The current era, characterized by geopolitical conflicts, energy crises and climate challenges, has been described as a “polycrisis” by experts. This environment results in fragile supply chains and volatile markets that often struggle to adapt to changing demands. To remain operational in these turbulent times, companies must reevaluate their business models and make adjustments. Expenditure management, that is to say the strategic control and optimization of all company expenses, is at the heart of this context.
Let’s be honest: do you know what your company spends on a daily basis in different areas like office management, production or logistics? Spend management sheds light on these expenses, allowing businesses to effectively analyze, document and manage their expenses.
Digital solutions for expense management providing transparency and visibility across all spend, enabling businesses to more quickly identify potential risks and respond proactively. In addition, they produce CO2 transparent emissions throughout the value chain, enabling 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 translation of texts. On smartphones, we have streaming services, online shopping platforms and even household appliances. AI is subtly integrated to make heavy daily tasks easier and more efficient. Since the rise of generative AI, companies and entire industries have worked diligently to integrate it into their solutions to improve processes and efficiency.
Purchasing is an area where the impact of the polycrisis is being felt hard, which has led to significant changes. Resilience, transparency and sustainability are the key words here – and AI can make the crucial difference.
AI can digitize the procurement function, making it more efficient. Stakeholders rightly expect that the implementation of AI will improve decision-making, automate processes and accelerate analytics. AI can also help reduce costs and mitigate error rates. The question is no longer if businesses will adopt AI but when they will. And that time must have come now.
AI strategies: thinking holistically
To ensure the success of such projects, a holistic approach is necessary. AI should become an integral part of the entire procurement process to benefit all areas. This starts with a coherent transformation strategy aligned with the company’s objectives and values. It is important to have a strategic and solution-oriented approach that helps find answers to real business challenges. By effectively integrating AI into data analysis and prediction models, businesses can unlock tangible value and drive meaningful results. The quality of the results depends on the quality and availability of the company’s data – and this is where the greatest potential for improvement lies. Businesses should clean their data pool so that only valid and meaningful data is included.
When it comes to spend management, sourcing and purchasing, generative AI in particular holds enormous potential. As in all areas where AI is deployed, SAP is committed to strictly adhering to the principles of relevance, reliability and accountability in spend management, carefully reviewing each application accordingly. Employees can be relieved of repetitive, manual and time-consuming tasks, allowing them to better focus on their core tasks. For example, Joule, SAP’s generative AI co-pilot, will be integrated across SAP’s portfolio, including procurement solutions.
As an intelligent co-pilot, he can understand natural language, process data from SAP and third-party systems and derive new insights. Through unified data models, it can provide users with appropriate answers to their questions, tailored to the specific business context, and thus helps ensure that AI makes a meaningful contribution, thereby improving business success. Additionally, it can offer them useful tips to help them solve their daily tasks smarter and faster, helping to increase their efficiency in a secure and compliant manner. The practical use cases are numerous, ranging from human resources or finance to supply chain management, purchasing and customer experience. In accordance with our principle of responsibility, Joule can, for example, help the HR department to eliminate potential biases from job descriptions and can even formulate suitable interview questions based on these job descriptions.
Category management plays an important role in procurement, allowing businesses to optimize their purchasing strategies, strengthen supplier relationships and reduce costs. As a result, 33% of procurement experts consider this a major technology trend to focus on over the next 12-18 months. A digitized, AI-enhanced category management company integrates generative AI to increase the efficiency and accuracy of product categorization and sourcing. By applying AI-driven algorithms, relevant data is automatically analyzed, leading to informed insights for optimized inventory management and strategic purchasing decisions.
With the ever-increasing amount of data generated by daily business operations, it is becoming increasingly difficult for businesses to find the resources necessary to get the most out of their own data, while ensuring that privacy and security are maintained. data security. This data must be made accessible, visualized and processed in such a way that it can be used. It is therefore important to rely on strong partners like SAP, who provide both technical and strategic expertise to develop objective-oriented solutions, strongly focused on data protection and integrity. Now is the time to advance purchasing through intelligent collaboration, intelligent category management, and an AI mindset.
Practical example: category management at OMV
OMV, a global chemicals and energy company based in Austria, is evolving its linear value chain towards a circular one with the aim of becoming a leading supplier of more sustainable fuels, chemicals and materials. Purchasing plays a key role in this transformation. OMV automates and streamlines all procurement and supply chain processes. The company is now planning to digitize category management.
At the heart 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, 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 leverage data for big data analytics, and can provide complete end-to-end visibility throughout the procurement process.
Adopting SAP Ariba Category Management provides OMV with many benefits, including improved efficiency, cost savings, and promoting sustainability through the selection of more environmentally friendly suppliers and products. By implementing SAP Ariba Category Management, OMV is successfully bridging the digital divide in procurement and taking another important step towards a circular value chain.
Curious to know more?
Learn more about intelligent category management and watch the recording of the SAP Spend Connect Virtual Innovation Day. A live event will take place on site on April 23 in Karlsruhe, Germany.
Elena Parker is Chief Revenue Officer for Intelligent Spend and Business Network, MEE, at SAP.
