August 22, 2023 | Peter Green Melgaard, Head of Communications & Marketing, Nohrcon
Nohrcon consulted generative AI to provide 7 insights into how AI (Artificial Intelligence) can assist procurement consultants in their daily work – and asked procurement specialist Veronika Kovács to evaluate the responses.
AI is a hot topic, but what does this new technology mean for you as a procurement consultant? And can the answers from a sophisticated chatbot be of any use?
That’s what Nohrcon set out to investigate. First, with generative AI as the procurement “oracle”, and then with Veronika Kovács (pictured) as the more genuine expert. Veronika is a Senior Counsel and Co-ordinator of the CEE Public Procurement Practice at CMS in Hungary – and will be giving a presentation entitled “The Potential Use of AI in Public Procurement Processes” at Nohrcon’s conference Nordic Public Procurement Forum 2023. She is, therefore, well aware of whether generative AI is onto something valuable – or if it occasionally “fumbles with the codes”.
dr. Veronika Kovács, Senior Counsel, CMS
1. Identify areas where AI can add value
Generative AI: “AI can be used to enhance the efficiency and accuracy of various steps in the procurement process, such as data analysis, market research, vendor identification, bid evaluation, and more. Identify the areas where AI would be most beneficial based on your needs and resources.”
Veronika: “Absolutely. Just do not conclude from this answer that after procurement professionals identify their needs and resources, AI is in fact used in each step of the procurement process they desire. In some countries, there are great innovative examples, but AI is not extensively used in public procurement yet, despite its enormous potential in the public sector for reducing costs. This is the beginning of the road, where multi-language models appear to be a real gamechanger.”
2. Implement AI in market research
Generative AI: “AI can assist in collecting and analysing market data and potential suppliers, including their past performance, customer satisfaction, and pricing. By utilizing AI in market research, procurement consultants can gain a comprehensive and objective understanding of the market and available opportunities.”
Veronika: “Correct, this is a key potential area for AI in public procurement. Use generative AI with caution though – one prominent challenge is the model’s lack of legal expertise and domain-specific knowledge. Despite its extensive training, generative AI models may not accurately interpret complex legal concepts, leading to potential inaccuracies or oversimplifications in its responses. Further, the models might not be „live” and if the training database (the knowledge base) is not updated regularly, the generated responses may not be accurate and up to date. Still, it is a great tool to augment market research.”
3. Use AI to evaluate bids
Generative AI: “AI can analyse bids and assess whether they meet the requirements stated in the tender conditions. This can save time and resources while ensuring consistent and objective evaluation of the bids.”
Veronika: “In theory, it is a correct answer, particularly for simple commodities purchases, but the answer is not that simple for complex tenders and rather deemed now as a danger zone than potential. Evaluation is not possible yet without any human involvement, due to various legal and practical constraints.“
4. Implement chatbots in your communication
Generative AI: “Chatbots can be utilized to answer questions from potential suppliers regarding the tender and procurement process. This can free up time for procurement consultants while ensuring that suppliers receive prompt and accurate responses.”
Veronika: “Advanced chatbots have many other potentials, such as to provide step-by-step guidance for contracting authorities when compiling tender documentation in the preparation phase (so inadequate or outdated templates can be eliminated), which will also save time at the end. Similarly, a trained chatbot on the applicable public procurement regime and tender documentation can be able to support bidders complete and submit their bids.”
5. Implement AI in contract management
Generative AI: “AI can be used to monitor contracts and identify opportunities for optimization or risks of non-compliance. By using AI in contract management, procurement consultants can achieve a more efficient and objective way of monitoring contracts.”
Veronika: “Well said!”
6. Use AI to identify risks
Generative AI: “AI can analyse risks in the procurement process, including risks associated with vendor selection, non-compliance with requirements, and other factors.”
Veronika: “Who would not agree? Of course, just be mindful of biased data or outdated information. Given that AI can capture and analyse billions of data, for risk analysis and pattern recognition AI is more effective than humans.”
7. Implement AI in automating routine tasks
Generative AI: “AI can automate routine tasks in the procurement process, such as form filling, report generation, and other tasks. By using AI in automating routine tasks, procurement consultants can free up time and resources for more complex tasks.”
Veronika: “Correct, but AI has even more potential for both the bidders’ and contracting authorities’ sides, as a result, currently administratively burdensome public procurement can be more attractive and efficient, which can dramatically reduce costs and enhance competition – according to recent examples.”
Despite Veronika’s powerful demonstration of genuine procurement knowledge, we will let generative AI have the final word: “These seven points cover various areas of the procurement process and can, according to Generative AI, help improve the efficiency and accuracy of the bidding process through the use of AI technology. However, it is the organization’s specific needs and challenges that determine which of these points are most relevant.”
Don’t miss out on Veronika’s presentation “The Potential Use of AI in Public Procurement Processes” at Nohrcon’s annual, international procurement conference Nordic Public Procurement Forum 2023!