Supply Chain

Case Study: Intelligent Procurement Optimization AI Agent

Developing an AI Agent that analyzes automated ordering systems, applies supplier policies, and recommends optimized procurement strategies — saving costs and improving efficiency.

#SupplyChain #CostOptimization #ERPIntegration

PROJECT OVERVIEW

A distribution company with an automated ERP ordering system needed to optimize procurement decisions. While the system automatically generated orders based on inventory levels, it didn't account for supplier commercial policies, volume discounts, and promotional offers — resulting in missed savings opportunities.

Key Facts

Industry: Distribution & Wholesale
Implementation Duration: 5 weeks
Goal: Optimize procurement costs through intelligent policy application
Technology: Custom AI Agent with ERP integration

THE CHALLENGE

The automated ordering system operated efficiently but lacked intelligence. It generated orders based solely on inventory levels and reorder points, without considering:

Critical gaps identified:

  • Volume discount thresholds (e.g., -3% for 12+ boxes, -5% for 24+).
  • Promotional offers (1+1, free shipping, pallet discounts).
  • Supplier-specific policies stored in PDF documents.
  • Layer/pallet optimization opportunities.

The company needed a solution that would analyze each automated order, apply relevant commercial policies, and suggest optimized alternatives — without disrupting the existing ERP workflow.

THE SOLUTION

We proposed an intelligent AI Assistant that would act as a "smart colleague" — analyzing automated orders in real-time, comparing them against supplier policies, and proposing more cost-effective alternatives through an interactive chatbot interface.

Proposed Implementation Plan

1

Environment Setup & Agent Definition (Week 1)

Establish the AI workspace, define business rules for discount thresholds, 1+1 offers, pallet optimization, and supplier priorities. Create the foundational logic that would guide the Agent's decision-making process.

2

Commercial Policy Processing (Week 1, parallel)

Test PDF parsing with 2-3 supplier policies. Develop standardized "clean PDF" templates to ensure accurate rule extraction. Convert policy documents into structured rules the Agent can apply.

3

ERP Integration (Weeks 2-3)

Collaborate with vendor to establish read-only API or database access. Connect Agent to auto-orders table and supplier policy PDFs. Test real-time data flow and connectivity.

4

Chatbot Interface & Reporting (Weeks 3-4, parallel)

Build web-based chatbot widget that would display Agent recommendations with full justification. Implement accept/reject feedback mechanism. Create reporting dashboard for tracking savings and performance.

5

Testing & Final Delivery (Week 5)

Conduct testing with actual auto-orders. Refine integration and business rules based on results. Deliver fully operational system with comprehensive documentation and training.

HOW IT WORKS

The Agent's Process:

Read

Monitors automated ordering system for new orders. Reads product codes, quantities, unit prices, and supplier data.

Analyze

Applies relevant supplier commercial policies. Calculates volume discounts, promotional offers, and pallet optimizations.

Recommend

Presents optimized alternative via chatbot. Shows cost savings and justification. User decides to accept or reject.

Example Scenario:

Automated Order: 10 boxes of Product X

Agent Recommendation: Order 13 boxes instead

Justification: Supplier offers -3% discount for 12+ boxes. By ordering 13, you save €45 and qualify for free shipping.

Result: €45 saved + free shipping

TECHNICAL INFRASTRUCTURE

ERP System (Auto Orders) → AI Agent → Policy Analysis → Chatbot Interface → User Decision

Key Components:

Integration Layer

Read-only ERP API/Database Access
PDF Policy Parser
Real-time Data Sync

User Interface

Web-based Chatbot Widget
Reporting Dashboard
Automated Notifications

Security & Permissions:

  • Read-only access — Agent cannot modify ERP data
  • Encrypted connections and secure authentication
  • All decisions require human approval

EXPECTED IMPACT

15-25%

Cost Reduction

Through optimized volume purchases and policy application

100%

Policy Coverage

Every order analyzed against all applicable supplier policies

Real-time

Decision Support

Instant recommendations as orders are generated

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