Reducing the complexity of their supply base has long been a priority for procurement teams. Many of these oversized bases include tens of thousands of suppliers, swelling as business needs change and acquired businesses are absorbed. They are also likely to include suppliers that have undergone little, if any, vetting.
As an antidote to this complexity, many procurement managers dramatically rationalised the supply base in their category of spend, often choosing a single source of supply to capitalise on economies of scale and minimise complexity. But these single-source supply arrangements are operationally risky and often lead to a lack of commercial leverage on the part of the buyer. Many procurement managers now find themselves fully reliant on a single supplier and lacking the influence to encourage them to invest in risk mitigation, ESG, and performance improvement as a whole.
In this report, IDC explores the benefits, key trends and challenges procurement managers should consider when applying AI-powered supplier identification to de-risk their supply base.
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