AI: Five myths about AI in procurement

With every passing week there is a constant growth in AI advances in the field of procurement technology, but how easy is it to sort fact from fiction?

A recent report by GEP and the World Economic Forum was published to help clarify the responsible use of AI in procurement.  GEP took a leading role in the project to develop a practical and comprehensive guide on how to apply artificial intelligence responsibly in the sector.  The guide details how it can be applied to help optimise cost, resilience, efficiency and sustainability. 

“In the gold rush to apply AI to improve how companies source suppliers and manage global supply chains, there is a very real risk that organisations will dehumanise decisions and unintentionally ignore waste, CO 2 emissions, and inequality, with devastating consequences to business, communities and the environment,” explained Subhash Makhija, chief executive officer and co-founder, GEP.

AI and automation find procurement savings 

Large businesses and organisations all over the world are also regularly championing the successes they have found using both AI and automated processes in the procurement operation.  

The NHS in the UK announced in 2023 they had found millions of pounds of savings across affiliated organisations by adopting a digital buying system. 

The UK Government has announced the success of the project, after funding the use of Atmis in 69% of NHS organisations in the country.  Many NHS linked organisations previously used different platforms to buy goods and services without proper coordination. These weren’t possible to integrate, meaning it has historically been difficult for buying teams in the Department of Health and Social Care and NHS to share insights and data between organisations to make effective commercial decisions and find cost savings.

The Atamis system, which brings together each element of the commercial process in one location, has removed burdensome manual processes and saved millions of pounds in administration costs. This has also freed up capacity in NHS teams while helping health services run more efficiently.

"We are thrilled to witness the remarkable results achieved by the NHS. Through the implementation of Atamis, both procurement potential and substantial value optimisation has been achieved. We are excited to continue driving success together in today’s competitive market and to see what the future holds for this successful partnership,"  said Phil Musgrave, Atamis CEO.

Five myths about AI in procurement 

In a guide called ‘What is Artificial Intelligence in Procurement’ by spend management software company Simfoni they have broken down five key myths about AI in procurement. 

One: AI will reduce Human Resource requirements

The Simfoni guide immediately identifies concern over whether AI will replace human input and put jobs at risk.  However, they suggest although AI may impact more low-skilled roles, as it can automate menial, repetitive or mundane tasks, it can streamline processes by stripping out unnecessary human input that doesn’t need cognitive or emotive reasoning.  

Two: AI involves a big learning curve

As AI procurement solutions become increasingly prevalent - they become less of a challenge for teams to adapt to.  The guide suggests once the initial set up is over, the learning curve will diminish as technologies change and update.

Three: AI is very time-consuming and expensive to manage

The guide again emphasises how AI is not time consuming as after the initial set-up is the ability to cut down on time consuming time.  The same is also true after the initial expense of setting up a solution, as after that costs reduce significantly.

Four: AI is still developing, so it's better to wait rather than jump onto the bandwagon

Progress in AI has been rapid with it being implemented into many areas of the procurement workflow.  Simfoni advises that since many procurement businesses are embracing the change, they are gaining market share to later adopters.  

Five: AI is hard to implement​​​​​​​

Simfoni argues this is incorrect, as AI solutions are designed to seamlessly integrate into existing software and platforms.  The appeal is there is rarely a need to start completely from scratch and build new infrastructure.  


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