Artificial intelligence startup LevaData Inc. thinks it can help enterprises get a better handle on their supply chains, with the goal of reducing costs and eliminating risks that could hurt their bottom lines.

To do so, the company today announced the launch of its Cognitive Sourcing Platform, which combines market intelligence with enterprise data before applying “AI cognitive analytics” to help companies better identify cost savings and risk. The company adds that it has just secured a $5 million Series A round led by Tola Capital to help get the ball rolling.

LevaData said its Cognitive Sourcing Platform has already been put to use by a number of well-known corporations, including networking giant Cisco Systems Inc. and audio equipment manufacturer Bose Corp.

“Our vision is to revolutionize the way procurement leaders manage their sourcing and procurement by being able to sense opportunities and risks faster, make smarter decisions, and act effectively using the latest AI technologies,” said LevaData Chief Executive Rajesh Kalidindi.

By targeting direct-sourcing teams, LevaData is trying to fill a niche that it reckons has been largely ignored by most enterprise resource planning solutions. Kalidindi explained that most ERP solution providers tend to focus more on enterprise spend analytics, indirect spend management and procurement execution, which means sourcing teams struggle to pull information from different systems to find the most cost-effective sources for supplies.

LevaData’s platform works by comparing costs from an enormous database of manufacturing parts it maintains. The company also applies the latest market intelligence to ensure the accuracy of this database.

However, LevaData’s secret sauce is not so much the massive dataset it offers, but the insights its AI technology provides, allowing companies to negotiate better with their suppliers. LevaData’s AI systems generate “negotiation playbooks” for its customers that they can use to negotiate better prices based on the information its algorithms obtain. For example, if LevaData’s algorithms predict that the cost of a certain raw material is likely to decline in the future, customers can leverage that knowledge in their negotiations with suppliers in order to get cheaper prices.

LevaData’s AI algorithms also help customers to identify risks and opportunities based on metrics such as the supplier’s financial health, changes to benchmark costs, and external factors such as foreign exchange rates and raw-material costs.

“Supply chain and procurement professionals are underserved by modern technology solutions; LevaData brings AI and data-first computing to this critical community,” said Aaron Fleishman, a principal at Tola Capital who will be joining LevaData’s board.

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