Cognitive Computing for Procurement and Contract Management
Usually people think of AI and cognitive computing as glamorous technologies used for cool things like self-driven cars, robots/ droids, or colonizing Mars. All that is true, but there are very meaningful, unglamorous and fundamentally transformational applications that are low hanging fruits. We have written about this before.
Take something like procurement. While it seems so drab on surface, the truth is different. Complexity of the procurement function is probably best judged by the complexity of its problems – tedious processes, fragmented data, difficult compliance to SOPs, very limited bandwidth of professionals leading to anecdotal research at best – essentially utter chaos.
Complexity of a seemingly drab function like procurement is probably best judged by the complexity of its problems. With the use tactical cognitive computing a method emerges from this madness.
It is a truism that trying to figure out cost controls and risks, while saddled with an outdated procurement / contract management system, makes for a dated player. Precious time and resources are consumed in dealing with doing things manually which result in limited options and sub-optimal decisions.
Tactical cognitive computing is about processing data, esp. natural language and unstructured data, in the same way as a human would, and using that capability to solve real problems at enterprises. So, now imagine 1,000 interns for the procurement team, powered by artificial intelligence. There are so many things a procurement manager can get done from this team:
- For every part, commodity or service, this team can read through all contracts across all locations and business units of the company to find the best procurement options.
- This team can also weigh these options with user feedback, public reviews, and other factors to further qualify.
- This team can also look at vendors not under contract currently. Some of these options may be better than existing contracts. In most cases this team will generate suggestions on who should be approached for contracts, how much money could be saved, and all the supporting data (See case example).
- Then, when new vendors are being brought on board the team could pull diligence packs them and generate supporting data for negotiations (See case example).
Suddenly, with the use of tactical cognitive computing, a method emerges from this chaos. Of course, every decision is recorded, every data point stored and every assumption verified, which provides the foundation for healthier organizations. Procurement or contract management is also a case where an approach like tactical cognitive computing outshines traditional AI approaches, mainly due to the fragmentation in underlying corpus, and lack of homogenous labelled data.
There are numerous such examples (sales, healthcare, ecommerce), that may look very mundane, and yet these are the areas where something like tactical cognitive computing succeeds easily. The only question is, are you truly being creative?