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Understanding the Rapidly Evolving GenAI Landscape and Exploring High Priority Use Cases to Align GenAI Implementation with Business Goals

Since OpenAI released version 3.5 of their NLP-based chatbot for public use in 2022, GenAI is being used for autonomous content generation, customized insight extraction from unstructured data, product design automation, and generative music and art creation. However, the current GenAI landscape has transformed from creative or efficiency increasing applications to decision-making applications.  As GenAI is driving the present business landscape, for enterprises, the critical shift is from questioning adoption to strategically planning its incremental integration. Therefore, it has become pivotal for CEOs to have a long-term vision on “How to unlock GenAI potential to align with business goals?” The answer lies in understanding the rapidly changing landscape of GenAI.

Rapidly Shifting Landscape of GenAI

The landscape of Generative AI is marked by continuous innovation, multi-billion dollar investments and a wide range of players competing in the market.

The rapid evolution of GenAI, highlighted by advancements to OpenAI’s ChatGPT, has integrated the technology into daily use during 2024. Beyond simple dialogue, GenAI is poised to transform industries with products addressing complex issues while offering personalized experiences. Daily advancements in multi-modal AI models, improved software development processes, and explainable AI (XAI) enhance GenAI's capabilities in creativity, efficiency, and ethical transparency.  The initial surge in improvements in reasoning and multilingual capabilities slowed until the release of ChatGPT-4o in May 2024. Anthropic's Claude 3.5 Sonnet showed incremental progress with smaller models, reflecting a shift towards practical considerations over model superiority in AI.  The race to develop the most advanced Large Language Models (LLMs) tightened leading into the second half of 2024 and the differences between leading LLMs are becoming minimal, leading enterprise companies to prioritize factors such as price, efficiency, and specific use-case fit over chasing the "best" model.  Emphasizing enhanced security and compliance features, Amazon displayed its latest strides in generative AI at the July 2024 AWS Summit in NYC. Their GenAI leader unveiled App Studio, a gen-AI-powered platform in public preview which enables users to rapidly create sophisticated apps by describing functions and data sources, significantly reducing development time from days to minutes.  

Generative AI Potential and Priority Use Cases

According to reports by McKinsey and SaaSBoomi, enterprises worldwide spent $15 billion on GenAI technologies in 2023, accounting for 2% of total software expenditures. This figure is projected to rise to 10% over the next 4-5 years. By 2030, global enterprise investment in GenAI for data analysis and digital operations is anticipated to reach between $150 billion and $200 billion demonstrating technology adoption, increasing trust on GenAI capabilities and strategic embrace of its transformative potential. Generative AI is set to revolutionize how businesses operate, driven by increasing interest and strategic initiatives among senior executives. Recent studies show that 33% of top leaders have already incorporated Gen AI into their digital plans, with another 67% aiming to adopt the technology within the next 18 months. Gartner projects that approximately 80% of enterprises will have integrated Generative AI APIs and models or implemented Generative AI applications within their operational environments by 2026

Unlock GenAI Potential with Aligned Automation for Enterprise Success

Using Aligned Automation’s techno-functional expertise and technology-agnostic approach, the Nerve Center platform connects data and processes using analytics and AI/ML to empower you to make intelligent decisions. Applying strong data governance, formulating policies to mitigate risks and educating teams to use the tools effectively and securely are integral parts of GenAI implementation with us.

How Aligned Automation Helps Create Intelligent Procurement

Aligned Automation helps create intelligent procurement operations leveraging GenAI for document management, summarization, and seamless compliance checks across all operational tiers.  

Case Study: GenAI-Driven Preventive Maintenance Enhances Cost Optimization for Oil & Gas Giant

Conclusion:

As enterprises increasingly adopt this transformative technology to enhance efficiency and spur innovation, its potential to reshape entire industries becomes undeniable. With visionary planning and seamless integration, businesses are poised to unlock the full power of Generative AI, heralding a new era of unparalleled productivity and creativity in the digital landscape. CEOs need to embrace the future where Generative AI drives unprecedented growth and opportunity.

Reference Links:

https://www.trinetix.com/insights/the-undiscovered-potential-of-generative-ai-for-enterprises

https://radixweb.com/blog/artificial-intelligence-statistics

https://www.moneycontrol.com/news/technology/gen-ai-spending-by-enterprises-to-touch-200-bn-by-2030-shows-saasboomi-and-mckinsey-study-12420261.html

Imagine if your business could foresee what’s next and be ready to act—systems that predict customer needs, operations that adjust before issues arise, and investments that consistently deliver greater value. As the business landscape becomes increasingly complex, staying ahead of challenges is crucial for long-term success. At Aligned Automation, we equip our clients with the ability not only to keep pace with change but also to lead it. That's why we're excited to introduce AAxon—a comprehensive, AI-powered platform designed to empower your business and shape the future.

Industry Challenges Being Faced: The Hidden Costs of Delays and Quality Issues

McKinsey highlights that digital transformation and data-driven approaches are crucial for businesses to thrive in today's environment, estimating that organizations using next-generation solutions can improve overall operational efficiency by 30% or more. However, many businesses still face challenges leveraging data effectively, leading to costly mistakes and missed opportunities.

These challenges make it difficult for businesses to stay ahead, particularly in an evolving market that demands proactive risk management and operational excellence. AAxon is designed to solve these challenges by enabling businesses to leverage their data effectively, converting insights into profitable outcomes.

Today, industries face a variety of critical challenges:

• Anticipating Unknowns: Business leaders often struggle to predict future business challenges due to the inherent uncertainty of the market. This inability can lead to costly mistakes and missed opportunities.
• Financial Efficiency: Companies strive to optimize operations and reduce costs, but factors like economic downturns, unexpected expenses, and inefficient processes can hinder financial efficiency.
• Risk Management: Identifying and mitigating risk is crucial for business success. However, the complex nature of modern business environments makes risk assessment and management challenging.
• Operational Effectiveness: While operational efficiency is essential, it can be hindered by challenges like data security, compliance issues, and the increasing volume of data.

AAxon: Future-proof Your Business

AAxon was created to solve these industry pain points and provide a comprehensive solution that prepares your business for the future. Here’s how AAxon transforms operations:

• Control Your Critical Path with AI-Powered Precision: Connect key data elements for clear planning, comprehensive visibility, and integrated intelligence for streamlined tracking and reporting.
• Seamless Collaboration, Powerful Results: Minimize technology clutter by equipping your team with a single, robust human-centered solution for workflow management, improved collaboration and execution.
• Mitigate Risks and Address Challenges Proactively: Track delays with in-depth root cause analysis and implement a prescriptive risk approach with anomaly detection, all supported by a timed resolution framework.
• Avoid Unexpected Setbacks, Make Informed Decisions: Balance running and transforming your organization within budget with continuous improvement and adaptive solutions.

Platform Overview: Structure and Features

AAxon is more than a tool—it's an integrated platform with multiple layers to ensure efficient and intelligent operations leveraging your existing tech stack:

• Data Foundation: AAxon’s Data Foundation is the centralized semantic data layer that consolidates, cleans, and prepares data from disparate sources. This data foundation supports advanced analytics, AI/ML, and automation, providing a robust base for generating actionable insights and driving intelligent automation across the enterprise.
• Intelligence Layer: The Intelligence Layer supports AI-powered integrated planning, smart operations, risk mitigation, and financial management. By leveraging predictive analytics and AI, this layer enables data-driven decision-making, uncovering hidden patterns, and enhancing operational effectiveness.
• Consumption Layer: This headless solution provides a single pane of glass view into all integrated workflows. It offers a unified view of past, present, and future operations, facilitating seamless collaboration across teams. Persona-based design ensures every user—from executives to frontline employees—has the information and tools they need to be effective.
• Outcomes: AAxon enables organizations to achieve key outcomes such as effective collaboration, intelligent decision-making, smart processes, and efficient execution. By bringing together critical data, automation, and AI capabilities, AAxon empowers your teams to make informed decisions and stay ahead of industry challenges.

With these integrated layers, AAxon provides a feedback loop that ensures continuous improvement and responsiveness, making it an indispensable asset for navigating today's complex business environment.

Delivering True Value: Maximize ROI with AAxon

Businesses using AAxon have seen remarkable results:

• 4-6x Return on Project Investment: AAxon delivers tangible returns through increased operational efficiency and cost optimization.
• $100M Unlocked in Value: By optimizing costs, AAxon helps companies uncover significant savings across their operations.
• 30% Efficiency Gains: Depending on the project scope and size, AAxon can help businesses achieve up to 30% efficiency improvements, boosting growth and profitability.

Gartner has also noted that by 2026, organizations that successfully adopt AI and digital platforms will outperform their peers by at least 25% in terms of operational efficiency. This emphasizes the importance of leveraging next-generation technologies like AI and automation to transform operations and drive efficiency. AAxon is the next-gen solution that not only enables but also helps run and manage your transformation, ensuring you maximize the profitability of your data-driven strategies.

Shape the Future with AAxon:

AAxon is more than a platform—it's your partner in innovation. Businesses that successfully integrate AI and automation into their core operations are better equipped to handle market volatility, optimize resource utilization, and stay ahead of competitors. At Aligned Automation, we believe that with the right tools, your business is not only prepared for the future but ready to define it.

With AAxon, you gain control, insight, and efficiency like never before. From AI-powered project management to risk mitigation and advanced analytics, AAxon turns possibilities into realities—keeping you ahead in an ever-evolving world.

Ready to take your operations to the next level? Discover the power of AAxon today and experience the benefits of connected, contextual and continuous intelligence to empower decision-making and improve everyday human-experiences.

Telemetry is a relatively old science booming with new possibilities. With the now commonplace Internet of Things (IoT) and abundance of sensors to monitor everything from home security to biometric data, consumers are adopting a broad use of it to simplify and manage their daily lives. But businesses have even more to gain. The data captured through telemetry offers insights into machines, giving leaders a real-time view into performance metrics. Combined with artificial intelligence and machine learning (AI/ML) and the wealth of untapped data stored within operations and along processes, teams can gain efficiencies that reduce downtime and risk while improving revenue.

In this article, we’ll cover….

• What is telemetry?
• How do we use telemetry data?
• Three use cases for telemetry data and AI/ML in enterprise operations
• How a top oil & gas industry company uses telemetry

What is telemetry?

Telemetry is the practice of using digitally connected sensors to record and report remote data from equipment. These sensors create what is commonly known as the Internet of Things (IoT) and, according to IDC, IoT devices are expected to generate nearly 80B zettabytes (ZB) by 2025. That’s a lot of data!Along with colleagues such as Associate Director of Advanced Analytics Hardik Rijhwani, I use telemetry data to improve our clients’ enterprise operations. Through our data and AI services, we capture significant insights from telemetry sensors that help both technical and business teams make KPI-driven decisions faster.

How do we use telemetry data?

There are many data science and analytics challenges between collecting data and delivering actionable insights. Telemetry sensors produce an exorbitant amount of unstructured data. To structure the data, we clean, convert, contextualize and connect it to isolate what’s important and how it should be organized in accordance with KPIs.

In this stage, we apply AI and analytics tools such as computer vision, natural language processing (NLP) and graph database (graph DB) to automate and streamline the process of gleaning usable data. For example, in graph DB, we use property graph models, which are made up of nodes (data storage) and edges (the relationships between those nodes), for data analysis and data interpretation. Statistical modeling is applied to conclude thresholds and performance parts based on sensor output. Graph query language and Cypher query allow us to analyze complex, unstructured and vast amounts of data quickly and in real time.

“How we configure the system is important for data capture,” Rijhwani said. “But the analysis and insights we are able to structure and pull from data is what is significant for our customers today.”

Those of us working with telemetry data and sensors are also concerned with where the intelligence is created and where decisions are made. While cloud computing is common in the field, we are continuously moving toward advanced practices with edge computing, in which decisions can be made on-site at the device. This is a developing and critical use for telemetry, as many of these sensors are attached to machines in time-sensitive situations. While we often aim to predict maintenance and avoid unexpected downtime or safety risks, edge computing can offer additional prevention by, for example, turning off a corroded valve before it breaks.

3 use cases for telemetry and AI/ML in enterprise operations

In industrial and business settings, telemetry use cases are situations where sensors are applied to specific machines to collect specific sensor data. That information helps teams in a variety of industries—including high tech, oil and gas, supply chain and manufacturing—understand how those machines are performing. Here are three use-case examples:

1. Faster and remote performance computer troubleshooting with customers

Manufacturers of high-tech equipment, such as computers, will install connected sensors into their hardware that log performance metrics. The information can then be used in several ways.

“We work with one global computer manufacturer who makes these logs available to support agents,” Rijhwani said. “In the past, an expert may have had to physically see the machine to fix it. Now, when a customer has an issue, those agents can remotely access the information in real-time to troubleshoot.”

Rijhwani said it also helps product teams understand product quality. They have access to logs from hundreds of thousands of assets of the same model sold. With AI/ML, it is possible to analyze many thousands of data lines automatically and rapidly for errors, such as the machine overheating, to improve the next model.

This information also benefits account managers, who can be better prepared to help customers and drive more positive relationships in the process.

2. Predictive equipment monitoring for efficiency and safety

Whether in high tech, energy or product manufacturing, telemetry connects and coordinates heavy machinery and equipment to help teams plan maintenance and avoid unscheduled downtime. The practice enhances safety measures while improving a company’s bottom line.

In industrial settings, such as oil refineries, there are hundreds of thousands of machines to be monitored. Whenever a machine goes down, it leads to revenue loss. It also increases risks to employee safety and even the environment.

Companies use telemetry to monitor the health of the system and prevent unplanned downtime. AI/ML analysis of collected data helps the teams understand the conditions that put those machines at risk. It can also alert teams to those conditions and set up a regular preventative-maintenance schedule to prevent an incident from occurring. By attaching sensors to equipment, teams can proactively schedule maintenance rather than react to a broken machine.

3. Improved shipping logistics efficiency by attaching sensors to trucks to gain insights into travel times, safety and more.

“We can use historical data to make decisions, such as suggesting better routes or scheduling preventative maintenance on fleets,” Rijhwani said. “The sensors may also improve safety by monitoring driving speed or sudden changes, such as a swerve. The information may suggest a driver is tired or distracted and sound an alarm to signal them to take a break.”

Additionally, autonomous cars and trucks being developed now are at the forefront of edge computing, where a split-second decision by the machine can have far-reaching consequences.

Not only can this data impact individual safety and efficiency; it can help improve a logistics system holistically. It helps teams analyze the whole of fleets and their movement to recommend new routes that streamline delivery or even decide whether to use different modes of transportation.

How a top oil and gas industry company uses telemetry

According to leaders at Shell, a top global oil company, the company monitors its thousands of miles of pipeline, up to 10,000 valves and a million instruments with embedded sensors. As an industry innovator, Shell has pursued digital transformation through telemetry, AI/ML and data science. They have succeeded in reducing downtime, improving safety and protecting their margins in the process.

Aligned Automation: Your partner in digital transformation

Enterprises are facing an explosion of data and feeling the pressure to use it strategically to streamline operations. At Aligned Automation, we combine innovative functional knowledge with dedicated technical experts in data, process and ML/AI services, accelerating your journey to intelligent operations. From enriching, structuring and connecting disparate data to enabling advanced technology, we work alongside enterprise teams to realize ambitious business goals.

From shifts to remote work and an unstable global economy to supply chain shortages and evolving customer expectations, businesses have faced unprecedented challenges at almost every turn throughout the past few years. Complex, interconnected risks are emerging faster than ever.

In order for companies to not just keep pace, but thrive into the future, it’s no longer just about adapting and transforming in response to change—it’s about doing so quickly, effectively and at scale.

Intelligent operations, a strategic, next-gen approach that streamlines technology, processes and people to advance and make a business’s operating model more agile, resilient and adaptive, gets you there. But how do you get to intelligent operations?

Our answer: the Nerve Center.

Looking ahead, we’ll cover the following:

• How does Nerve Center fuel intelligent operations?
• What does a Nerve Center do?
• Where is a Nerve Center applicable?
• Intelligent operations in procurement through a Nerve Center

How does Nerve Center fuel intelligent operations?

The Nerve Center is Aligned Automation’s value-delivery methodology across end-to-end operations. By applying a connected data fabric, digital right-fit capabilities and powerful artificial intelligence (AI), businesses integrate value-driven solutions, gain the insights they need to make decisions faster and maximize efficiencies across the value chain and the enterprise.

The Nerve Center sets up organizations to meet today and tomorrow’s business challenges. COOs and CFOs need transformation initiatives with a direct tie to value. They need solutions that boost employee productivity while reducing cost. And they need the right data and insights to make decisions quickly and with confidence. That’s why the Nerve Center is designed as a scalable methodology—it can start with a single use case and grow to connect functions, processes and data across the organization.

What does a Nerve Center do?

The Nerve Center empowers teams to sense, respond and manage like never before and enables smart, rapid decision-making through automated and augmented support.

Sense

Predictive insights and alerts empower you to handle the invisible before it becomes visible.

- Predictive alerts with severity levels (early warning signals)

- Alerts to deviations from optimal workflows

Respond

Drive efficiencies across organizational processes while balancing cross-functional and cross-enterprise trade-offs with automated workflows.

- Root-cause analysis

- “What if?” scenarios

- Augmented decision support (e.g., recommended next-best action)

- Automated workflows

Manage

Gain E2E transparency with persona-based visibility and performance management.

- Action tracking

- Value tracking

- KPI dashboard

- Near real-time insights

Where is the Nerve Center applicable?

The Nerve Center is a fit for complex enterprises in a variety of functions, including procurement, supply chain, manufacturing and customer experience.

• Procurement: Drive innovation, boost profitability and minimize time to market by connecting your planning, sourcing, procurement and production activities.
  
  
• Supply chain: Reimagine, build and operate supply chain networks that orchestrate change, simplify life and positively impact business and the planet.
  
  
• Manufacturing: Optimize, digitize and connect factories, plants and sites. Create products that consumers love and get them to market quickly, sustainably and cost-effectively.
  
  
• Customer experience: Create products that consumers love and get them to market by integrating a relentless focus on the customer into your end-to-end operations.

Intelligent operations in procurement through a Nerve Center

Realizing the need for a new approach to manage the complex demands of their global value chain, one global manufacturer deployed a procurement-based Nerve Center. By leveraging tools such as robotic process automation (RPA), process mining and machine learning (ML)/AI, the teams were able to improve operations by establishing an intelligent, connected centralized procurement solution.

This new, collaborative environment allowed them to better manage business initiatives such as margin optimization, carbon-credit forecasting and intelligent contract management—and has led to more than $95 million in value unlocked between siloed functions.

The Nerve Center now acts as the organization’s single source of truth for cross-functional intelligence and collaboration, serving as the “brain” for procurement’s operational improvements, risk mitigation and value-capture projects.

Read more about our Nerve Center approach to intelligent operations and how it can help you make data-driven decisions faster and more efficiently.

Procurement leaders are turning to digital solutions to accelerate their business, which includes many uses across the function processes. As technology develops at different rates, some of these digital procurement use cases may be implemented now. Other, more advanced applications may be considered for the future.Aligned Automation specializes in enterprise digital procurement and many of our practice leads each bring more than a decade of experience with Fortune 500 clients. In this article, we’ll cover common use cases with specific examples, including:

• Digital procurement for category strategy
• Digital procurement for source-to-contract
• Digital procurement for procure-to-pay
• Digital procurement for supplier collaboration
• Digital procurement for sustainable procurement
• Advanced uses of digital procurement

Common digital procurement use cases

The majority of enterprise procurement organizations are global by necessity. To compete on this global scale, organizations must also be digitally enabled. Digitalization accelerates data capture, analysis, decision making and execution.According to a 2021 PWC Digital Procurement Survey, the top three strategic priorities in purchasing include cost reduction, supplier sourcing and management, and process digitization. However, there is good argument for why digitization is an enabler of those other priorities. Many processes in procurement that experience unnecessary friction from manual touches, bottlenecks and human error. The combination of digital services and solutions increases efficiency and accelerates value, contributing to a next-generation intelligent operating model.

What are digital procurement use cases?

Digital procurement use cases demonstrate the many scenarios where digital tools make operations more efficient. Common examples are found across the value chain: category strategy, source-to-contract, procure-to-pay, supplier relationship management and sustainable procurement.“Within those categories are more task-specific use cases where digitalization and automation make a big impact on daily operations,” Aligned Automation CRO Steve Simpson said. “Studying use cases not only helps leaders understand direct applications of digital tools, but also initiates brainstorming for cross-applications unique to their own organization.”[caption id="attachment_3140" align="aligncenter" width="240"]

Steve Simpson  
Chief Revenue Officer [/caption]The following list includes instances where digital procurement practices save time, reduce costs and propel innovation through organizations.

Digital procurement solutions mapped against the value chain

Mapping digital procurement use cases against successful solutions.

Digital procurement for category strategy

Category strategy breaks down purchasing into specific product groups for optimal management. Digital applications and automated processes enable procurement category teams to work faster and increase value across the organization.

“Category management is complex,” Senior Manager of Operations Sarang Kulkarni said. “Managers must know their product, conduct spend analysis and be able to analyze and respond to global market shifts quickly.”

Digitalization, from automated processes to predictive analytics, informs category strategy in the following ways:

1) Category management

Digitalization helps category managers save more money while contributing value. By providing enhanced visibility into key operating data, it improves supplier performance, mitigates supply risks, improves cash flow and market basket and drives innovation.

Teams may implement automated intelligence in use cases such as:

• Identifying spend leakages vs. agreed category strategy
• Identifying strategic levers and options
• Communicating strategy to the user community
• Tracking implementation real-time, e.g., automated month-on-month realized value / EBITDA impact calculations
  

2) Market intelligence

 Procurement teams rely on market intelligence for decision making. In a digitally enabled organization, teams automate the collection of data from external and enterprise data sources including categories, customers, competitors and channels to create insights.

Market intelligence depicts useful information such as price escalations due to geo-political issues like conflicts, pandemics and more. Analysts use this data to minimize risks and determine new or alternate sources, either within the geography or through Best Cost Country Sourcing (BCC).

“Where manual analysis may take extensive time to gather and consider information, automated market intelligence can rapidly collate thousands of data sources,” Kulkarni said. “With real-time market intelligence, procurement teams are able to shift supplier strategies, negotiate and secure materials at the best price at the best time.”

3) Risk management

Digitalization allows procurement stakeholders to anticipate category risks in real-time, analyze data and receive alerts for recommended changes in key performance indicators, unused potential and performance outliers.

Digital applications seamlessly track and analyze the large datasets common for enterprise procurement teams (like those monitoring nearly 20k materials). Teams collaborate across functions, action tracking and online impact assessments for risk identification.

4) Margin optimization

Digital tools make it possible to ensure margin consistency and growth across all categories in a shorter timeframe. They provide transparency into forecasted cost fluctuations to inform better decision making that improves margins. Learn about margin optimization in our “Margin Optimization Case Study.”

5) Spend analytics

Sourcing teams in procurement must sort through mountains of data, dozens of spend categories and lengthy reporting processes to optimize price, control costs and prevent spend leakage. Without visibility into categories or a streamlined way to edit classifications, it is difficult to implement effective sourcing strategies or see where leakage occurs. Digital tools offer real-time insight into spend that may take hours or days for human analysts to complete. These include analytical metrics and tools to address leading KPIs and improve the market basket for sourcing. Strong digital teams will optimize and automate their procurement spend management.

6) Collaboration

Digital procurement allows teams to foster cross-functional collaboration, promote idea sharing and perpetuate best practices. For example, a supplier collaboration platform may serve as the centralized location for strategic documents as well as initiative-specific learning and development. This may serve internal cross-functional collaboration as well as collaboration with suppliers.

“These tools help us capture ideas, qualify them and track them through value realization,” Kulkarni said. “For one petrochemical company, we used our supplier collaboration suite to drive savings on maintenance cost with a scaffolding supplier. This is just one example of the potential for strategic savings that the tools hold.”

Digital Procurement For Source-To-Contract

Source-to-contract represents the processes that take place for procurement teams to purchase their materials and services. Digital tools and AI make it possible to streamline these processes, from receiving quotes to controlling costs.

1) Strategic sourcing

Digital strategic sourcing empowers teams to leverage the full potential of supply markets. Often referred to as eSourcing, these platforms facilitate tasks such as quotes from suppliers, collaboration across sites to evaluate suppliers, run RFQs, negotiate deals and award contracts.

“The potential for eSourcing capabilities is expanding,” Kulkarni said. “One exciting example is advanced route optimization, which utilizes scenario modelling options for available routes and makes recommendations to suppliers for the most efficient course. This capability offers real-time analysis that accelerates value capture for procurement teams and their suppliers.”

2) Tail spend optimization

According to BCG, tail spend is generally defined as the amount of money organizations spend on purchases that make up approximately 80% of transactions but only 20% of total spend volume. With its vast data, tail spend has been considered difficult to wrangle by analysts. But digital tools offer teams the ability to firmly grasp and optimize extensive and complex tail spend.

“Organizations can rapidly deliver positive cash flow by tapping into and managing tail-spend,” Kulkarni said. “They may also conduct holistic tail-spend assessments to rationalize suppliers and increase market basket with preferred suppliers. More than just grasping what is going on, they can make strategic decisions with the information.”

Other examples of tail spend optimization include integrating marketplaces into Procure-to-Pay systems so that all non-contracted spend goes through open bidding, and proactive alerts on a material level for non-compliance.

Digital Procurement For Procure-To-Pay

Digital solutions in procure-to-pay offer teams the ability to gain more control, minimize risk and increase efficiency through automation.

1) Working Capital Optimization

Improve the effectiveness of working capital by applying measures across all operational areas. Working capital includes accounts receivable (money coming in), payable (money going out) and inventory cycles. Optimization looks at the daily management of these parts to ensure they interact harmoniously. Digital tools can help streamline the process through alerting when to pay accounts so the organization remains in good standing.

2) Procure-To-Pay Automation & Management

P2P automation reduces paperwork and cuts down cycle times by removing human bottlenecks and errors. Enterprise Resource Planning (ERP) systems often offer automated P2P workflows to manage this process. By automating processes, buyers can shift their focus to only manage exceptions rather than the entire process.

3) Procure-To-Pay Analytics

P2P analytics tools offer teams real-time analysis of all procure-to-pay processes to ensure transparency, discover inefficiencies, highlight potential risks and opportunities, and uncover trends.

Digital Procurement For Supplier Collaboration

With supply chain disruptions and bouts of scarcity, strong supplier relationships are more critical than ever. Supply chain optimization makes the best use of technology and resources like blockchain, AI and IoT to improve efficiency and performance in a supply network.

“A high-performing and intelligence-powered supply chain enables business efficiency and responsiveness,” Kulkarni said. “Customers get what they want, when and where they want it in a way that is both profitable for the organization and contributes to supply chain sustainability.”

1) Intelligent Supplier Relationship Management systems (SRM)

SRMs provide consistent visibility into supplier performance that allows procurement teams to make informed decisions. SRMs encourage organization, facilitate analysis and enable streamlined operations to strengthen relationships with suppliers. When materials are limited due to unexpected circumstances, a strong supplier relationship built with goodwill could mean receiving scarce goods over competing organizations.

2) Digital supplier collaboration tools

These allow teams to share demand forecasts, secure supplier commitments and view critical information including:

• Fulfillment rates
• PO expeditions needed
• Freights in transit
• Invoice approval stages
• And more

Digital Tools For Sustainable Procurement

Competitive organizations are incorporating sustainability into strategy discussions to meet 2030 and 2050 sustainability goals across the value chain. It is both a moral and ethical necessity, that when correctly situated with digital capabilities can accelerate positive change while increasing business value.

The number of companies prioritizing climate is growing, with 76% of Fortune 100 and 13% of Fortune 500 companies setting at least one climate commitment. However, Procurement professionals, such as those surveyed for the 2021 PWC Digital Procurement Survey, listed cost cutting as the top priority, with only 2-3% focusing on sustainability. The gap represents a strategic misalignment that may harm the organization as they come under scrutiny from customers and partners for setting up sustainability PR campaigns that don’t deliver results.

With technology, sustainability opportunities are both abundant and profitable. Efforts should be an important consideration for any transformation plan. At a high level, there are two use cases procurement organizations should start with to accelerate their sustainability plans: (1) supply chain traceability, and (2) smart sourcing. With these capabilities, teams can make better decisions that conserve resources and facilitate ambitious sustainability goals.

1) Supply chain traceability

Procurement teams are increasingly focusing on choosing the right energy sources (electricity, fuel, water, etc.), using recyclable materials, cultivating supply chain transparency and more.

“With supply chain traceability tools, teams can track any impact of disruptions to the Level 1 and Level 2 supplier sites and delivery commitments,” Kulkarni said. “We can track carbon commitments to ensure sustainability metrics are met throughout the supply chain and challenge partners to meet certain standards.”

Other key efforts include tracing sustainability measures across the organization, tracking current emission levels with deep granularity and assessing whether implemented changes are having the desired positive impact.

2) Smart sourcing / relocation sourcing

Digitally enabled solutions may promote transparency between suppliers and customers and enable teams to make more sustainable decisions when it comes time to renew contracts. More than tracking alone, there are also technology solutions that can help teams be more proactive and efficient with maintenance and emission reduction.

Discover more insights about how procurement organization can drive sustainability here.

Advanced Digital Procurement Use Cases

Many organizations fall in the early stages of digital transformation, whether they’ve recently started the journey or have stalled out along the way. For those who have a firm grasp on their data and are already integrating much of the technology described above, adding innovative AI could provide additional optimization.

1) Virtual purchasing assistant

Virtual assistants combine technologies such as artificial intelligence and natural language processing to create helpful AI assistants. Virtual purchasing assistants are specialized versions of these bots for procurement teams that take the form of a chatbot.

A procurement team may rely on the bot to provide rapid access to information that helps them choose the right product, ensure regulation compliance and alert users to problems, such as a shipping delay or incorrect address.

2) AI-guided buying

AI-guided buying is an advanced purchasing assistant. As the technology develops and data becomes more widely available, these bots have the potential to make more complex recommendations. One example is proactively advising procurement teams on purchasing based on the highest profit margin. The technology may ingest data from historical purchases combined with present pricing information to forecast the best purchase price and time.

Steps in Digital Health

Digital procurement use cases examples by industry

As nearly all major industries involve purchasing goods and services, digital procurement is useful for a variety of industries where leaders seek to cut costs, increase efficiencies and spur innovation. More information about why industries are moving toward digital procurement can be found in our blog, “The Benefits Of Digital Procurement: Direct, Indirect & Strategic.”

1) Digital procurement use cases in manufacturing

Includes the five main categories: category strategy, source-to-contract, procure-to-pay, supplier relationship management and sustainability. More specifically, manufacturing teams may benefit from digitally enabled turnarounds, which helps teams predict downtime and increase uptime by collaborating across three functions:

• Engineering for specifications
• Manufacturing for quantities
• Procurement securing supplies
  

2) Digital procurement use cases in oil & gas

These may include telemetry or connected devices. For example, a company may place connected devices on refinery machinery, which can include hundreds of machines over many sites. The devices collect data on maintenance and function, which can be used to predict and plan future maintenance and avoid excessive downtime.‍

3) Digital procurement use cases in healthcare

These may include purchases for healthcare facilities, construction of those facilities and even in the manufacturing of pharmaceuticals. More specifically, because healthcare is a heavily regulated industry, digitalization may help compliance through automation or reference chatbots, which reduce human error.

4) Digital procurement use cases in retail

Includes inventory management. For example, a procurement team may introduce Robotic Process Optimization (RPA) to monitor inventory and alert managers when to order more product. Conversely, RPA may alert teams when current inventory is sufficient but an order is scheduled, allowing teams to react and thus reduce excess product. This has the potential to prevent wasted resources, prevent degradation of products in storage and free up storage space for other products in higher demand.

Prioritizing Your Procurement Use Cases

As long as there is uncertainty in the world, there will always be a need for data-driven, reactive decision making. But the more risk that can be eliminated via proactive insights, the more strategic and valuable procurement becomes.

With the right technology, tools and processes, procurement professionals have everything they need to effectively monitor, measure and mitigate risk – within the organization, across the supply chain and within the supplier ecosystem. These systems help with immediate response to shocks, but also allow predictability to take precautions beforehand.

How pandemics and crisis situations impact the order companies prioritize their use cases

To successfully build resilience against an uncertain reality, procurement professionals should start with managing their data to gain real-time visibility into every aspect of the business. Following a firm grasp of data, applying analytics, AI/ML and automation allows the team to use that data to respond faster to changes. Finally, look outward, and use that information to build more strategic relationships with suppliers. (Read more about resilience in our blog, Three Ways to Enable Resilience in Procurement.)

Digital tools provide transparency and a single source of truth metrics that allow teams to see which suppliers are performing and which may not be valuable partners long term.

Aligned Automation: Your partner in strategically applying digital transformation to procurement

At Aligned Automation, we combine innovative procurement knowledge with dedicated technical experts who care about delivering digital transformation with efficiency. From enriching and connecting disparate data to pursuing better future options, we work alongside procurement teams to execute ambitious business goals.

In this article:

As the recently released Corporate Climate Responsibility Monitor 2022 indicates, leading global organizations will be closely monitored for their success and efforts towards meeting their stated sustainability goals. They are not only on the hook for their carbon footprint but also how they engage with their suppliers and customers to ensure their Scope 2 and 3 emissions footprints are reduced as well.

As companies firm up their plans to achieve ambitious 2030 and 2050 sustainability goals, procurement teams are increasingly focusing on choosing the right energy sources (electricity, fuel, water, etc.), using recyclable materials, cultivating supply chain transparency and more. Other key efforts include tracing sustainability measures across the organization, tracking current emission levels with deep granularity and assessing whether implemented changes are having the desired positive impact.

How Companies Should Approach Sustainability Goals

While these goals serve as the North star, the steps to meeting them are less clear. Typically, implementing such changes can be year-long or more projects as they require changing many legacy systems and software, investing in new equipment and empowering employees to work differently. The challenge, then, is not just deploying a more environmentally friendly operations model but doing so in a way that makes business sense.

At a high level, there are two steps procurement organizations should take to accelerate their sustainability plans: (1) gain insight into historical data, and (2) generate accurate forecast data and engage suppliers with a data-driven approach. With these capabilities, teams can make better decisions that conserve resources and facilitate ambitious sustainability goals.

Integrating Sustainability Into Procurement Carbon Credits

One example for how implementing a data and analytics strategy can benefit sustainability initiatives is through carbon credits. Companies operating in the European Union must observe emission caps based on the carbon credits system, which allows companies to purchase permits that account for emissions. Carbon credit pricing fluctuates with the market and can become more or less (but usually more) expensive. Procurement teams need to find the right emission buying strategy while simultaneously discovering ways to reduce their carbon footprint overall.

Increasingly, teams are buying recyclable materials to make eco-friendly products and investing in renewable energy – both strategies that contribute to sustainability goals and can help offset the carbon credit costs. But for some materials, the renewable or recyclable option may not be cost-efficiently available. Procurement teams must determine where that point lies, and strategically determine when to purchase carbon credits for the remaining products.

Real-World Application: Improving One Organization's Carbon Credit Spend Strategy with an Intelligent App

A client with 15 manufacturing sites across the EU has an annual carbon credit budget between $100M and $130M USD to manage across the footprint. The client’s procurement team sought to create a more efficient purchasing strategy that considered the next five years, but they lacked insight into the historical data necessary to predict future emissions. Without access to accurate and enriched data to inform predictive forecasting models, the team could not respond quickly to market fluctuations and capture the best prices.

The need for predictive, accurate forecasting

One carbon credit is equal to one ton of carbon dioxide, and the prices fluctuate with the market. The company plans its credit purchases for years into the future, making it desirable to accurately forecast whether the current rate will be better than the rate in the next year. If they produce more emissions than credits purchased, the organization will face costly fines and higher rates. If they purchase more credits than needed, they will need to trade them back and potentially lose the money.

The client knew they needed insights into their current and future emissions to successfully manage their carbon credit strategy. Predictive models and forecasting capabilities are quickly becoming must-haves in any competitive business strategy. The technology can rapidly analyze years of data to inform key decisions in a way that is nearly impossible and inefficient for a human to do manually. However, there are common obstacles to implementing these tools, such as poor data quality.

Enriched data and web-based solution offers a consolidated view across the emissions footprint for enhanced decision making

The client initially had raw data that was not suitable for predictive modeling. The Aligned Automation team enriched the client’s internal data by selecting and labeling key features, integrated it with external market data and applied enablers such as predictive modeling. This enabled useful insights, allowing the procurement team to quickly simulate and forecast strategies based on different parameters.

The team connected this data to a purposely designed web-based app that collects important data points across 15 manufacturing plants. This information is collected at each installation level within the plants and across Level 1 and Level 2 sub-suppliers. With access to all the data in a single view, the category manager can simulate various scenarios and price points across years to study its impact to the strategy and make more informed purchasing decisions. In the first year, this enhanced data-driven strategy and digital solution is on track to uncover more than $14M USD.

Why Aligned Automation?

At Aligned Automation, we combine cutting edge procurement knowledge with dedicated technical experts who care about delivering sustainability outcomes with efficiency. From enriching and connecting disparate data to pursuing better future options, we work alongside procurement teams to execute ambitious business goals.

SET UP A CONSULTATION

There are many myths about digital transformation, such as the belief that it always leads to layoffs or that hiring a team in data analytics means the company is transformed. But the truth is that transformation is much more than a simple addition or subtraction. Rather, it is about fundamentally changing the way teams work for more accurate and accelerated outcomes.

The way a business operates is central to its strategy and culture, but in large enterprise companies where layers of disjointed legacy software systems, processes and varying skill levels reign, it can be challenging to pinpoint digital gaps. One method of determining strengths and opportunities for an organization is conducting a digital health assessment to benchmark its current operations functionality.

Our team of transformation experts compiled eight crucial questions leaders should consider when establishing where technology and skills gaps exist. From evaluating cultural readiness to distinguishing which processes are reducing efficacy, the following questions can provide a view into the organization as it stands today against business goals.

1. Is mission-critical data “owned” by specific roles or readily accessible across teams?
   A mark of successful transformation is data readily available to stakeholders who need it, without facing bottlenecks such as emails, phone calls or unnecessary approvals with colleagues to obtain it.
2. How good is the quality of my underlying data?
   Many organizations believe just having data will lead to profits, but access alone is not enough. Data should be clean and of high quality. If it’s not, employ teams to investigate the root cause and fix it at the source.
3. Is my data managed to accelerate the realization of my business objectives?
   Take a close look at the way data is managed and evaluate where it is stalling or inhibiting decision making. Data governance is an important priority of transformation preparation. We also advocate for automation and outsourcing where appropriate to reduce re-work, streamline data management and enhance quality control for faster progress.
4. Are the key processes across the value chain identified and digitally enabled to increase value realization?
   Like software point solutions, it is common for some processes to outlive their usefulness simply because they are the incumbent process. Assessing the health of your systems and operations is vital to discovering gaps and seizing opportunities.
5. Does the mix and integration of technological tools appropriately support the digital transformation strategy?
   Many of our clients have programs that are close, but not quite there. Building custom tools that incorporate existing technology can be a cost-effective and fast way to capture value.
6. Are the necessary skills and domain knowledge available to effectively materialize and maintain my digital strategy?
   When gaps exist, consider the importance of employees growing with digital transformation by coaching, upskilling and providing support through the process.
7. Is it possible to track value generated from activities?
   From maintaining supplier relationships to getting contracts signed, value should not only be transparent but easy to trace from specific activities across the organization.
8. Are organizational guidelines available and enforced to prevent and measure security risks and legal compliance?
   Meeting the latest cybersecurity and compliance standards keeps your data safe and your company protected. Avoid waiting until a crisis exposes vulnerabilities to get these components up to par.

Why Aligned Automation For Digital Transformation?

Addressing these questions is a great start to creating a benchmark for where your company is on the road to digital transformation — but you don’t have to answer them alone. We combine deep industry expertise, advanced digital capabilities and a human-centered approach to help our clients shape their business strategies and drive growth. Dedicated to empowering people, we activate, align, energize and equip leaders to inspire and drive change that lasts. Contact our team to get started on your journey today.