AI & Procurement: Three Trends for the Future

I recently came across an insightful article titled 'Predicts 2024: CPOs Adjust to Technology’s Impact on Procurement,' which was recently published by Gartner.

The article, concise yet extremely detailed and informative, delves into several points regarding the evolving landscape of AI and automation and its clear influence on procurement (you can find the link to the extended article below).

While reading through the document, I've thought about three significant trends emerging in procurement, gaining momentum, and defining the imminent future.

Let's see what they are!

1. Skill Augmentation Through AI

One of the prominent shifts is the transformative impact of AI on traditional procurement tasks.

Generative AI, in particular, is already revolutionizing communication-focused activities by automating responses, enhancing natural language understanding, and personalizing engagements for more efficient and effective interactions. This shift is freeing up procurement teams to redirect their precious focus toward more strategic, value-added activities such as - for example - better cost optimization, improved risk management, and a heightened emphasis on sustainability initiatives.

Gartner's research also suggests that, by 2026, AI will enable individuals with limited proficiency to perform on par with seasoned procurement practitioners, highlighting the growing importance of skill augmentation.

2. The Rise of Virtual Assistants and Chatbots

Organizations are recognizing the transformative potential of virtual assistants and chatbots in enhancing employee productivity and customer satisfaction.

We will experience a significant surge in the adoption of virtual assistants and chatbots, with a projected 20% of organizations utilizing these technologies to handle internal and vendor interactions by 2026. This shift is also certainly pushed by the Generative AI revolution we are all experiencing.

It is also important to remark that this trend not only streamlines transactional workflows such as invoice processing and status checks but also redefines how organizations train and support end users. As chat-based user interfaces become a fundamental component, the implementation timelines for training and support are expected to shrink, marking a pivotal shift in the procurement landscape. In light of this, businesses will embrace a more agile and responsive approach to technology adoption, ensuring that the integration of virtual assistants and chatbots becomes not just a tool for efficiency but a cornerstone of organizational flexibility and innovation.

In short, procurement platforms are expected to undergo a transformative shift towards a more conversational and intuitive experience. This evolution envisions a user interface that requires fewer clicks, prioritizing seamless interactions. Users can anticipate a shift away from traditional, transactional interfaces, embracing a more dynamic and user-friendly platform that simplifies the procurement process through natural language interactions.

3. AI's Influence on Decision-Making and Negotiations

Looking ahead to 2029, the research forecasts that 80% of human decisions will not be replaced but augmented by Generative AI. This recognition highlights the coexistence and combination of human creativity and knowledge with AI capabilities.

Just to mention a specific example, AI-enabled tools in contract analysis and redlining are set to revolutionize contract negotiations. However, human oversight remains crucial, as final decisions still rest with individuals who would ensure and monitor these AI capabilities. In this specific case, by 2027, half of the organizations surveyed are expected to leverage these AI tools, marking a crucial turning point in how procurement teams navigate and enhance the negotiation process.

As AI increasingly influences procurement, we will witness a broader transformation: advanced analytics and machine learning algorithms are streamlining data analysis, offering unparalleled insights into supplier behavior, market trends, and potential risks. These advancements will empower procurement professionals to make informed decisions, optimize supplier relationships, confidently negotiate, and proactively mitigate risks.

In conclusion, as the procurement technology landscape undergoes rapid transformation, these three disruptive patterns stand out as pivotal in shaping the future of the industry.

Organizations that proactively embrace these changes, fostering a culture of continual learning and adaptation, will likely find themselves at the forefront of procurement excellence in the years to come. Conversely, procurement organizations that do not embrace AI technologies will find themselves at a cost and agility deficit compared to their competitors.

Last but not least, let's not forget the human touch: the interplay between human expertise and AI capabilities is creating a dynamic and promising era for procurement professionals.

https://www.gartner.com/doc/reprints?id=1-2G7O54NZ&ct=240112&st=sb