ChatGPT for Procurement: How It Helps (And How It Doesn't) | GEP
Generative AI tools such as ChatGPT can offer tremendous potential benefits for procurement teams, including improved efficiency, reduced costs, and better decision-making. However, it's important to be aware of the risks and potential biases associated with these tools and to put appropriate safeguards in place.
Enhanced Efficiency and Reduced Costs
By automating routine tasks, generating data-driven insights, and facilitating collaboration, ChatGPT can help procurement professionals focus on strategic decision-making and long-term value creation. As an advanced language model, it can help with supplier communication, risk assessment, and data analysis, freeing up time for more important tasks.
Additionally, ChatGPT can analyze vast amounts of data and provide insights on market fluctuations, enabling procurement teams to find new suppliers, products, and capabilities to help secure better deals. It can also create proper drafts and serve up first cuts of tasks such as drafting RFPs, SOWs, and other contracts. It can aggregate and classify spend data according to UNSPC taxonomy, cleanse and analyze spend data, and process and analyze historical data to identify trends and patterns.
Improved Communication and Collaboration
ChatGPT can help bridge communication gaps between procurement teams and suppliers, facilitating negotiations, clarifying requirements, and drafting emails. This can improve efficiency and foster better relationships with suppliers, leading to better outcomes for everyone involved.
Additionally, ChatGPT can simplify the purchase order creation process by automatically generating accurate and detailed purchase orders based on predefined templates. This reduces errors and accelerates the procurement process, benefiting both buyers and suppliers.
Better Risk Management
Risk management is a critical aspect of procurement, and ChatGPT can help with that as well. By using AI to analyze supplier performance, financial stability, and compliance, procurement teams can identify potential risks and take mitigating actions. AI-driven risk assessment enables procurement professionals to make more data-driven decisions and minimize risks. Additionally, ChatGPT can improve supplier performance tracking by automating data collection and analysis, quickly identifying issues and addressing them for optimal supplier performance and continuous improvement.
Risks and Biases
While ChatGPT offers many potential benefits, it's important to be aware of the risks and potential biases associated with generative AI tools. Procurement leaders should set up protocols that guide their teams on how to use these tools responsibly and ensure that their outputs are properly vetted and cross-checked to avoid copyright infringements and social biases.
Procurement and supply chain leaders should begin the process of discovery and testing immediately and put sensible controls in place to ensure that they are not exposed to risks from ChatGPT. By approaching this technology with caution and careful planning, procurement professionals can take advantage of its many benefits and improve their processes for years to come.
