The current era, characterized by geopolitical conflicts, energy crises, and climate challenges, has been termed a “polycrisis” by experts. This environment results in fragile supply chains and volatile markets that often struggle to adapt to changes in demand. To remain operational in such turbulent times, companies must reevaluate their business models and make adjustments. Expense management, the strategic control and optimization of all company expenses, comes into focus in this context.
Let’s be honest – do you know what your company spends daily across different areas like office management, production, or logistics? Expense management sheds light on this expenditure, allowing companies to analyze, document, and manage their expenses effectively.
Digital solutions for spend management provide transparency and visibility across all expenses, enabling companies to identify potential risks faster and address them proactively. Additionally, they make CO2 emissions transparent along the value chain, empowering companies to implement decarbonization measures and reduce their carbon footprint.
AI as a Booster for Procurement and Purchasing Processes
Artificial intelligence (AI) has become an integral part of our daily lives, optimizing search engine results, personalizing advertising, and facilitating automatic text translation. On smartphones, we have streaming services, online shopping platforms, and even household appliances. AI is subtly integrated to make cumbersome, everyday tasks easier and more efficient. Since the rise of generative AI, companies and entire industries have been diligently working to incorporate it into their solutions for improved processes and efficiency.
Procurement is one field where the impact of polycrisis is keenly felt, which has driven important changes. Resilience, transparency, and sustainability are the keywords here – and AI can make the crucial difference.
AI can digitalize the procurement function, making it more efficient. Stakeholders rightly expect AI implementation to enhance decision-making, automate processes, and expedite insights. AI can also contribute to cost reduction and error rate mitigation. The question is no longer whether companies will adopt AI but when they will do so. And that time has to be now.
AI Strategies: Think Holistically
To ensure the success of such projects, a holistic approach is needed. AI should become an integral part of the entire procurement process to benefit all areas. This begins with a consistent transformation strategy aligned with the company’s goals and values. It is important to have a strategic, solutions-oriented approach that makes it possible to find answers to real-life business challenges. By effectively integrating AI into data analysis and prediction models, companies can unlock tangible value and drive meaningful outcomes. The quality of the results depends on the quality and availability of corporate data – and this is where the greatest potential for improvement lies. Companies should clean up their data pool so that only valid and meaningful data is included.
For spend management, procurement, and purchasing, generative AI in particular holds enormous potential. As in every area where AI is deployed, SAP has committed to strictly adhering to the principles of relevance, reliability, and responsibility in spend management, thoroughly examining each application accordingly. Employees can be relieved of repetitive, manual, and time-consuming tasks, allowing them to focus better on their core tasks. For example, Joule, SAP’s generative AI copilot, will be embedded across SAP’s portfolio, including procurement solutions.
As an intelligent copilot, it can understand natural language, process data from SAP and third-party systems, and derive new insights from them. Thanks to unified data models, it can provide users with appropriate answers to their questions that fit the specific business context and thus helps to ensure that AI makes a meaningful contribution, enhancing business success. Moreover, it can offer meaningful advice to help them solve their daily tasks more intelligently and quickly, thereby helping to increase their efficiency in a secure and compliant manner. The practical use cases are numerous, ranging from HR or finance to supply chain management, procurement, and customer experience. Following our principle of responsibility, Joule can, for example, assist the HR department in eliminating potential bias from job descriptions and can even formulate suitable interview questions based on these job descriptions.
Category management plays a significant role in procurement, enabling companies to optimize their procurement strategies, strengthen supplier relationships, and reduce costs. Accordingly, 33% of procurement experts consider it a top technology trend to focus on in the next 12 to 18 months. A digitalized and AI-enhanced category management company integrates generative AI to increase efficiency and precision in product categorization and procurement. By applying AI-supported algorithms, relevant data is automatically analyzed, leading to informed insights for optimized inventory management and strategic purchasing decisions.
With the steadily growing amount of data generated by daily business operations, it is becoming increasingly challenging for companies to find the resources to make the most of their own data, all while ensuring data privacy and security aspects are maintained. This data needs to be made accessible, visualized, and processed in a way that it can be leveraged. Therefore, it is important to rely on strong partners like SAP that bring both technical and strategic expertise to develop goal-oriented solutions with a strong focus on data protection and integrity. Now is the time to advance procurement through intelligent collaboration, smart category management, and an AI mindset.
Practical Example: Category Management at OMV
OMV, a global chemical and energy company based in Austria, is transitioning its linear value chain into a circular one with the aim of becoming a leading provider of more sustainable fuels, chemicals, and materials. Procurement plays a key role in this transformation. OMV is automating and streamlining all procurement and supply chain processes. The company is now planning to digitalize category management.
At the core of this initiative is SAP Ariba Category Management, based on SAP Business Technology Platform (SAP BTP) and supported by generative AI. This solution helps procurement teams develop more effective category strategies by helping to accelerate the market analysis process and provide targeted recommendations. This can lead to faster and more efficient category management processes and increased cost savings.
Complex planning processes that were once done manually can now be easily executed with SAP Ariba Category Management. The solution integrates features and tools to help leverage data for Big Data analytics, and it can provide comprehensive end-to-end visibility throughout the procurement process.
The adoption of SAP Ariba Category Management offers OMV numerous benefits, including improved efficiency, cost savings, and the promotion of sustainability through the selection of more environmentally friendly suppliers and products. By implementing SAP Ariba Category Management, OMV successfully bridges the digital gap in procurement and takes another significant step towards a circular value chain.
Curious to Learn More?
Learn more about intelligent category management at SAP Spend Connect Live, taking place October 14-16, 2024, in Las Vegas.
Elena Parker is chief revenue officer for Intelligent Spend and Business Network, MEE, at SAP.
