AI Introduces a Fundamental Shift in Finance and Procurement
Today, the decisive factor emerging when it comes to a sustainable competitive advantage is information. Information that is more accurate, more timely, and more relevant than what competitors have access to.
AI has a fundamental role to play in facilitating this access to information.
We’ll explore cutting-edge ways in which AI can be leveraged by finance and procurement teams to gain a crucial advantage and position their organizations for long-term success.
Empowering teams with accuracy
With more accurate information, you are empowered to make better decisions and drive more value. AI has an incredibly powerful role to play and it’s easy to see that when used effectively, this provides a key advantage. Examples of this include:
- Automated Market Analysis Reports: Generative AI can automatically generate comprehensive market analysis reports by aggregating data from various sources, such as industry news, financial reports, and market research databases.
- Real-time Supplier Performance Reports: AI-driven systems can continuously monitor supplier performance metrics such as on-time delivery rates, product quality, and customer service responsiveness.
- Risk Assessment and Mitigation: AI can analyze historical data and external factors to assess supplier risks. By generating risk profiles for each supplier, AI can provide procurement professionals with actionable insights on which suppliers pose potential risks and how to mitigate them.
- Dynamic Pricing Analysis: AI algorithms can analyze historical pricing data, market demand fluctuations, and supplier negotiation histories to generate dynamic pricing models. These models can help procurement professionals optimize their negotiations and contract terms.
- Supplier Diversification Strategies: Generative AI can analyze supplier portfolios and market conditions to recommend strategies for diversifying the supplier base.
- Predictive Demand Forecasting: AI can analyze historical demand data, seasonal trends, and market conditions to generate highly accurate demand forecasts.
- Optimized Inventory Management: AI-driven inventory optimization systems can provide real-time insights into inventory levels, reorder points, and lead times. Generative AI can generate recommendations for adjusting inventory levels based on changing demand patterns, helping to reduce carrying costs.
- Sustainable Sourcing Strategies: Generative AI can analyze environmental and social data to assess the sustainability practices of suppliers. It can generate reports that guide procurement professionals in selecting suppliers with strong sustainability credentials, aligning procurement decisions with corporate responsibility goals.
- Negotiation Support: AI-powered chatbots or virtual assistants can assist procurement professionals in negotiation processes. These AI systems can analyze negotiation tactics, historical data, and market conditions to provide real-time recommendations and counteroffers during supplier negotiations, helping to achieve better terms and pricing.
- Spend Analysis: AI can analyze spending data from various sources, such as invoices and procurement records, to identify cost-saving opportunities and patterns of excessive spending.
- Contract Compliance Monitoring: AI can monitor supplier contracts for compliance with agreed-upon terms and conditions. It can flag deviations and potential issues, allowing procurement professionals to take corrective actions and avoid disputes.
Providing information at the perfect time
Having this information is one thing. But having it at the right time is another.
This is where the advantages of a real-time AI-driven chatbot are most apparent. Almost like a coach at your shoulder, these types of chatbot can surface exactly the insights you’re looking for, at just the right time. In many cases, these AI chatbots can suggest information that a human might not even have thought of.
For example, consider a pricing negotiation with a supplier. They might be hardballing and demanding a big increase on last year’s pricing. The AI chatbot can analyze existing market conditions, competitor rates for that item, general pricing trends, historical negotiation tactics, supplier financials, and a multitude of other sources to give real-time advice on what pricing range should be finally agreed upon.
Alerts are another key area where timely information provided by AI is key. For example, if there's breaking news about a supplier's financial troubles or labor strikes at a factory, AI can immediately send an alert to the procurement professional.
It can also score and prioritize these risks: a supplier's financial difficulties might be categorized as "High Risk," while a minor production delay could be labeled as "Low Risk." It then may offer actionable insights, such as practical ways to diversify the supplier base for this particular item.
Information that’s relevant and actionable
Deloitte, in a report titled “How Generative AI will transform Sourcing and Procurement Operations,” notes that “generative AI can boost efficiencies, unlock value, birth new digital capabilities, and revolutionize what’s possible across source-to-pay processes in the world of supply chain.” The report points out specific ways that AI can support better decision-making through accessing more relevant information:
- Gather and analyze external data to identify new suppliers
- Evaluate, and compare bids from various suppliers and recommend bid decisions based on various scenarios
- Conduct supplier negotiations
- Automatically draft the fully compliant contract document based on the requirements fed
- Contract negotiations
- Scan the existing contract document to identify any risks
- Agreement summarization for document signers
- Tracking of contract deadlines, compliance with terms and managing renewals
- Accelerated supplier risk assessment during the onboarding process
- Send targeted communications to the suppliers
- Identify patterns and trends to detect potential supplier disruptions
- Track supplier sustainability/diversity
- Insights and recommendations on supplier performance
Requisitioning and ordering
- Auto-create a requisition with minimal inputs from the end users
- Validate if the requisition can be auto-approved based on the procurement policy
- Highlight key policy deviations in the requisition to the approvers
- Demand predictions
- Country-level compliances
- Complex tax calculations and validations
- Automated validations and approvals
- Buying channel validations
- Autonomous dispute functionality
- Intelligent payment routing based on factors like currency conversion rates, fees, and available payment methods
- Payment terms optimization
- Automated bank validations
- Foreign exchange impact analysis
- Payment scheduling
PayEm offers all the benefits of AI in one unified platform
PayEm already provides the majority of these functionalities, enabling organizations to step straight into an AI-optimized world. PayEm’s comprehensive solution brings together all major finance and procurement requirements in one powerful platform.
From consolidating fund requests, issuing corporate cards, generating purchase orders, facilitating bill payments, and carrying out reconciliations seamlessly, to effortless approvals, next-level spend management, advanced AP automation, and much, much more.
It’s no wonder more organizations are moving to PayEm, and benefitting from AI-powered workflows.
To learn more about how PayEm can transform your finance and procurement teams, optimize outcomes, and give you that key differentiator, get in touch with a product expert today.
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