Will the Procurement function exist in the future ?

For decades, the procurement function has been a cornerstone of organizational success, excelling in cost optimization, supplier management, and risk mitigation. However, this traditional operating model, often reliant on people intensive processes and fragmented data, is now on the cusp of a groundbreaking transformation. As AI tools mature and take on more sophisticated roles, the traditional procurement operating model will become obsolete. The question is not if procurement will change, but how to embrace this transformation and unlock value.

Will Procurement exist in the future ?

The short answer is that the Procurement function will not exist as we know it today. Instead, it will evolve through distinct phases, redefining roles, structures, and outcomes as elaborated below:

Phase 1: Assist — Augmenting Human Capability

In the Assist phase, AI will act as a co-pilot, enhancing the productivity of procurement teams. With the launch of Gemini 2.0, the "Agentic" capabilities have grown by leaps and bounds. There are many tools available with inbuilt "Source-to-pay AI potential" performing the following functions:

• Spend Analysis and Forecasting: AI-driven tools screen through complex datasets, identifying patterns and enabling precise budgeting and forecasting.
• Smart Contracting: Automated contract drafting tools reduce cycle times, offering templates tailored to business needs.
• Fraud Detection: AI algorithms flag anomalies in transactions, mitigating financial risks.

While AI in this phase primarily supports human decision-making, the impact is significant. By automating mundane tasks, teams can focus on strategic initiatives. This phase emphasizes collaboration between humans and machines, ensuring the human expertise remains central to procurement’s value proposition.

Phase 2: Perform — Shared Responsibility

As organizations mature in their AI adoption, the Perform phase will see AI taking on more complex tasks.

• Category Strategy Development: AI tools analyze market trends and supplier performance, autonomously creating data-driven strategies.
• End-to-End Workflows: From demand forecasting to contract renewals, AI will manage entire procurement cycles, with minimal human intervention.

The structure of procurement teams will evolve. Tactical roles will shrink as automation takes precedence, while new roles will emerge. Procurement professionals will need to pivot toward strategic oversight, ensuring AI outputs align with organizational goals. Key skills will include data literacy, AI governance, and business strategy, underscoring the shift from execution to value creation.

Phase 3: Empower — A Self-Service Paradigm

The Empower phase represents the apex of AI integration. Here, procurement becomes a highly digitalized, self-service function:

• AI-Driven Platforms: Intuitive interfaces will empower business users to manage procurement activities independently, from supplier evaluations to routine purchases.
• Strategic Focus: Procurement professionals will concentrate on value-chain optimization and managing strategic supplier relationships.
• Reimagined Team Structures: Traditional procurement teams will make way for AI governance and data management experts, ensuring the integrity and effectiveness of AI systems.

This phase envisions procurement as a decentralized yet highly strategic function, where AI not only executes but also informs and empowers.

Challenges and Opportunities

While the trajectory is promising, the integration of AI into procurement comes with its challenges:

1. Data Quality: AI’s effectiveness hinges on the availability of clean, structured data. Organizations must prioritize data governance.
2. Change Management: The shift to AI-driven procurement will require significant cultural and organizational change. Leaders must champion this transformation, emphasizing its long-term benefits.
3. Ethical AI: As decision-making becomes increasingly automated, ensuring transparency and fairness in AI algorithms is crucial.

However, these challenges are outweighed by opportunities. AI allows procurement to break free from its transactional past and emerge as a driver of innovation and strategic value.

The Human Element in an AI-Driven Future

Even as AI redefines procurement, the human element remains indispensable. The role of procurement professionals will evolve but not disappear. Strategic thinking, relationship management, and ethical oversight are areas where humans will continue to outperform machines. The future of procurement lies in the synergy between human ingenuity and AI’s capabilities.

Disclaimer:The views, opinions, and perspectives expressed in this article are solely those of the author and do not necessarily reflect the official policy, position, or views of the organization they are affiliated with. All content is shared in a personal capacity and is intended for informational purposes only.