The ROI of AI in Supplier Audits

December 16, 2023 - 5 min read

By Nishtha Verma, ESG Lead at Elm AI

In an era where efficiency and compliance are paramount in the business world, procurement teams face the constant challenge of balancing rigorous supplier due diligence with the need to optimize time and costs.

Supplier audits are a critical component of procurement processes, ensuring that suppliers meet stringent standards of quality, ethics, and compliance. However, the traditional audit methods are often time-consuming, resource-intensive, and prone to human error.

After speaking to over 200 procurement teams across industries, we have discovered that teams spend anywhere between 16-25 hours cumulatively per report just to ensure that their suppliers are meeting the compliance criteria defined by their company's internal checklist. As organizations strive to enhance efficiency and maintain compliance, there arises a pressing need for innovative solutions that can streamline the auditing process without compromising on thoroughness. There are a multitude of benefits to this:

Time Savings
- Traditional supplier audits often require extensive manual effort, consuming valuable time that procurement teams could allocate to more strategic initiatives.

Cost Reduction
- The reduction in manual efforts translates directly into significant cost savings. By automating repetitive tasks, AI minimizes the need for extensive manpower, thereby lowering operational costs associated with supplier audits.

Enhanced Compliance
- AI-powered audits not only expedite the audit process but also enhance accuracy and consistency in identifying potential compliance issues and reducing the risk of oversight and associated penalties.

Scalability and Flexibility
- Whether an organization is dealing with a handful of suppliers or managing a vast network, AI has the capability to seamlessly scale to accommodate varying levels of complexity and flexibility to meet the organization's unique requirements. This can all be made possible while ensuring stringent privacy and data confidentiality standards.

‍Elm AI's audit tool revolutionizes supplier due diligence by leveraging advanced Large Language Models that are trained on ESG data as well as on unique company schemas. By automating and accelerating the audit process, Elm AI's tool provides procurement teams with a robust solution to navigate the complexities of supplier compliance.