AI in the Purchasing Process

AI is helping businesses in a number of functions and purchasing/procurement is one of them. Although perhaps not quite as straight forward as other functions, AI tools can help contribute to a smooth-running purchasing operation.

Here are some ways that AI can help purchasing/procurement:

1. AI tools can help do some of the basic tasks. By automating some of the purchasing functions, such as processing invoices, managing contracts, and setting up suppliers, human error mistakes can be eliminated. It also allows buyers and purchasing managers to focus on strategy.
2. An important function of AI in purchasing can and will be data analysis. It will be able to take large amounts of data and analyze supplier performance, spending patterns, and changing markets. This will help management make important decisions affecting cost and savings. AI will even be able to help in the decision-making process.
3. AI can help with supply chain management by analyzing data to look for potential problems with the supply chain. It can potentially identify areas of concern for future supply and suggest measures to avoid supply disruptions.

There are some concerns with using AI for purchasing. Here are some things to consider:

1. Good data must be available for AI to provide meaningful and accurate information back to decision makers. Bad or incomplete data could result in bad decisions being made.
2. Certainly, the increased use of AI could reduce the number of employees needed to run the purchasing department leading to job displacement.
3. There could be some concerns about ethical decisions. AI systems use algorithms and data to reach decisions and not ethical considerations. Humans will still need to be involved in enforcing ethical standards.
4. Because AI uses such vast amounts of data, the security and privacy of data could be compromised. Security strategies must be used to protect the data.
5. AI might not be the best negotiator. Right now, humans should still be the main actor in supplier negotiations using AI data results to help in the process.

There are certainly other things to consider with the use of AI in the purchasing/procurement function and most likely more will come to light as AI grows and becomes more common in every business function.

AI will be a helpful tool in purchasing if used correctly with guard rails that help supervise and possibly restrict its use, performance and capabilities.