Supplier management and other procurement processes are complex and time-consuming. By applying artificial intelligence to procurement, you can save valuable time in the process. Automating manual tasks such as supplier selection, cost analysis or risk prevention increases productivity in companies and ensures a more efficient way of working.
20 March 2025 – Frank von Orlikowski
Traditional procurement generates high costs for companies because opaque procurement processes take up a lot of time and price advantages are not reflected in the volume of information. The purchasing decision is full of manual processes, such as supplier selection or price comparison. Another problem for procurement is communication within the organisation. Procurement requires the cooperation of several departments, which often act independently. Minimal information sharing, low levels of employee organisation and analogue working methods complicate purchasing processes and prevent rapid procurement.
The digitisation of the procurement process is summarised under the term ‘Procurement 4.0’. This includes autonomisation, individualisation and data protection. The aim of Procurement 4.0 is to better link existing business processes through digitisation and to install new procurement processes. According to a study by the Fraunhofer Institute, many companies see no future in operational procurement – they are relying on artificial intelligence in strategic procurement to permanently simplify the procurement process for buyers.
AI in procurement helps to streamline lengthy procurement processes. It can take over manual tasks such as document management, sourcing and invoice processing, or help companies make decisions by providing accurate demand forecasts and price analysis.
AI can almost completely automate tasks such as order and supplier management. These are particularly suitable for transfer to an AI as they operate without human intervention. It can also assist with risk and contract management and, by analysing data, create demand forecasts that facilitate procurement planning.
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Artificial intelligence in procurement automates manual tasks by verifying data, shortening decision paths and helping to reduce costs. It increases productivity, reduces the workload on staff and avoids wrong decisions by providing more accurate forecasts. According to a study by UX experts, ChatGPT users are able to generate 59% more documents in a working day than employees who do not use AI.
AI can quickly sift through large amounts of data, which would be difficult to do manually. Through document control, it detects patterns, identifies and structures data quickly and efficiently. In this way, AI improves decision-making and reduces workload in the most cost-effective way.
To err is human. By using AI, errors can be reduced because data is less likely to be misinterpreted. The software makes predictions that support decision-making and help procurement professionals better understand use cases. AI tools identify potential risks and autonomously develop measures to manage them.
Automating many manual tasks, including contract management and electronic invoice and payment management, saves money in the long run. According to a McKinsey & Company 2023 online survey, 33% of employees report that the use of AI in supply chain management significantly reduces costs. Of these, 9% report cost reductions of up to 19%.
In many companies, AI is not yet an integral part of the procurement work structure. According to the Federal Statistical Office, 72% of companies surveyed in 2023 said that a lack of knowledge about the technology prevents them from using artificial intelligence. Another source of uncertainty is the lack of visibility into the amount of data and documents an AI has access to. In addition, AI needs complete and accurate data to make reliable predictions and avoid misinformation.
1. Lack of knowledge:
A lack of knowledge leads us to avoid helpful changes. Many AI technologies, such as ChatGPT, are particularly user-friendly and easy to understand. They do not require any prior knowledge.
2. Lack of clarity:
Manual processing of stored data is confusing and time-consuming. This is where Shareflex Documents comes in. The document management solution with integrated AI secures your data in the Microsoft cloud and simplifies processing with common Microsoft 365 applications.
3. Seamless and accurate data:
Manual work processes are prone to errors due to incomplete data. This leads to the wrong information being processed, forecasts being misinterpreted and policies being ignored. AI is used to evaluate needs analyses and avoid wrong decisions by presenting classified data and promising secure handling. The DMS solution from Portal Systems is also suitable for this.
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Studies show that the use of AI in procurement is becoming increasingly popular. The market demands constant adaptation to technological progress. 76% of companies that are not yet using AI plan to do so in the near future for fear of being left behind by the competition. Due to the increasing demand, experts are focusing on the continuous improvement of AI, which will also benefit companies in the long term.
Although AI brings many benefits to procurement, it cannot completely replace humans. AI works with sources that are made available to it. These can be flawed and require external control to prevent incorrect processing.
Companies need to ensure that their employees are fully trained in the use and application of AI so that they understand how it works. There are also costs associated with implementing new software, but these are usually quickly recouped.
AI is taking over many of the manual tasks in procurement. Areas of application include supplier and data management, failure analysis and risk forecasting. It also helps to optimise costs and understand demand.
AI can process and analyse unstructured data. As it evolves, it learns to understand and derive insights from this data. AI functions can analyse, interpret and imitate human work.
Hamburg, 20 March 2025
Author: Frank von Orlikowski
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