AI in Procurement: Transforming Sourcing with Intelligent Systems

AI in procurement is not a single technology but a broad toolbox comprising machine learning, natural language processing (NLP), optimization algorithms, generative AI, and many more. These technologies work together to:

• Automate repetitive tasks, freeing up time for strategic activities.
• Enhance decision-making with data-driven insights.
• Improve supplier selection and bid evaluation.
• Reduce sourcing cycle times and increase agility.

Narrow AI vs. Generative AI

While generative AI (GenAI) has gained significant attention, procurement benefits most from narrow AI – specialized systems designed for specific tasks like supplier discovery, bid analysis, and optimization. Keelvar’s approach applies the right AI tool for each task, ensuring maximum value and efficiency.

AI enhances various stages of the sourcing process, including:

1. Event Design & Setup

• AI Bidsheet Configurator: Automatically configures bid sheets based on historical data and business rules.
• Data-Driven Event Parameter Setting: Recommends optimal sourcing parameters based on past performance.
• Formula Creation from Text Prompts: Uses NLP to generate complex formulas for bid evaluation.

2. Supplier Discovery & Selection

• Global Supplier Discovery: Identifies potential suppliers based on predefined criteria and market intelligence.
• Item-Supplier Matching: AI suggests the best supplier options for each item based on historical data and pricing trends.

3. Bidding & Evaluation

• Bidder Input Validation & Outlier Detection: Ensures accurate and fair bidding by detecting anomalies.
• Bid Optimization & Scenario Analysis: AI-driven optimization tools evaluate different sourcing scenarios for cost savings and risk reduction.
• Automated Event Summaries: AI generates reports summarizing key bid insights.

4. Award & Supplier Communication

• Award Recommendations: AI suggests optimal supplier awards based on price, performance, and risk factors.‍
• Automated Supplier Communication: AI streamlines notifications and updates, ensuring transparency and efficiency.

To determine the best AI application in procurement, Keelvar considers four key questions:

1. Fit: What specific sourcing task is AI being applied to?
2. AI Type: Which AI approach (machine learning, NLP, optimization) is most suitable?
3. Value: Why is this AI type the best fit for the task?
4. Expected Impact: How does AI enhance performance compared to human-only efforts?

By answering these questions, Keelvar ensures that AI is strategically applied for the highest value.

The evolution of AI in procurement is ongoing, with key trends shaping the future:

• Increased intelligence and decision-relevant insights: AI will continue to enhance data processing and analytics for better sourcing decisions.
• Bot-to-bot negotiations: AI-driven negotiation bots will enable more efficient and automated contract discussions.
• Greater automation in bid processes: From supplier selection to bid evaluation, AI will further reduce manual intervention and accelerate sourcing cycles.

Keelvar’s AI-Powered Sourcing Solutions

Keelvar is at the forefront of AI-driven procurement, offering in-app AI capabilities such as:

• Bid sheet configuration
• Supplier recommendations
• Intelligent formulas and scenario rules
• Scenario optimization

Future developments will include automated bid processing and enhanced supplier selection tools, further optimizing procurement efficiency.

AI is transforming procurement by automating routine tasks, and improving sourcing decisions by computing complex data in ways human brains can’t. By applying the right AI tools to the right tasks, Keelvar empowers procurement organizations to drive the best sourcing outcomes and reach their goals beyond cost savings.