Procurement is a vital aspect of business, and it’s only going to become more important in the coming years. The most common trends in procurement include artificial intelligence (AI), digital marketplaces, and predictive analytics. Let’s take a look at what these three trends mean for procurement professionals.
- Artificial Intelligence
Artificial intelligence is changing the supply chain. The ability for computers to execute tasks normally requiring human intelligence is rapidly progressing and already making a major impact on the supply chain. Using AI for procurement, for example, can provide many opportunities for companies: faster turnaround, reduced costs, and greater insight into sourcing and purchasing.
AI stands to transform the supply chain. By using intelligent automation techniques applied to business processes, AI increases productivity and efficiency while also reducing errors. As a result, AI can save time and money and increase profits. In addition to providing better results in less time with less effort, AI has some unique advantages over human employees that will allow it to become an essential tool for procurement departments.
AI is becoming more common in procurement practices. One of the key trends in business today is the application of artificial intelligence systems in resource planning and management (RPM). A report by Accenture predicted that by 2020, AI would enable companies to cut annual costs by $1 trillion and boost revenues by $3 trillion as a result of increased efficiency from intelligent automation.
The easiest way to begin leveraging AI is through data analytics software that performs automated pattern recognition on purchasing data. This software provides automatic insights into optimal sourcing strategies based on past performance and current market trends.
- Predictive Analytics
Predictive analytics is the process of using data and statistical analysis to make predictions about future events. In the realm of procurement and supply chain management, predictive analytics can be used in a number of ways, including:
- Predictive forecasting: Predictive forecasting uses historical data to predict future trends with the aim of improving supply chain management decisions.
- Classification & regression trees (CART): Classification and regression trees (CART) are used to analyze large quantities of data where relationships between variables have not been established yet. This method helps companies understand what factors affect purchasing decisions so they can take appropriate action in response to changes in demand or supply conditions.
- Neural networks: Neural networks allow computers to learn from experience rather than being explicitly programmed by humans. They are often used for pattern recognition tasks, such as image recognition or speech understanding but can also be applied across other areas such as marketing decision-making, strategic planning, and risk assessment within the context of procurement processes like demand planning or supplier selection/sourcing strategies.
- Digital Marketplaces
Increasingly, organizations are relying on digital marketplaces to help them procure goods and services. A digital marketplace allows businesses to connect with suppliers through a single platform, enabling them to streamline their procurement process and improve efficiency.
The most widely used type of digital marketplace is the business-to-business (B2B) model, which focuses on matching buyers with sellers directly using online tools. In B2B markets such as Dooka´s B2B Marketplace for African enterprises or Amazon’s Marketplace for Businesses (AM4B), third parties like wholesalers can list products for sale through a storefront managed by the platform operator. This strategy lets companies compete on price while cutting out intermediaries from the equation.
The concept of a business-to-business marketplace may sound simple enough, but there are some fundamental differences between this kind of marketplace and its consumer counterpart. For one thing, the sellers on these sites tend to have lower barriers of entry than their e-commerce counterparts—that means that small businesses have an easier time finding customers for their products or services. This is particularly beneficial for small businesses that don’t have the budget to build out their own marketing departments or to hire consultants who can help them grow—both of which are common expenditures for larger companies that rely on more traditional methods of selling products and services.
However, even larger businesses might find value in an online marketplace—particularly if they’re looking to do business in a new region or with a new kind of supplier. These sites serve as an easy way to make connections with businesses in other regions or industries.
This trend is more than just a buying and selling platform. It’s a shift in how small businesses are conducting their business affairs. Online marketplaces are bringing buyers and sellers together in new ways, which is benefiting both small businesses and big brands that would otherwise have trouble finding each other.
- Data-driven Insights
Data-driven insights are a way to gather data, analyze it and then use it to make decisions. It can be used in many different industries, but is particularly important for procurement because the field has so much data to sift through.
For example, if you know your company doesn’t have enough dollars for a particular product line and needs new suppliers, you can use data from past purchases as well as other factors such as cost of living index (COLI) data from Moody’s Analytics that shows how much your employees make by state or area code. The result? You can pinpoint which suppliers are most likely to offer the lowest prices while still being able to compete with them on quality and service levels.
- Buying experience
Customer experience is the top priority for procurement teams. According to a study by Gartner, customer experience is now the top priority for procurement departments—and it should be for your business too.
The buying experience is about more than just a website or catalog; it’s also about how customers can interact with suppliers before and after purchase. To create a great buying experience, you need to combine digital tools, data, and insights in order to give customers an easy way to find what they need while keeping costs down.
Automation is the use of machines to do work. It can be used to reduce costs and improve efficiency, quality, and safety, and productivity—and if you’re a company that manages procurement projects, automation will have a substantial impact on your department’s day-to-day operations.
In 2023, procurement professionals will be using automation in all areas of their work: from supplier interaction and procurement processes to project management and compliance reporting. If you’re not already looking into how your organization can benefit from automation now, it’s time to start exploring the possibilities.
The buying experience is not just a website or catalog; it’s also about how customers can interact with suppliers before and after purchase. To create a great buying experience, you need to combine digital tools, data, and insights, in order to give customers an easy way to find what they need while keeping costs down. Automation can help your team save time and money, increase productivity, improve the quality of your procurement process and make things more efficient. Automating tasks will allow you to focus on more important things like strategic planning and supplier development.
The most common procurement trends for 2023 are artificial intelligence, digital marketplace, and predictive analytics.
AI will improve the way companies buy products and services by automating processes and eliminating repetitive tasks. With AI, organizations can create more efficient processes that require fewer human steps or decisions to get a job done.
A digital marketplace allows buyers and sellers to connect through a single platform rather than multiple ones. The digital marketplace also allows businesses to use AI technology in order to find the most ideal products or services at the best price possible without having to search through all of these sources individually.
Predictive analytics help companies predict what their customers are likely doing in order for them to act on that information before it’s too late for them not be able to gain any insight into how well their business is performing during its highest points when compared against its lowest points
We hope this article has given you some insight into the future of procurement. With all the changes occurring in the world today, it can be hard to keep up with what’s new. But by following these four trends—artificial intelligence, predictive analytics, digital marketplaces, and data-driven insights—you’re sure to stay on top of everything coming down the pipeline in 2023!