THE PROCUREMENT EVOLUTION

historically, procurement can be traced back to ancient times. the role then known as "Material Man" dates as far back as the construction of the Pyramids in Egypt. over time, this profession has evolved significantly.

In the 20th century, procurement became a formalized function within commercial operations, and by 1916, it was recognized as part of the commercial function. The 1980s marked a significant shift when Peter Kraljic introduced the idea that not all procurement is the same. He categorized procurement based on risk and spend, giving rise to strategic procurement. This period also saw the development of E-procurement, which began to integrate electronic processes into procurement activities.

However, traditional ERP systems, while covering some procurement activities like requisitions, purchase orders, and payments, still lacked end-to-end connectivity and integration. In the last few decades, procurement has continued to evolve, moving from these traditional methods to what we now call digital procurement, or Procurement 4.0

This involves the use of a wide range of digital technologies, including 3D printing, augmented reality, big data, and most notably, artificial intelligence (AI). AI has become increasingly prominent in procurement, particularly in the last few years. It helps us enhance efficiency and gain deeper insights into procurement processes.

The introduction of generative AI, such as ChatGPT, in 2023, has further accelerated this evolution, making AI more visible and accessible.AI , at its core, involves developing algorithms that can process large amounts of data, recognize patterns, and make decisions. These algorithms learn, reason, and make decisions based on the data they process. For instance, in procurement, AI can help sort through millions of supplier records, analyze bids, and recommend the best option based on predefined criteria.Machine learning, a subset of AI, is particularly powerful in procurement. It can recognize patterns from past behaviors and leverage this knowledge to make predictions and decisions.

AI is a game changer for procurement. While it started as a concept in the 1950s, it has only recently become a mainstream tool in procurement, particularly with the advent of generative AI. Today, AI plays a crucial role in both operational and strategic procurement, helping organizations automate processes, make better decisions, and ultimately drive more value from their procurement activities.