There is a new way to handle procurement in the supply chain, which is called Cognitive Procurement. Cognitive procurement shows us how technology is truly changing how we do business.
Cognitive procurement is using technology in the supply chain process. Everything from artificial intelligence to deep learning, data mining, pattern recognition, the Internet of Things, and blockchain technology. These technological processes help to make cognitive procurement the way procurement is done in the future.
Table of Contents
- New Way To Handle Procurement – Cognitive Procurement
- Exploring Cognitive Procurement: 6 Key Differentiators in Modern Procurement
- Frequently Asked Questions
- Related Content
New Way To Handle Procurement – Cognitive Procurement
Everyone is talking about cognitive procurement as a new way to handle procurement in the supply chain. This is considered to be the future of procurement. Cognitive procurement is regarded as a disruptive technology. It is a technology that is redefining the supply chain procurement processes.
Cognitive procurement is all about the computer systems starting to self-learn the procurement process so that the computer starts to make the decision. For strategic sourcing, the computer will make a faster and more accurate buying decision than a human being.
Exploring Cognitive Procurement: 6 Key Differentiators in Modern Procurement
Introduction: In the evolving supply chain management landscape, Cognitive Procurement emerges as a groundbreaking approach, showcasing the transformative impact of technology on business operations. This method integrates advanced technological solutions, including artificial intelligence, deep learning, data mining, pattern recognition, the Internet of Things, and blockchain technology, into the procurement process.
This integration modernizes procurement and positions cognitive procurement as the future standard for efficient and intelligent supply chain management.
1- Use of Artificial Intelligence(AI) Not Humans To Make Decision
Artificial intelligence is the new wave of technology; in fact, Artificial Intelligence will probably redefine a lot of what we do today and a lot of our technology. This is because artificial intelligence can support, replace, or supersede human intelligence in any task.
Artificial Intelligence ensures that many jobs that once required human intelligence will be obsolete for many people; procurement is one of those jobs.
In data-heavy industries such as procurement, the self-learning technology of artificial intelligence can handle advanced tasks, including analyzing massive amounts of information in real-time to make a decision. Also, to replace some time-consuming, repetitive tasks such as invoice matching, data entry, and payment approvals.
AI or Artificial Intelligence thrives on repetitive, data-driven tasks. And the more AI learns, the better and more proficient it becomes.
Artificial Intelligence can do all this with accuracy and speed that no human can match. In other words, with cognitive procurement, a machine can outperform our own human intelligence at a speed and accuracy that we mere humans can only dream of.
2 – Use of Deep Learning
Part of Artificial Intelligence is known as deep learning. Simply put, this is the AI function that imitates the workings of the human brain; it is how AI can process data and create patterns to make decisions.
Deep learning is considered a part of artificial intelligence. This means that the system can learn from the unsupervised data. The system would detect objects, recognize speech, translate languages, and then make accurate decisions based on what they have learned.
The key in all this is the machine can learn all this without human supervision. It would be like having an employee you did not need to pay, who would work day and night and did not need to be supervised and still could make 100% accurate decisions.
3- Use of Data Mining
Data mining is the ability to turn raw data into useful information. This is also another core function of cognitive procurement and artificial intelligence.
With cognitive procurement, the machine can mine huge amounts of data and quickly find the most useful information or information needed to make the correct decision. Once humans dig through this data and try to make sense of it, with cognitive procurement, a machine will do that for us now.
4- Pattern Recognition
With cognitive procurement, there will be automatic recognition of patterns and irregularities in data. The machine should be able to help you see patterns and irregularities or even target irregularities in your procurement process. Pattern recognition is one of the major advantages of cognitive procurement, as it will help find any problems in the procurement supply chain.
5- Internet of Things (IoT) Powered by Big Data
Internet of Things, known as IoT, is the ability to process a large amount of data on a real-time basis and store the data using various storage technologies. A large amount of unstructured data can be generated by the Internet of Things (IoT) devices, which is then all collected together in the Big Data System.
In simpler terms, Big Data and the Internet of Things (IoT) work together with a vast network of sensors (IoT)to collect information, also known as big data. This big data and information can improve the procurement process in the supply chain and easily store the information.
6- Use of Blockchain Technology
Blockchain technology makes it difficult or almost impossible to change, hack or cheat any system. A blockchain is essentially a digital ledger of transactions that is then duplicated and distributed across the entire computer system network known as the blockchain.
Under the blockchain, the data is in blocks. All the blocks would need to be hacked to hack an enormous system. The way the system is set up in blocks makes it almost impossible to hack or compromise the entire system.
Cognitive procurement will use the blockchain system at its very core. This means that it will divide the data into blocks, making it difficult to hack, cheat or change the system. Today, there are some issues in the blockchain system, but it is believed that cognitive procurement will use blockchain technology as it becomes refined.
One reason blockchain is so important in the supply chain is that blockchain in the supply chain can help foster better traceability, transparency, and credibility. This, in turn, of course, has an impact on procurement.
If this all sounds a bit scary or futuristic, it should not. This is the future of procurement and many other industries. This new technology will help anyone who is purchasing or in procurement to make better decisions. But of course, in the process, there will be those who lose their jobs, or their jobs will become obsolete.
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Frequently Asked Questions
What is Cognitive Procurement?
Cognitive Procurement refers to the application of advanced technologies like artificial intelligence, deep learning, data mining, pattern recognition, the Internet of Things, and blockchain in the supply chain process to enhance and optimize procurement activities.
How does Cognitive Procurement differ from traditional procurement?
Cognitive Procurement differs from traditional procurement by leveraging cutting-edge technologies to automate and optimize various procurement tasks, leading to faster decision-making, improved accuracy, and enhanced supplier relationships.
What are the benefits of using Cognitive Procurement?
Cognitive Procurement offers benefits such as increased efficiency, reduced errors, improved supplier management, enhanced spend analysis, quicker decision-making, and better strategic insights through data-driven approaches.
How does Cognitive Procurement utilize artificial intelligence (AI)?
Cognitive Procurement uses AI to analyze vast amounts of procurement data, predict trends, automate routine tasks like purchase order creation, and provide insights that support strategic procurement decisions.
Can you provide examples of deep learning in Cognitive Procurement?
Deep learning in Cognitive Procurement involves training AI systems to understand complex patterns in procurement data, enabling them to suggest optimal sourcing strategies, negotiate better contracts, and predict supply chain disruptions.
How does Cognitive Procurement utilize the Internet of Things (IoT)?
The IoT in Cognitive Procurement involves connecting physical assets and devices in the supply chain to collect real-time data. This data can be used to monitor inventory levels, track shipments, and improve demand forecasting accuracy.
What role does blockchain technology play in Cognitive Procurement?
Blockchain technology in Cognitive Procurement enhances transparency, traceability, and security in supply chains. It helps verify supplier credentials, track product origins, and ensure ethical sourcing practices.
Is Cognitive Procurement suitable for all types of businesses?
Cognitive Procurement can be adapted to various industries and businesses of different sizes. However, its implementation may require varying levels of customization and integration based on the organization’s specific needs.
Related Content
What Is Product Sourcing and Strategic Sourcing?
Product sourcing is when you source or look to find a supplier for a product you need. Strategic sourcing is strategically sourcing products. Strategic sourcing is not about the lowest purchase price but the lowest overall cost. Product sourcing and strategic sourcing are very similar, but strategic sourcing is sourcing with a plan in place.
You can discover more by reading Product Sourcing and Strategic Sourcing Explained by clicking here.
What Is The Difference Between Supply Chain Management and Logistics?
Supply chain management is about the collaboration and partnerships to get the goods from raw materials to the end consumer; it is about the partnerships and collaborations within this supply chain process. Logistics is one part of supply chain management; logistics is about moving goods from one place to another. Sometimes, the logistics providers will also store the goods and send them to the end consumer.
You can learn more by reading our blog What Is The Difference Between Supply Chain Management and Logistics? by clicking here.
