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AI that actually works: built for chemical procurement

AI that actually works - built for chemical procurement

Finding chemical and raw material suppliers is tougher than ever. Use supplier scouting technology to quickly uncover relevant, qualified alternatives

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Dheev Arulmani

<h2>The importance of supplier discovery</h2>
Finding chemical and raw material suppliers is tougher than ever. With 100s of thousands of suppliers globally and an infinite permutation of specs, certifications, and requirements — manually searching for the right supplier at the right time is a near impossible task.
Supplier discovery is a core part of any procurement process &#8211; the first step in a long chain of actions before a new product is received. Ideally, companies could continue relations with the same supply base in perpetuity, but recently, shifting consumer demands and rising geopolitical risks have forced businesses to constantly reinvent their supply network.
New suppliers are required for a range of reasons, but some of the top reasons cited by multinational corporations include:
<ul>
<li>Supply chain risk management: The past 5 years have launched a burning platform for supply chain professionals to manage risk. In procurement, that manifests through actions such as dual-sourcing, reducing lead times, and diversifying source locations, all of which require scouting the market for new suppliers.</li>
<li>Cost management: When companies consistently stick with the same suppliers, they begin to lose the ability to understand true market costs. It becomes difficult to hold an informed negotiation position with suppliers. New supplier discovery introduces competition and intelligence into the procurement process, helping manage costs.</li>
<li>New product introduction: Companies are constantly iterating and reinventing their product suite to appeal to their consumer base. In today&#8217;s environment, that consumer base holds high demands. New or relaunched products often require new materials, that may or may not be available within your current supply base.</li>
<li>R&amp;D: Innovation in the chemicals market is strong, making it difficult to keep up with the latest and greatest offerings. Are there offsets available for a patented material you use? Is there a product that can offer an improved consumer promise? The ability to discover and test market alternatives can support the development of new, innovative products that can help both lower the bottom line and increase top line.</li>
</ul>

<h3 id="ember185" class="ember-view reader-text-block__heading-3">What roadblocks exist today?</h3>
Despite supplier discovery being a core function of a procurement team, today, the options to discover new suppliers are often unfruitful. Imagine the current workflow of a procurement professional, looking for a new product:
First, they hop on a preferred search engine and scroll through (seemingly endless) results for their material search. They have to intelligently research each company to compile a list they’d like to outreach to, assuming that each company publicly states what they offer.
Next, they draft cold outreach emails to the suppliers, to see if they are able to supply the material requested. Undoubtedly, there will be follow-ups and reminders sent.
Finally, when a supplier responds with the green light that they have the material required, the next part of the process, including negotiations, material testing, and qualification can begin. The lack of established trust and qualifications between the procurement team and this new supplier can cause this part to drag out, or fail.
Procurement teams are loaded with every day tasks across the end-to-end procurement workflow. Investing the extra time to find new suppliers is challenging, and therefore, can be deprioritized under immediate business needs and issues-of-the-day. However, without new supplier discovery, the company is certainly both leaving top and bottom line value on the table and increasing their supply chain risk.
Companies are aware of this and working towards solving for these problems. A recent study of CxOs stated supplier diversity and multi-sourcing as top strategic priorities for procurement professionals in the next 3-5 years. To ensure success towards those goals, the opportunity must be rethought.

<h3 id="ember194" class="ember-view reader-text-block__heading-3">Rethinking Supplier Discovery</h3>
If we focus on some of the pain points of the supplier discovery process, we can innovate on how this process could be made better. Valdera uses combination of data science, ML, and AI models to power a sophisticated matching engine. Underlying Valdera’s algorithms is the world’s most extensive database of chemical and raw material suppliers.

A range of different matching algorithms route each individual raw material request to the most relevant global suppliers based on a set of core parameters (e.g., chemistry, application, quantity, chemical properties, certifications, logistics) &#8211; within minutes. Valdera ensures suppliers are qualified based on filters such as size of company, import/export data, certifications, and more. These filters ensure high-quality quotes end up in the inboxes of those that request a material.
Buyers can now send requests to matched &amp; qualified suppliers in minutes, no manual search or cold calling required.

The author thanks Melissa Boelstler for her contributions.