Genpact: Getting Procurement Teams Ready for Gen AI
As procurement constantly evolves and new technologies takes its function to new levels, AI and Generative AI (gen AI) is the tool most leaders are looking to harness to improve their process.
Steve Simko, Global Procurement Service Line Leader at Genpact, spoke with Procurement Magazine to talk about how gen AI is poised to revolutionise sourcing and procurement and how training staff is vital to finding success with this new tool.
Steve leads the Sourcing and Procurement Practice for Genpact, where he delivers digitally enabled procurement managed services, including category management, sourcing and transactional procurement, along with advisory and technical services, to transform his clients’ procurement functions.
He's been with Genpact for seven years, having first started working with the company in a partner capacity in 2007. Before Genpact, he held procurement leadership roles in various industries, including a procurement technology start-up. With more than 30 years in the field, he is particularly excited about the potential of generative AI to disrupt the sourcing function.
Can you tell us a bit more about Genpact?
We’re a firm that leverages technology, process transformation, and analytics to enhance functions like procurement, supply chain, finance, risk and customer experience.
With 125,000 employees in 30 countries, we are dedicated to the relentless pursuit of a world that works better for people, transforming leading Fortune 500 enterprises globally. Our laser focus on delivering measurable results through data, technology and AI resonates with our clients.
According to Gartner, only 14% of procurement leaders express confidence in their talent’s ability to meet future needs. What do you believe are the main reasons behind this lack of confidence?
This may speak more to the lack of strong procurement expertise in the market than to a lack of specific future-proof skills.
Strategic procurement is a complex activity, requiring individuals who can manage their internal stakeholders, understand the dynamics in supply markets, and negotiate and partner effectively with their suppliers. This requires a breadth of skills that, frankly, have been undervalued in the past.
Most CPOs want their function to be more strategic and have a bigger impact on the business, so this may be behind such a low percentage reporting confidence in their talent’s abilities to meet future needs.
Of course, there is also the digital transformation that procurement is undergoing as well. Procurement teams need to understand the analytics behind the data they use for sourcing and how to leverage digital capabilities most effectively.
We know the procurement function in the future will move from “control” to “enablement,” with technology at the core. This will require rethinking the procurement function and the required capabilities.
How is gen AI impacting procurement operations, and what are the biggest challenges and opportunities it presents?
In my 30 years in procurement, gen AI is the technology with the biggest potential to impact how sourcing and category management are performed.
The sourcing process involves research, creating documents such as RFPs and contracts, and analysing proposals; tasks that gen AI can perform well. In the future, sourcing will look very different when all these tools become available.
However, the path won’t be as smooth as platforms like ChatGPT have led us to believe. The main barrier now is information security, which will eventually be overcome, much like the initial reluctance to move applications and data to the cloud.
More significant challenges are the availability of underlying data and the ability to trust the outcomes. gen AI can work with standard text documents instead of relying solely on structured data, but many source documents are not currently being collected.
For example, to incorporate insights from previous sourcing projects or category plans, these documents need to be captured for use by gen AI applications.
The quality of the AI-generated output is also a concern. Currently, few procurement applications use gen AI on a standalone basis due to the risk of “hallucinations” or inaccuracies. At Genpact, we use gen AI to supplement our trained teams, so we don’t require 100% accuracy from the AI’s results.
What strategies are most effective for upskilling employees in gen AI technical skills?
Upskilling in gen AI for procurement professionals involves more than just learning about the technology. Here are key strategies:
- Task Integration: Employees should learn which tasks can be supplemented using gen AI and how to write effective prompts to integrate these tools into their daily work.
- Technical Understanding: A basic understanding of the underlying technology helps employees grasp its strengths and weaknesses.
- Risk Awareness: It is crucial to understand the limits and risks of gen AI, both for internal use and when working with suppliers using the technology.
At Genpact, we’ve invested significantly in upskilling our employees. We’ve embedded gen AI content into our Genome platform, an industry-leading approach for reskilling and upskilling our employees.
It includes online study, coaching sessions with subject experts, and hands-on projects to solidify the learnings. We’ve also deployed a gen AI playground, providing employees a platform for experimentation and learning from others’ developments.
How can companies build an AI-ready procurement team? What are the first steps they should take?
To build an AI-ready procurement team, companies should do the following:
- Identify a gen AI Guru: Designate a team member who is both tech-savvy and knowledgeable about procurement and can stay updated on the rapidly evolving AI landscape and guide the team.
- Training and Upskilling: Provide ongoing training to ensure the team understands AI tools, their applications, and associated risks. Use resources like online courses, workshops, and hands-on projects.
- Supplier Engagement: Recognize that suppliers, especially in indirect categories, will increasingly use AI. Procurement should drive responsible AI use at suppliers through mechanisms like an “AI Code of Conduct.”
What role does leadership play in fostering an environment that embraces AI and continuous learning in procurement?
As with any technological shift, it is important for leadership to have a declared approach to adopting AI. This provides clarity for their teams.
AI technologies will evolve at varying speeds; some areas will advance quickly, while others will take more time. Establishing your company’s pace of adoption is important. I’ve seen some procurement departments specify projects in anticipation of available development capacity from their corporate IT teams.
In addition, leading by example is also essential. AI technology is highly accessible and can be experimented with quite inexpensively.
How do you see the landscape of procurement talent evolving in the next 3-5 years, especially with the influence of gen AI?
Gen AI will impact the procurement function by democratising much of the work and placing it in the hands of business users, especially for indirect spend. As a result, the procurement function will require fewer tactical and transactional team members.
It will also improve the ability to access information and run robust sourcing events easily. This will allow generalists to be more flexible and effective. Category experts will be required, but only in areas of strategic importance.
What will not change is the need for people who can build relationships with their business stakeholders. This skill has always been in demand, and it is something that AI cannot easily replace.
How does Genpact plan to stay at the forefront of these changes and continue supporting procurement leaders in navigating these challenges?
Genpact adopts an AI-first approach in everything we do. By combining our deep domain expertise with technical proficiency, we focus on AI applications that deliver targeted outcomes. We've made significant investments in upskilling our workforce through our Genome program.
We have developed AI applications to support our sourcing process, learning rapidly as we address more use cases. Additionally, we work closely with technology partners to understand their roadmaps and build accelerators where valuable.
Many procurement executives are trying to grasp the AI landscape, its urgency, and their paths forward. We see varying levels of understanding about AI across companies, and we partner with our clients to guide them through this journey.
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