Technology simplifies, at least that is its promise.
That’s because, when effectively implemented, digital solutions can break down legacy silos and remove countless man hours from laborious and redundant processes.
Add into the mix generative artificial intelligence (AI), and technology can now do more than just simplify — it can eliminate long-entrenched superfluities and automate error-prone workflows.
“The [procurement] process has become hopelessly complex. … It’s a massive employee experience problem, and it is also a workflow problem,” Cheng explains, noting the high degree of difficulty when “coordinating struggles” between various departments, including legal, security, IT and more.
“[Procurement is a] disjointed process that requires users to login to multiple systems to manage payments (invoices, corporate card transactions, personal card reimbursements, etc.), with each system requiring its own workflow and compliance process, and no centralized view of all their spend,” he adds.
The lack of a centralized system has made it challenging for firms and their employees to navigate the various steps involved in procurement, including legal, security, IT, and finance processes.
This disjointed system led to coordination issues, especially for employees who needed to engage with new vendors, initiate marketing campaigns, or onboard contractors.
Zip was born when Cheng and his co-founders identified these significant pain points in the procurement process and set out to build a solution to streamline them.
Many companies, particularly those with over 400 employees, face similar procurement challenges. Two fundamental changes in the business world contributed to this growing problem: decentralized spending and an increase in the number of vendors.
Departments within organizations had more autonomy in their spending decisions, and outsourcing work to vendors had become a common practice. This led to companies having more vendors than employees in some cases and created an incredibly complex and increasingly opaque procurement process.
“One of the biggest challenges is vendor sprawl,” Cheng says.
Enter: generative AI.
“There are all these problems that generative AI can help automate away, allowing companies to be even more focused on their mission, not their maintenance,” Cheng says.
And by tapping embedded generative AI solutions to automate previously manual workflows, flag legal and security risks, and generate valuable business insights, firms can enjoy downstream enhancements across their operational workflows and even rethink the staffing requirements needed for procurement and payment functions.
“CFOs are excited about the labor savings and the ability to run their teams a lot more efficiently. And when we talk to procurement heads, they look at it as a pretty massive time saving because they are typically spending 50% of their time reviewing contracts but now they’ll be able to actually spend more time negotiating and running RFPs and doing a higher level of work that will help the company’s bottom line,” Cheng explains.
That’s why his company is launching a new generative AI suite designed to bring new competitive advantages to finance and procurement teams.
Leveraging AI for procurement can help companies consolidate vendors, optimize payment terms, and maintain accurate contract data. The technology is there.
The challenge, Cheng acknowledges, is in building trust in AI recommendations.
Initially, companies may still want manual validation to support AI generated outcomes, particularly around the creation of purchase orders (POs). But by leveraging generative AI, organizations can enforce a “no PO, no pay” policy and achieve greater spend visibility.
Vendor onboarding, a notorious pain point for many businesses, is another area where AI solutions can automate and simplify existing onboarding processes to reduce friction between companies and their suppliers.
Looking ahead, Cheng says that he envisions generative AI providing insights to companies based on the aggregated data it processes.
While data sharing may be a sensitive issue, particularly for larger enterprises, AI tools can potentially offer insights on payment trends, procurement cycle times, and working capital optimization. These insights can help businesses make informed decisions and optimize their procurement strategies.
The greatest benefit of AI, Cheng says, is its ability to free companies up from the mundane and allow them to clarify their focus on what truly differentiates them by informing more strategic go-forward decisions.