Business Strategy

Transforming, innovating, and leading the future of automotive with AI-powered indirect procurement

November 26, 2018 | Marissa Bialick

This year’s OESA annual conference began with Julie Fream, OESA’s CEO and president, reviewing the event theme: “Transform. Innovate. Lead.” She warned that the automotive industry is transforming and if you don’t follow suit, you risk getting left behind. This message was further relayed throughout the day when Neil Boehm, VP of engineering at Gentex said, “you have to change with the times or you won’t exist,” when discussing the impact of new technology. The truth of the matter is that as the industry evolves, organizations must do the same. From corporate culture to business models to customer relationships and everything in between, things are changing, and in order to stay relevant and successful, organizations need to find ways to keep up.

With many of the conference’s sessions focused on the rise of vehicle electrification, autonomous vehicles, and the impact of uncertain times, the dialogue revolved around how to stay successful in automotive manufacturing and procurement in spite of these changes. Sitting there, listening to each of the speakers, taking notes, and curious about what takeaways I was going to leave with, it dawned on me that no one was talking about indirect spend. When procurement was mentioned, it was all concentrated on production, direct spend, and supplier relationships. I briefly wondered why and then remembered that for most organizations, indirect is often an afterthought.

Because it’s not the key lifeline to an automotive company’s profitability, indirect procurement gets ignored.


What a shame,” I thought to myself. And then the day’s big takeaway clicked. It’s not just about autonomous vehicles, electrification, or the impact of the new tariffs – it’s about thinking differently, collaborating, being ahead of the curve, and getting intelligent insights that drive your business decisions.

That’s where artificial intelligence comes in. Let’s dig into four of the ways AI can solve some of your biggest indirect procurement problems.

4 ways AI-powered procurement can help:

  1. To get different results, you need to think differently
    In this case, thinking differently refers to multiple facets of your organization. The reality is: there’s going to be changes. The important part is how you plan to deal with them.For starters, when it comes to talent, you have to think differently. With AI becoming more prevalent, don’t permit your team to get bored by only allowing them to focus on the tactical. Let them be strategic and leave your AI-driven software to do the tactical tasks instead. Imagine: a coworker that’s smart enough to drive strategic value and willing to take on the most tedious and complex aspects of the job – enabling you and your team to focus on the initiatives that will move your company forward. That’s what advanced AI can do. Sounds pretty nice, doesn’t it?
    There’s going to be changes. AI tech allows you to do more with less. There are still people involved, but now they’re focused on things that will actually grow your business, rather than being stuck on time-consuming, manual tasks.
  2. Increase alignment
    With these new processes and roles emerging in your procurement organization, it’s imperative to not only think differently but to also adjust how you work and communicate. In order to be successful, you’ll be required to work together as a team. Sounds cliché, but it’s true. Build relationships – both with those directly in your organization and with those outside your organization, like the suppliers you work with most. By doing so, each side will be more inclined to help each other out. This applies to both direct and indirect procurement. As Tom Lake, senior vice president of purchasing at Honda of America Mfg., Inc., said at the conference, when you have a good relationship with your suppliers, they will go the extra mile for you, which ultimately, will be beneficial to help get through any bad times as well. Also, the earlier and more collaboratively you work with your suppliers, the more likely you will get what you need on time. And who wouldn’t want that?! Wink The bottom line: be flexible, willing to help, and communicate better for your procurement processes to run smoothly. A collaborative procurement software can help you do so. When you have a single system to establish a proper workflow for requests, streamline communication between buyers and suppliers, and manage your organization’s spend, you’ll start to see less off-contract spending, reduced cycle times, and improved performance.
  3. Be one step ahead
    If you’re not using innovative technology, you’re already behind. How far back are you willing to fall? To get ahead, you have to do what the competition isn’t. In procurement, that means utilizing advanced tech that will actually drive results. You need to be thinking about the future. Because even if you aren’t, others might be.

    We’ve said it before, but I’ll say it again: the future of procurement is AI. Advanced AI technology (like ours) offers so many benefits to your organization, such as:

    • The ability to turn “imperfect” data into cleansed, categorized, and enriched data
    • The automation of tasks to make your team more efficient
    • The machine learning effect, where the more the AI learns, the more value it delivers
    • The evaluation of information, like supplier bids, to help guide buyers
    • Access to detailed visibility to handle requests, track spending, and make faster, better decisions

    All of these work together to unlock hidden insights and reveal savings opportunities that otherwise would’ve been missed. And when your organization is focused on cutting costs, finding new ways to save is key…especially when it’s in a place you probably wouldn’t have thought to look, like your indirect spend.

  4. Drive improvement with intelligence
    Julie Fream mentioned that “everything you better has an opportunity to make a world of difference.” So if you improve your indirect procurement, simultaneously, you’ll improve your direct procurement. And for the automotive industry, that’s what matters. Especially with the tariffs going on right now. As the tariffs are increasing costs, offer solutions to help mitigate costs. One solution is to implement a powerful procurement software to manage spend. Tasked with finding savings? Utilize the insights an AI-fueled procurement solution can uncover to reveal opportunities to save.Jada Smith, vice president of advanced engineering and external relations for Aptiv, made a great point when she said that we don’t trust our own senses in isolation, and in tech, it should be the same. Don’t let your automotive organization ignore the resources available to help it. Take advantage of advanced technology, specifically, solutions with true AI and embedded industry intelligence, to drive the results you desire.

Are you ready to transform, innovate, and lead your automotive organization? Chief economist at Ford, Emily Kolinski Morris, discussed how it’s easier to think about what’s in front of us instead of thinking toward the future. Are you thinking about the future? For procurement, the future is already here with AI. Don’t get left behind.

Want to learn more about how AI is shaping the future of indirect procurement? Check out our webinar!