As AI approaches, supply chains double down on the basics

There's a tension at work in supply chain operations at companies of all sizes. While new technology is rapidly appearing in the workplace and changing everyday dynamics, this IT evolution can take the focus off of the basic best practices that make these departments such an important part of their respective organizations.

The question of how best to make use of new systems such as big data analytics and artificial intelligence requires an answer as these tools seem to be on the brink of ubiquity. Fortunately, there are plenty of rewards waiting for companies that successfully match their particular needs and operational styles with the potential advantages of improved tech tools. The road may be bumpy, but it's leading to potential value.

Between the future and fundamentals
PYMNTS recently spoke with Zycus' Richard Waugh about the state of procurement departments as they approach the transformative technologies just beginning their useful lifespans. This group includes blockchain systems and robotic process automation, alongside advanced analytics methods such as machine learning and artificial intelligence. Users are excited about the potential these processes have to transform their own operations for the better, as well as move departments toward an overall more strategic role.

Waugh told PYMNTS that procurement officials have taken a sensible approach to the impending changes that come with improved tech tools, resolving to "get our house in order" internally before fully committing to the latest wave of solutions. This means setting up the infrastructure that will power the truly transformative innovations on the way. An AI algorithm can only sift through data and find insights if it has access to streams of digitized information.

Rather than using technology to become strategic, companies will have to shift their thinking and approach, setting up the IT that will serve as a baseline for the next stage of their evolution. Then, the new tools will become available, improving the potential effectiveness of departments and allowing employees to be more efficient in their day-to-day processes. Waugh noted that value will have to come from internal improvements because the classic source of monetary savings - improved agreements with suppliers - has its limits.

What does AI really mean for procurement?

Making AI matter
Gartner went into detail about what kinds of processes procurement departments will have to put in place to make the most of AI. E-sourcing will become a must-have, because departments heavily split between digital and offline transaction tracking aren't equipped to turn their data into fuel for better decisions. Gartner specified not every category of spend will be suitable for e-procurement, but companies should still do their due diligence to make sure every relevant department has been digitized.

One of the other considerations with modernization is the need for organizational knowledge and training. AI algorithms are powerful tools, but using them effectively isn't automatic - it's a skill that has to be learned. According to Gartner, preparing human employees to work alongside new tech tools is a potentially underrated part of preparation. Analytics skills are essential to extract value from the latest IT developments, no matter how impressive those solutions seem in the abstract.