Shanton Wilcox, US manufacturing lead at PA Consulting, explains how AI can help boost decision-making amid procurement chaos.
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The article notes that procurement and sourcing are integral functions of supply chain management for any company making or selling goods. Sourcing, an early stage of the procurement process, is about identifying and assessing potential suppliers of goods or services, negotiating terms and selecting vendors. Procurement goes further, however, and is about obtaining supplies and payment from suppliers that compete for business by submitting bids and negotiating contracts.
But challenges abound in a supply chain landscape filled with disruptions and risks – from issues related to the COVID-19 pandemic and the war in Ukraine to climate change. AI, however, can be a game changer.
Shanton says that the current focus in procurement is one of “firefighting” – that is, daily efforts to stay on top of and ahead of the next seemingly unforecastable disruption. Today’s companies are faced with availability issues, wildly fluctuating commodity prices, transportation challenges and increased costs.
He adds: “AI solutions help inform decisions in a seemingly chaotic business environment. Artificial intelligence can be in everything from the development of scenarios and modeling potential scenario impacts and decisions, to developing AI models that forecast prices and help balance the trade-off between current and future prices."
Shanton continues: "Investing in AI to boost procurement and sourcing will become a priority investment area in the near future, due to complex challenges around business volatility and increased labor mobility. Long gone are piece price comparisons – decisions now include aspects like flex capacity / responsiveness, initial sustainability interests, transportation options and resulting costs."
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