‘A Paradigm Shift’: The Future of Gen-AI in Procurement
It is an exciting time for procurement professionals starting to use the emerging technology, with the promise of time, cost and performance improvements, but the exact impact on Gen-AI is still to be fully realised and understood as further tools and solutions reach the market. Moving past the initial hype surrounding the technology, conversations are starting to deliver tangible and affordable benefits to procurement and supply chain professionals as they look to gain a competitive advantage. “In 2024, AI hype will reach its peak,” says Pascal Bensoussan, Chief Product Officer at Ivalua. “This time the hype will be matched by meaningful, relevant capabilities, and a raft of generative AI procurement tools will come to market, becoming accessible for procurement professionals.”
Muhammad Alam, President and Chief Product Officer, Intelligent Spend and Business Network at SAP, agrees saying that the potential benefits have created a seismic shift in the procure-tech industry and the discussion has evolved from ‘if the technology should be used’, to ‘how quickly it can be implemented’. “Generative AI was like a bolt of lightning that compelled every business and technology leader to sit up and take notice,” he says. “We’re no longer asking if businesses will adopt AI technology, but rather how quickly they can deploy it and realise its benefits.”
The reason any business invests in technology is to deliver results for their customers, bottom line and staff, and that is something Seth Catalli, Chief Revenue Officer at Globality, feels is the most important reason Gen AI will make significant changes to businesses. “Done right, generative AI is a game-changing technology that can transform workplace processes and drive improvements to the bottom line and speed-to-market,” he says. “CFOs need to start applying generative AI to improve productivity and gain a competitive advantage.”
Melanie Nuce-Hilton, SVP at GS1 US, feels the surge in supply chain and procurement technology investment has signalled a ‘paradigm shift’ with AI emerging as the pivotal player. “In a landscape marred by inefficiencies and inconsistency, the transformative potential of AI has come to light,” she adds. “Just as consumers have evolved around technology, supply chains are poised to evolve around increasingly advanced artificial intelligence.”
Importance of quality data
With so much hype about the potential benefits of integrating Gen AI into procurement strategies, one challenge going forward is whether reality will reach the level of expectations.
Walter Sun is the new Global Head of Artificial Intelligence at SAP, and believes Gen AI is tied inextricably to the data it is linked to. “Customers have always required relevant and reliable business results. That means they’ll need to find ways of combining generative AI with their business-specific data,” he says.
However, Sun is concerned that data can be notoriously complex, sitting in different systems and silos, meaning there is a risk of valuable context being lost when it is combined. “Since generative AI is only as valuable as the data it draws from, companies that can best combine their own business data with generative AI to provide the strongest context to the models will have a significant leg up on the competition,” he adds.
Gen AI and compliance
The mood across the industry is that of excitement for the emerging technology’s potential, but with a note of caution that human expertise is still critical to ensure compliance and privacy isn't compromised. “Against sky-high expectations, procurement leaders must accept that Gen AI solutions are like any other tool – they are only as good as the person using them or the data they are fed,” says Pascal Bensoussan from Ivalua.
This call for vigilance is backed by Sarah-Jayne van Greune, Chief Operating Officer at Payen & ILIXIUM. She believes AI offers compliance teams a powerful tool to stay competitive and streamlines costs and processes to allow staff to focus on higher value work, but human expertise is still critical. “The technology should be embraced and leveraged to help teams weather the evolving landscape,” she says. “But compliance professionals must continue to provide strong human oversight to mitigate risks and safeguard ethical principles.”
This leads to her wariness that the technology needs to be used carefully as it becomes more prevalent in workplaces. “As AI systems depend on large quantities of data to work effectively and accurately, it’s imperative this reliance doesn’t create data privacy concerns or lead to protocols not being met,” she adds.
Adonis Celestine, Automation Practice Leader at Applause, echos the need for thoughtful implementation when it comes to privacy concerns. “One notable problem has been the data privacy, compliance and copyright infringement issues that call into question the data sets being used to train the algorithms,” he says. “However, concerns about adopting generative AI may be lesser as AI companies take full accountability for the data used by their LLMs.”
Fine tuning the future of Gen AI
As with any emerging technology that is still in a relative form of infancy, there will always be new ways to improve and optimise performance and outcomes. Rodrigo Liang, CEO at SambaNova Systems is excited about the powerful potential of real-time fine-tuning so they can better cope with new data.
“Generative AI has often been criticised for tapping into old data to drive mission-critical results,” he argues. “However, the collaboration between hyperscalers and AI models will revolutionise the entire data analytics landscape, matching current data with real-time fine tuning, leading to significant speed, accuracy and price improvements.”
This is one of the many potential ways to embrace the technology, and Chief Product Officer at Coupa, Fang Chang feels there are even more opportunities the procurement industry can still explore. “AI and machine learning are already doing great things for procurement, helping save costs and manage risks,” he says. “From pricing intelligence to automating accounts payable processes to identifying fraud, procurement teams already have immense opportunities to drive value. But what’s especially exciting is where the technology is headed,” he adds.
Chang expects with all the investment heading into Gen-AI, it will help procurement keep pace with the changing demands in business. “Future advancements will help procurement teams operate more efficiently and effectively, allowing for more automated processes. These tools are not a replacement for humans, and I encourage practitioners to think strategically about how AI can instead augment human decision-making to accelerate value,” he concludes.
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