Santosh Nair, chief product officer with GEP, explains how artificial intelligence is helping to drive “orchestration” in the procurement function.

The word “orchestration” means the ability to align operations across the supply chain, ensuring the ready availability of data to all stakeholders, and intelligent execution based on that data, Nair says.

Procurement is especially ripe for orchestration today, he adds. Despite advances in software and technology over the past 20 years, many procurement organizations struggle with bringing all information together in place, and making it easily available to all stakeholders.

A category manager, for example, needs to be able to access contract terms and market intelligence in order to respond in real time. Previously, such information existed in multiple silos. That made it difficult for managers to negotiate direct sourcing and enforce contract terms.

AI is playing a valuable role in achieving orchestration within procurement. One major benefit is the ability of end users — from data analysts to senior executives — to interact with applications in a natural language, such as ChatGPT. “You don’t need to be extremely well-versed in complex technology,” Nair says. In the process, modern-day AI tools can improve contract compliance by anywhere from 40% to 50%, he adds.

AI’s other big benefit is making sense of data and workflows in a way that wasn’t possible before. It can quickly locate key contract terms, whether they’re scattered across users, on paper, or in the form of a PDF.

Nair cites uses cases in which buying has been “completely reshaped by AI.” Organizations are able to achieve the best possible price and selection, while being taken out of “the blocking and tackling role.”

“We’re at the early stage of this particular journey,” Nair notes. “Some companies in the last year have seen significant benefits, but we expect that in the next year or two, more and more use cases will pop up.”