How AI is Solving the Biggest Challenge in Automotive Procurement

AI in Automotive Procurement

Artificial intelligence (AI) is revolutionizing the way we live and work, and the automotive industry is no exception. From self-driving cars to supply chain management, AI is transforming every aspect of the automotive industry. While most of the focus in this industry is concentrated on production, supplier relationships, and direct spend, today we’re taking a closer look at how AI is addressing indirect or ‘tail spend’ within the automotive industry, and why companies that fail to embrace these technologies risk falling behind their competitors.  

Because it’s not the key lifeline to an automotive company’s profitability, tail spend is often ignored, which is shortsighted, because it can account for up to 20% of an automotive company’s overall spend. However, most companies do not have the resources or time to effectively manage this tail spend, resulting in a lack of visibility and control over these expenditures. 

This is where AI comes in. By using AI-powered tools, automotive companies can analyze their vast amounts of data to identify areas where they can save money and streamline processes. For example, AI can analyze invoices and contracts to identify errors or discrepancies that may lead to overpayments or missed discounts. Furthermore, AI can help identify the best suppliers by analyzing supplier data and performance metrics, ultimately leading to better supplier relationships and improved supply chain management.

Another key benefit of AI in addressing tail spend is increased efficiency. By automating the time-consuming tasks associated with tail spend, such as manual data entry and invoice processing, AI frees up valuable resources that can be redirected toward more strategic tasks. Moreover, AI can also provide real-time analytics and insights that enable automotive companies to make data-driven decisions quickly. 

AI can also enhance risk management by identifying potential supplier risks and helping companies implement proactive measures to mitigate those risks. 

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In short, AI is revolutionizing the way automotive companies manage their tail spend by providing them with greater visibility, streamlined processes, increased efficiency, and improved risk management. Therefore, automotive companies must embrace AI-powered tools if they want to remain competitive in this constantly evolving industry. Ignoring the potential benefits of AI in addressing tail spend could be detrimental to an automotive company’s bottom line and hinder its growth and success in the long run. Why? Because as we mentioned, tail spend can account for up to 20% of an automotive company’s overall spend, resulting in missed opportunities for cost savings and process improvements. Even if you aren’t thinking about tail spend, plenty of your competitors are. And they are gaining a competitive advantage by leveraging the power of AI to optimize their supply chain and improve their bottom line. 

If you’re an automotive company looking to stay ahead of the curve and maximize your profitability, it’s time to start exploring what AI-powered tail spend management tools can do for you. 

Read our latest whitepaper to learn more about how Simfoni’s AI-driven spend analytics solution can help you streamline your tail spend management and achieve significant cost savings and process efficiency in the automotive industry.


Book a time with our procurement experts who will provide you with a guided tour of our software – helping you to understand and visualize how a best-of-breed solution, like Simfoni, can help you to achieve your most transformative digital procurement goals.

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