaders to mitigate risks proactively.
For example, during the early stages of the COVID-19 pandemic, companies that had intelligent risk management systems in place were able to quickly identify at-risk suppliers and adjust their strategies accordingly. This agility was key to maintaining operations amidst unprecedented disruptions.
Are your operations ready for another hit to the global supply chain? Better to have intelligent insights and not need them, than need intelligent insights and not have them, don’t you think?
Compliance and Governance
Adhering to procurement policies and regulatory requirements is non-negotiable. AI ensures compliance by enforcing policies and maintaining detailed audit trails. Automated compliance checks reduce the risk of violations, while comprehensive audit trails simplify the audit process, providing transparency and accountability.
Cross-functional workflows
AI and orchestration streamline cross-functional workflows, improving communication and collaboration between departments.
For instance, automated workflows ensure that procurement requests are approved promptly, reducing delays and improving efficiency. Integrated systems facilitate better communication between procurement, finance, and operations, ensuring that all departments are aligned and working towards common goals.
Integrated systems
Procurement orchestration platforms integrate seamlessly with existing ERP systems, allowing for a free flow of consistent data, so nothing is missed or mistaken.
Zip’s integration ecosystem ensures that procurement processes complement broader financial and operational systems, creating cohesive and efficient workflows for everyone involved.
Best practices for implementing AI and procurement orchestration
Implementing AI and procurement orchestration requires a strategic approach. Here are some best practices to guide you:
Planning and Strategy
- Set clear objectives: Define what you aim to achieve with AI and orchestration. Whether it's improving efficiency, reducing costs, or enhancing compliance, clear objectives will guide your implementation strategy.
- Stakeholder buy-in: Secure support from key stakeholders across the organization. Ensure that everyone understands the benefits of AI and orchestration and is committed to the implementation process.
Technology Selection
- Choose the right tools: Select AI and orchestration tools that align with your objectives and integrate seamlessly with your existing systems.
- Integration considerations: Ensure that the chosen technologies can be easily integrated into your current infrastructure, minimizing disruptions and maximizing efficiency.
Continuous Improvement
- Feedback loops: Establish mechanisms for regular feedback from users. This feedback will help you identify areas for improvement and ensure that the system evolves to meet your organization's needs.
- Iterative enhancements: Continuously refine and enhance your AI and orchestration processes based on this feedback and changing business requirements.
Leverage AI in Procurement Orchestration with Zip
It’s time to lay the foundation for procurement orchestration at your company. All the pieces are in place to intelligently guide intake, accelerate process and approval workflows, and ultimately give your team more time to focus on the strategic work that really moves the needle.
Zip offers a wide range of AI-powered tools and orchestrated capabilities designed to streamline procurement processes and drive efficiency.
- Universal AI-powered Intake for purchasing requests: Zip’s AI assistant intelligently guides procurement initiation for every employee, ensuring procurement gets the information they need every time.
- Dynamic approval workflows: Stakeholders are notified and aware of every request and requirement along the process, with customizations easily designed without extensive IT involvement.
- Powerful dashboards for spend insights: Provides real-time AI-enhanced visibility into spending patterns, allowing for real-time fully informed decision-making.
- Pre-built integrations for your ERP: Zip’s integration ecosystem unites procurement with existing best-of-breed systems, enhancing data integrity and operational consistency.
- Pricing designed for adoption: Encourages widespread use, ensuring the benefits of streamlined procurement are realized across the organization.
By embracing AI and orchestration, procurement leaders can transform processes, drive efficiency, satisfy compliance, and enhance strategic value across their organizations—expanding procurement’s impact on the bottom line.
Ready to see how Zip can accelerate your procurement? Request a demo today.
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