The formula for return on investment is a ratio between net profit and the cost of investment. A high ROI means the investment's gains compare favorably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.
But in an economy that has been rocked by furloughs, remote work, and mandated shutdowns due to a pandemic, return on investment has become low on the list of priorities for executives. The formula is no longer simple.
The number one goal has been keeping supply chains going - not ROI.
Procurement generally involves making buying decisions under conditions of scarcity.
In the meantime, procurement costs are skyrocketing. Extended operation costs, unfavorable contract terms, and increasing rates to move goods adds to increasing prices to do basic business. Not to mention the expense of maintaining social distancing or prevent face to face transactions to prevent higher numbers of infection. Scarcity now includes finding employees to do the job, sourcing goods, and complying with service level agreements within contracts.
Each step in a supply chain is linked to a commitment hidden in legalese. Or understood by a few that work from home or have been laid off.
Most companies are investigating robotic automation and artificial intelligence (AI) within their supply chains. These technologies reduce manual intervention and hand-offs, cutting transmission risks, and reducing the reliance on humans to work face-to-face. They can also enable production to scale and shrink in response to sudden demand.
Determine what contracts are costing you the most money, how you can negotiate better terms, or save in penalties around termination. AI can translate raw contract data into detailed insights - exposing hidden risks and opportunities. By reading and understanding inaccessible and complex contractual language and clauses, artificial intelligence could grant you full contract visibility with unprecedented accuracy—empowering you to act in the most business-critical moments.
What is the best AI solution to delve deep into your company's spending to identify patterns and trends? ElectrifAi’s SpendAi product generates risk and opportunity insights with varying scenarios to enable effective decision making and strategy development. With the best-in-class time-to-value, SpendAi cleanses, normalizes and classifies your spending with unprecedented accuracy.
ElectrifAi’s machine learning is built by data scientists and procurement professionals with deep domain expertise in spend management and procurement. Leveraging machine learning algorithms, SpendAi presents an intelligent visualization of your entire organization’s spending, spend patterns and potential opportunities for unrealized savings. By harnessing the power of practical AI, SpendAi can help you recover from the pandemic and build a strong return on your investment.
By 2022, 50% of legacy spend analysis will be replaced by AI-powered solutions. – Source: Gartner, Inc.
It’s clear this crisis will cut down on numerous outdated practices or kill unnecessary steps to get to the same goal we had before COVID-19: profitability.
At the same time, consumers and employees are looking to reinvent themselves.
As the lead instructor for Qualex Institute, and part-time instructor for TechTalentSouth, hundreds of people that come from food & beverage, retail, and recent unemployed college graduates in a variety of majors, are quickly skilling themselves in artificial intelligence and data science.
So, if future employees know that artificial intelligence is the new secret formula to return on investment, shouldn't you?