Procurement Executives Reveal How They Expect Generative AI tools to Transform the Function in Two Key Surveys

There is one development the CPO cannot underestimate anymore — ??the integration of Generative AI tools into procurement.

The wheels have been set in motion with the usual sourcing, procuring and paying processes already being transformed, thanks to large language models that are advancing rapidly.

The generative AI market itself is projected to grow to $1.3 trillion by 2032 from a mere $40 billion in 2022, according to Bloomberg Intelligence.

So, will 2024 be the year Gen AI drives higher procurement efficiency? Let’s check the signals.

Welcome to the first edition of GEP’s Supply Signals newsletter, where we assess what’s shaping procurement and supply chain organizations in North America.?

We’ll start with what CPOs in North America are thinking about generative AI.

In a survey published in the 2024 ProcureCon CPO Report, supply chain, procurement, and risk management leaders from companies across the U.S. and Canada said their top focus areas in 2024 are mitigating the effects of inflation (41%), technology implementation or transformation (39%), and delivering bottom-line savings (36%). All these go hand in hand with smartly but rapidly leveraging Gen AI in their procurement processes.

According to the report, CPOs and other procurement leaders need new technologies to improve efficiency and more easily identify savings opportunities. In fact, 49% of the respondents say their CPOs have led initiatives to acquire, implement, or adopt new technologies over the past 12 months.

Meanwhile, in another important survey, the annual CPO Compass 2024 report by Procurement Leaders, 46% of the senior procurement executives said they believed Gen AI technology would transform the function “to a great extent.” Also, 48% of those surveyed agreed that Gen AI would “somewhat” transform their function.?A quarter of the participants were from the Americas.

When the participants were asked to identify parts of the procurement process ripe for transformation and areas where generative AI is already used, the top three results were:

1.?? Market intelligence and research

2.?? Administrative tasks and maintaining data

3.?? Procure-to-pay processes

In the GEP Outlook 2024 report too, one of the seven leadership themes for procurement and supply chain leaders is AI – and separating the hype from reality.

Despite the risk of being crushed by its own hype, AI and other digital technologies will become actionable and compelling in 2024, says the report.

The use cases are starting to take hold and significant benefits look achievable in the next year and nearly certain in the long term. Getting it right, however, will take more work than is commonly realized. The change management effort required may rival the scale and complexity of crisis-response COVID-19 initiatives.

So, how is Generative AI?different from the usual AI being used for procurement transformation?

A new report by the Everest Group and GEP lists many use cases of generative AI technology across the source-to-pay value chain.

·????? Customized document creation across requisitions, POs, invoices, RFXs and contracts

·????? A comprehensive virtual assistant for answering queries and enabling guided buying

·????? Identification of the scope for process optimization

·????? Automation of supplier relationship management

·????? A strategic assistant to the leadership team

·????? Identification of cost-saving opportunities

The bottom line is that organizations will need to prioritize use cases and ensure change management to mitigate risks and fully leverage Gen AI for maximum value creation.

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