As the buzz around AI, and gen AI in particular, refuses to die down all CFOs are on the hook from their CEOs and boards to find use cases for this game-changing technology that deliver instant upticks in productivity and efficiencies while reducing OpEx and positively impacting the bottom line. A select group of innovators have identified that procurement is the lowest-hanging fruit out there, enabling enterprises to drive more value from their company spend by implementing enterprise-wise procurement mandates.

They are adopting AI-driven sourcing and spend management technology to ensure that all third-party spend is tendered fairly, competitively, and transparently — with the right guardrails and policies in place to maintain compliance and risk management. As a result, these CFOs are instantly able to get more visibility, control and assurance of buying the right goods and services at fair market prices across all of their expenditures.

Global 2000 companies spend billions of dollars each year but legacy procurement processes and technology mean that many employees simply bypass the designated systems and engage in ‘maverick’ or ‘rogue’ spend as they need to be able to execute their jobs in the marketing, R&D, technology, human resources, real-estate and other functions in the company with a reasonable degree of speed and simplicity.

But forward-thinking finance leaders have identified autonomous sourcing as the answer to this conundrum – the user-friendly, consumer-like experience means using this technology for all company spend above a certain threshold is one mandate that their workforce is happy to embrace.

Let’s look at what CFOs need to consider in order to encourage participation in the process and make sure procurement mandates drive their companies toward the goal of delivering savings, reduced operating expenses and improved business results.

Why more companies are choosing mandates
Traditionally, mandates haven’t always been welcomed by employees, particularly those within the “frozen middle” of organizations where there’s a large disconnect between the declared company strategy and operational imperatives and ultimately the execution by mid-level managers. However, employees will often take the path of least resistance and not follow recommended business processes and practices as they know there are no consequences for doing so, as long as they don’t exceed their budget. While this ensures budgets are not surpassed, it also ensures companies WILL get less for more within that budget. 

With mandates, CFOs can quickly and effectively encourage the behaviors needed to deliver on business goals, principally more efficient cost control and adding strategic value. That’s why we’re seeing more enterprises adopt this strategy.

CFOs are also realizing that being nimble and being buttoned up are not mutually exclusive. In fact, mandates can increase efficiency and agility, especially within procurement where improved spend management directly impacts the bottom line.

Making it easy for employees to comply
For mandates to succeed, they need to be easy for every employee to comply with. It’s straightforward enough to create mandates that are clear and reasonable, such as: “Anyone spending more than a specific dollar amount on a service must participate in the procurement process.” What’s more critical is ensuring the underlying processes for the protocol you’re mandating are easy to use.

If employees are using outdated procurement systems that are difficult or cumbersome, then they’re going to struggle to comply. If you empower people with self-serve, intuitive AI-powered technology, it will make them want to use the mandated platform on an ongoing basis.

Take travel booking, for example, which used to be an agent-based travel management function. Once employees were empowered with the technology to compare rates, flight times, routes and seats, they could pick the best option that worked for them and for the company. This same model applies for CFOs looking to implement procurement mandates for all of their external spending. By giving employees user-friendly, digital solutions with a modest set of guardrails, you’ll empower them to be their own buyer and simplify compliance.

Autonomous sourcing technology enables CFOs to set mandates without having to fear the reverberation of noise – complaints that it’s too hard to comply or business stakeholders continuing to work in their old, archaic way of email and spreadsheets before going into the system right at the end of the process simply for compliance purposes. While democratizing how an organization buys everything it needs – putting the purchasing decisions in the hands of the experts who own the budgets and allowing them to work however they want – this new model ensures issues such as risk management and ESG targets are adhered to while also improving the bottom line.

Procurement mandates deliver instant cost savings
Successful implementation of a buying mandate means substantially more company spend will be managed by technology with new efficiencies and competition across a transparent, inclusive sourcing process that drives your costs 10-20% lower from day one. This fundamentally leads to either more for less, improvement to the company’s bottom-line (and therefore employee bonuses and shareholder returns) or conscious reinvestment in critical growth initiatives.

CFOs who invest in AI-driven sourcing and spend management solutions will find that mandating their use by the business is far easier than has often been the case in the past and that their organizations will both enjoy value from day one and be better positioned to manage the bottom line in the long term.

Click here to request a demo of the market leading automated spend management platform for instant improvements to your bottom line.

The promise of generative AI has carried the stock market to new heights, and some even believe we’re at the precipice of a technology boom that the world hasn’t seen since the advent of the Internet in the 90s.

That’s great for investors – but finance leaders don’t care about the hype. They only care about generative AI to the extent that it can impact key financial metrics such as working capital, free cash flow, and EBITDA. In short, they only want to know about AI if it can drive tangible business outcomes and improvements.

Globality is at the forefront of unlocking the massive cost savings of AI. We call it Transformative Spending, and it’s revolutionizing the way companies spend their money.

So how does it work? AI can be threaded throughout the procurement process from creating the sourcing event all the way to awarding to a selected supplier. Along the way, you will have automated mundane tasks, increased competition among vendors, and automatically generated key documents all whilst staying in control of spend decisions. Think of this application of AI as a way to prevent margin leakage and thus improve free cash flow.

Image caption goes here

Margin Leakage and the Impact on Free Cash Flow

The promise of generative AI has carried the stock market to new heights, and some even believe we’re at the precipice of a technology boom that the world hasn’t seen since the advent of the Internet in the 90s.

That’s great for investors – but finance leaders don’t care about the hype. They only care about generative AI to the extent that it can impact key financial metrics such as working capital, free cash flow, and EBITDA. In short, they only want to know about AI if it can drive tangible business outcomes and improvements.

Globality is at the forefront of unlocking the massive cost savings of AI. We call it Transformative Spending, and it’s revolutionizing the way companies spend their money.

So how does it work? AI can be threaded throughout the procurement process from creating the sourcing event all the way to awarding to a selected supplier. Along the way, you will have automated mundane tasks, increased competition among vendors, and automatically generated key documents all whilst staying in control of spend decisions. Think of this application of AI as a way to prevent margin leakage and thus improve free cash flow.

The Power of Procurement + AI

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1. Increase vendor competition to realize massive savings. If an employee is sourcing a project, the more fully-vetted vendors that the AI invites to participate the better and the greater savings the subsequent competition will create.
   Furthermore, key alerts can be put into play: an AI-powered system can notify superiors when a buyer is inclined to award business to a proposal that isn't the most cost-effective, providing an opportunity to rectify the decision and optimize savings. It can also alert and notify stakeholders when spending is about to be sole-sourced, promoting multiple bids and fostering a more competitive procurement landscape.
2. Get a better price without raising your blood pressure. AI makes negotiations easy: it can automate the communication where a vendor’s bid is received and understood, but nevertheless requires some price adjustments. When this practice is done at scale, the result is substantial decreases in the costs of goods and services.
3. Streamlined vendor onboarding to reduce risk. Navigating existing Master Service Agreements (MSAs) and approved vendor lists can be daunting to employees. This AI-guided feature reduces the time and effort required to engage both approved providers and with new vendors, and therefore reduces the risk of the entire project.
4. Keep your people on track with AI-piloted scope definition. Writing scope documents is hard. Often, users don’t know what to say – or they say the wrong thing. AI can guide them, helping them with prompts and even filling in large portions of the document based on what’s been done previously. With an AI “co-author” at hand, employees can be prevented from engaging in wasteful buying.
5. Make information accessible with transparency throughout the entire process. AI platforms provide transparency with comprehensive rate card analysis and pricing insights, while also making supplier and product information readily accessible. Since the platform also has access to both past purchases and market trends, it can offer up recommendations for recent purchases at lower costs, provide benchmarks for negotiation, and facilitate cost-effective procurement strategies.
6. Enable economies of scale through collaboration. An AI-powered platform can identify opportunities for collaborative sourcing, helping aggregate demand across business units and geographies and therefore drive down costs.
7. Accelerate renewals and approvals. AI simplifies contract renewals and enforces approval policies, ensuring competitive bidding and proper oversight to maximize savings on strategic projects.
8. Turn everyone in the organization into a procurement professional. Here’s a big one. The velocity of the business can slow down if procurement has to drive every single spending project—not just the strategic purchases, but all the tail spend as well. That can be avoided by giving the entire organization the ability to source their own goods and services while keeping them safely within AI-mandated guardrails.
   Doing so can speed up business outcomes by a factor of three. Purchases don’t have to run through a central department anymore; the act of sourcing can be “democratized” and every business unit can be empowered to complete their own purchasing projects. According to BT CPO Cyril Pourrat, AI-powered autonomous sourcing is making it possible for his non-procurement team specialists to sit down and create a sourcing request “with one sentence”. 

Lorem ipsum dolor sit amet consectetur. Purus nulla lorem diam lobortis maecenas feugiat. Non sed amet commodo pharetra nisl diam nulla. Elementum in nunc dolor aliquam tellus eros. Diam fermentum sed duis nulla. Nibh neque et.

The collective outcome of the cost drivers described above are significant:

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1.  $100 million returned to the balance sheet. Costs that would ordinarily have been wasted on poor purchases or incorrectly negotiated ones return tens of million dollars quickly. How quickly?
2. Payback period in less than 12 months. It takes less than a year to realize the return on the AI-powered purchasing platform.
3. Sourcing projects completed 6x faster. Because of the efficiency gains inherent in having each employee source their own purchases, with AI guiding them while safeguarding the interests of the organization, projects can be completed at a high velocity. A leading US-based investment firm who use Globality is now competitively sourcing spend that would have taken 50 additional people to achieve and is seeing a 20% price improvement.

What will procurement’s future operating model look like?

get report

Bottom line savings with AI-powered spend management

Far more than simply “adding AI’ to the existing procurement process, a Transformational Spending approach finds a complete rebuilding of the function to both empower the existing team while enabling all employees to source and complete their own purchasing projects – all while preventing margin leakage and returning tens of millions of dollars to free cash flow. Some organizations have already realized this vision, while others are racing to it.

But it’s only a matter of time until the rest catch up.

The promise of generative AI has carried the stock market to new heights, and some even believe we’re at the precipice of a technology boom that the world hasn’t seen since the advent of the Internet in the 90s.

That’s great for investors – but finance leaders don’t care about the hype. They only care about generative AI to the extent that it can impact key financial metrics such as working capital, free cash flow, and EBITDA. In short, they only want to know about AI if it can drive tangible business outcomes and improvements.

Globality is at the forefront of unlocking the massive cost savings of AI. We call it Transformative Spending, and it’s revolutionizing the way companies spend their money.

So how does it work? AI can be threaded throughout the procurement process from creating the sourcing event all the way to awarding to a selected supplier. Along the way, you will have automated mundane tasks, increased competition among vendors, and automatically generated key documents all whilst staying in control of spend decisions. Think of this application of AI as a way to prevent margin leakage and thus improve free cash flow.

Image caption goes here

Margin Leakage and the Impact on Free Cash Flow

The promise of generative AI has carried the stock market to new heights, and some even believe we’re at the precipice of a technology boom that the world hasn’t seen since the advent of the Internet in the 90s.

That’s great for investors – but finance leaders don’t care about the hype. They only care about generative AI to the extent that it can impact key financial metrics such as working capital, free cash flow, and EBITDA. In short, they only want to know about AI if it can drive tangible business outcomes and improvements.

Globality is at the forefront of unlocking the massive cost savings of AI. We call it Transformative Spending, and it’s revolutionizing the way companies spend their money.

So how does it work? AI can be threaded throughout the procurement process from creating the sourcing event all the way to awarding to a selected supplier. Along the way, you will have automated mundane tasks, increased competition among vendors, and automatically generated key documents all whilst staying in control of spend decisions. Think of this application of AI as a way to prevent margin leakage and thus improve free cash flow.

The Power of Procurement + AI

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1. Increase vendor competition to realize massive savings. If an employee is sourcing a project, the more fully-vetted vendors that the AI invites to participate the better and the greater savings the subsequent competition will create.
   Furthermore, key alerts can be put into play: an AI-powered system can notify superiors when a buyer is inclined to award business to a proposal that isn't the most cost-effective, providing an opportunity to rectify the decision and optimize savings. It can also alert and notify stakeholders when spending is about to be sole-sourced, promoting multiple bids and fostering a more competitive procurement landscape.
2. Get a better price without raising your blood pressure. AI makes negotiations easy: it can automate the communication where a vendor’s bid is received and understood, but nevertheless requires some price adjustments. When this practice is done at scale, the result is substantial decreases in the costs of goods and services.
3. Streamlined vendor onboarding to reduce risk. Navigating existing Master Service Agreements (MSAs) and approved vendor lists can be daunting to employees. This AI-guided feature reduces the time and effort required to engage both approved providers and with new vendors, and therefore reduces the risk of the entire project.
4. Keep your people on track with AI-piloted scope definition. Writing scope documents is hard. Often, users don’t know what to say – or they say the wrong thing. AI can guide them, helping them with prompts and even filling in large portions of the document based on what’s been done previously. With an AI “co-author” at hand, employees can be prevented from engaging in wasteful buying.
5. Make information accessible with transparency throughout the entire process. AI platforms provide transparency with comprehensive rate card analysis and pricing insights, while also making supplier and product information readily accessible. Since the platform also has access to both past purchases and market trends, it can offer up recommendations for recent purchases at lower costs, provide benchmarks for negotiation, and facilitate cost-effective procurement strategies.
6. Enable economies of scale through collaboration. An AI-powered platform can identify opportunities for collaborative sourcing, helping aggregate demand across business units and geographies and therefore drive down costs.
7. Accelerate renewals and approvals. AI simplifies contract renewals and enforces approval policies, ensuring competitive bidding and proper oversight to maximize savings on strategic projects.
8. Turn everyone in the organization into a procurement professional. Here’s a big one. The velocity of the business can slow down if procurement has to drive every single spending project—not just the strategic purchases, but all the tail spend as well. That can be avoided by giving the entire organization the ability to source their own goods and services while keeping them safely within AI-mandated guardrails.
   Doing so can speed up business outcomes by a factor of three. Purchases don’t have to run through a central department anymore; the act of sourcing can be “democratized” and every business unit can be empowered to complete their own purchasing projects. According to BT CPO Cyril Pourrat, AI-powered autonomous sourcing is making it possible for his non-procurement team specialists to sit down and create a sourcing request “with one sentence”. 

Lorem ipsum dolor sit amet consectetur. Purus nulla lorem diam lobortis maecenas feugiat. Non sed amet commodo pharetra nisl diam nulla. Elementum in nunc dolor aliquam tellus eros. Diam fermentum sed duis nulla. Nibh neque et.

The collective outcome of the cost drivers described above are significant:

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1.  $100 million returned to the balance sheet. Costs that would ordinarily have been wasted on poor purchases or incorrectly negotiated ones return tens of million dollars quickly. How quickly?
2. Payback period in less than 12 months. It takes less than a year to realize the return on the AI-powered purchasing platform.
3. Sourcing projects completed 6x faster. Because of the efficiency gains inherent in having each employee source their own purchases, with AI guiding them while safeguarding the interests of the organization, projects can be completed at a high velocity. A leading US-based investment firm who use Globality is now competitively sourcing spend that would have taken 50 additional people to achieve and is seeing a 20% price improvement.

What will procurement’s future operating model look like?

get report

Bottom line savings with AI-powered spend management

Far more than simply “adding AI’ to the existing procurement process, a Transformational Spending approach finds a complete rebuilding of the function to both empower the existing team while enabling all employees to source and complete their own purchasing projects – all while preventing margin leakage and returning tens of millions of dollars to free cash flow. Some organizations have already realized this vision, while others are racing to it.

But it’s only a matter of time until the rest catch up.

The promise of generative AI has carried the stock market to new heights, and some even believe we’re at the precipice of a technology boom that the world hasn’t seen since the advent of the Internet in the 90s.

That’s great for investors – but finance leaders don’t care about the hype. They only care about generative AI to the extent that it can impact key financial metrics such as working capital, free cash flow, and EBITDA. In short, they only want to know about AI if it can drive tangible business outcomes and improvements.

Globality is at the forefront of unlocking the massive cost savings of AI. We call it Transformative Spending, and it’s revolutionizing the way companies spend their money.

So how does it work? AI can be threaded throughout the procurement process from creating the sourcing event all the way to awarding to a selected supplier. Along the way, you will have automated mundane tasks, increased competition among vendors, and automatically generated key documents all whilst staying in control of spend decisions. Think of this application of AI as a way to prevent margin leakage and thus improve free cash flow.

Margin Leakage and the Impact of Free Cash Flow

In its most basic view, net income is revenue minus expenditures. The typical view of margin leakage is that it represents decline in the profit margin occurring as a result of pricing and promotion shortfalls on the revenue side. A different kind of margin leakage can also result from the expenditures side of the equation where the act of purchasing goods and services falls short of best practices.

In some cases, a small, persistent drip of revenue leakage can become a raging torrent. Likewise, company’s management needs to plug holes in operating costs and overhead costs from expenditures. The procurement function can be an incredible leverage point for increasing net profit margin through operational best practices and reducing expenditures.

The Power of Procurement + AI

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1. Increase vendor competition to realize massive savings. If an employee is sourcing a project, the more fully-vetted vendors that the AI invites to participate the better and the greater savings the subsequent competition will create.
   Furthermore, key alerts can be put into play: an AI-powered system can notify superiors when a buyer is inclined to award business to a proposal that isn't the most cost-effective, providing an opportunity to rectify the decision and optimize savings. It can also alert and notify stakeholders when spending is about to be sole-sourced, promoting multiple bids and fostering a more competitive procurement landscape.
2. Get a better price without raising your blood pressure. AI makes negotiations easy: it can automate the communication where a vendor’s bid is received and understood, but nevertheless requires some price adjustments. When this practice is done at scale, the result is substantial decreases in the costs of goods and services.
3. Streamlined vendor onboarding to reduce risk. Navigating existing Master Service Agreements (MSAs) and approved vendor lists can be daunting to employees. This AI-guided feature reduces the time and effort required to engage both approved providers and with new vendors, and therefore reduces the risk of the entire project.
4. Keep your people on track with AI-piloted scope definition. Writing scope documents is hard. Often, users don’t know what to say – or they say the wrong thing. AI can guide them, helping them with prompts and even filling in large portions of the document based on what’s been done previously. With an AI “co-author” at hand, employees can be prevented from engaging in wasteful buying.
5. Make information accessible with transparency throughout the entire process. AI platforms provide transparency with comprehensive rate card analysis and pricing insights, while also making supplier and product information readily accessible. Since the platform also has access to both past purchases and market trends, it can offer up recommendations for recent purchases at lower costs, provide benchmarks for negotiation, and facilitate cost-effective procurement strategies.
6. Enable economies of scale through collaboration. An AI-powered platform can identify opportunities for collaborative sourcing, helping aggregate demand across business units and geographies and therefore drive down costs.
7. Accelerate renewals and approvals. AI simplifies contract renewals and enforces approval policies, ensuring competitive bidding and proper oversight to maximize savings on strategic projects.
8. Turn everyone in the organization into a procurement professional. Here’s a big one. The velocity of the business can slow down if procurement has to drive every single spending project—not just the strategic purchases, but all the tail spend as well. That can be avoided by giving the entire organization the ability to source their own goods and services while keeping them safely within AI-mandated guardrails.

   Doing so can speed up business outcomes by a factor of three. Purchases don’t have to run through a central department anymore; the act of sourcing can be “democratized” and every business unit can be empowered to complete their own purchasing projects. According to BT CPO Cyril Pourrat, AI-powered autonomous sourcing is making it possible for his non-procurement team specialists to sit down and create a sourcing request “with one sentence”.

The collective outcome of the cost drivers described above are significant:

How can AI prevent margin leakage and reimagine the value that procurement can actually offer an organization?

1. $100 million returned to the balance sheet. Costs that would ordinarily have been wasted on poor purchases or incorrectly negotiated ones return tens of million dollars quickly. How quickly?
2. Payback period in less than 12 months. It takes less than a year to realize the return on the AI-powered purchasing platform.
3. Sourcing projects completed 6x faster. Because of the efficiency gains inherent in having each employee source their own purchases, with AI guiding them while safeguarding the interests of the organization, projects can be completed at a high velocity. A leading US-based investment firm who use Globality is now competitively sourcing spend that would have taken 50 additional people to achieve and is seeing a 20% price improvement.

What will procurement’s future operating model look like?

get report

Bottom line savings with AI-powered spend management

Far more than simply “adding AI’ to the existing procurement process, a Transformational Spending approach finds a complete rebuilding of the function to both empower the existing team while enabling all employees to source and complete their own purchasing projects – all while preventing margin leakage and returning tens of millions of dollars to free cash flow. Some organizations have already realized this vision, while others are racing to it.

But it’s only a matter of time until the rest catch up.