The excitement around the potential impact of AI on procurement is understandably great. When we surveyed over 200 managers as part of DPW’s first annual study on procurement digitalisation, we learned that a near 300% increase in adoption of AI in procurement is planned for the coming 12-18 months. While admittedly coming from a relatively low level of current adoption this will be a heavy lift. On top of that we found that managers were assessing levels of readiness for digitisation in their organisation lower than solution providers recommend.
So, how do you get started? Let me offer you three do’s and two don’ts.
1. Just get started
The first part of the answer is – you start by starting.
Just organising a brainstorm about possible application areas and starting a small-scale pilot is a start that can be made quickly and inexpensively. I have enjoyed facilitating several in-company work sessions informed by available technologies and practices of innovators across industries.
2. Leverage the hype
The second part of the answer is that you can use the interest in AI to your advantage in driving engagement amongst leadership.
It only takes a few stakeholders to provide scope and access needed for a pilot. A pilot does not have to be expensive at all and there is a lot of funding available in the solutions space.
3. Fail fast, learn fast
Focus on learning in early efforts. If a pilot fails, that can still be a success, if we learn from it. In fact failures can inform better use-case development and inform future successful pilots. To ensure learning it is important to evaluate a pilot upon completion and before moving on to the phase or project.
It is also important to be honest about what worked, could be better and needs to be fixed.
The evaluation is best done not only by those directly involved but also by colleagues that are further from the pilot but can evaluate its potential or externals. I have evaluated several pilots of companies and found learnings transferable across companies and industries.
4. Take it one bite at a time
But don’t make it too big. You eat an elephant one bite at the time.
Despite AI’s vast potential, trying to solve too many things in initial efforts may overly complicate things. A lot can be learned from a small pilot or a few small pilots.
Keeping it small makes it easier to ensure funding, get going and reduce the risk of negative consequences if the pilot fails.
5. It’s not about the AI
Don’t make it about the technology. While it is exciting to learn about how AI can be unleashed and to see AI in action, avoid the risk of “a solution looking for a problem.”
The question is not what AI can do for you but what problem you can apply it to. So, when brainstorming use-cases, don’t overfocus on how cool AI is. Rather, think through which challenges AI might resolve and why that would be worth the effort.
The good news is that this space is moving very quickly and that leaders are learning a lot quickly. So don’t wait, if we do, we will likely fall short against our ambitious adoption plans for the next year.
Dr. Remko van Hoek, FCILP FCIPS, is a professor at the Sam M Walton College of Business at the University of Arkansas where he teaches procurement and studies procurement digitalization. He is an advisor to several companies around the world, and co- author of Leading Procurement Strategy.