GEP Shares Its Insights on The Future of AI and Procurement
AI - a transformative piece of technology that is enhancing efficiency, accuracy and decision-making through advanced automation across many industries.
Not only does AI allow for procurement organisations to optimise supplier selection and predict market trends, but it also fosters innovation by exploring opportunities for sustainable practices, like adopting circular economy models.
However, many of us are still sceptical about the potential of AI, but Wayne Clark, Vice President of Consulting at GEP, is certain of the profound impact it will have on the procurement industry.
“AI is not hype," he explains.
"It’s already a US$200bn industry and projected to grow to US$1.2tn by 2030. From voice assistants to fraud detection, AI is everywhere and it’s evolving at an astonishing pace,”
“[...] As AI-driven innovations mature and more disruptive use cases emerge, procurement as we know it today will be upended, replaced by something more powerful, efficient and integrated with AI systems.”
How will AI continue to impact procurement?
AI will reduce operational inefficiencies by automating an abundance of routine tasks, such as contract management, invoice processing and supplier selection.
In our increasingly digital world, AI will allow procurement teams to make data-driven decisions, anticipate market changes and uncover cost-saving opportunities by analysing large datasets in real-time.
If stakeholders begin to foster collaboration through AI automation and insights, procurement will transform into a strategic tool.
In light of this, Wayne uncovers how the procurement operating model will evolve alongside the trajectory of AI.
“AI will create more empowered procurement teams equipped with advanced tools, fundamentally reshaping the system of roles, workflows and controls,” he states.
“This new model will greatly exceed today’s standards in quality, speed, value and cost efficiency.
“It will be a major boon to leadership teams and also require new roles, including ones that don’t even exist yet, to design, train, validate and control AI systems.”
- AI-driven contract management tools to catalyse drug development and streamline vendor integration
- Access and identify alternative suppliers
- Centralise procurement activities
- Analyse consumer behaviour
- Demand forecasting
What are the three phases of procurement transformation?
As the procurement industry continues to experience disruption from digital transformation, greater demands for agility and regulatory challenges, organisations must embrace AI to maintain their competitive advantage and remain aligned with future business needs.
By doing so, organisations can not only identify risks effectively but they can also center their focus on strategic initiatives as AI automates many repetitive tasks.
Wayne states how procurement will undergo transformation through three stages, which were as followed:
The Assist Phase
The Assist Phase outlines the stage where we utilise AI to enhance productivity in procurement teams but data privacy worries remain - where we are in now.
Wayne explores how we are following the trajectory of this phase today, highlighting how AI fluency is still low among procurement teams.
“Chatbots assist with supplier queries, while AI tools help score RFP responses, analyse bids and suggest award scenarios,” he explains,
“However, human judgment remains critical. In phase 1, the tools aren’t useful enough to meaningfully replace humans.”
The Perform Phase
In this phase, digital centres of excellence that focus on AI-driven workflows with grow and AI will obtain more abilities in the procurement industry, including:
- Handle more end-to-end processes
- Automate category strategy development
- Automate contract renewals
- Automate invoice reconciliations
- Mine data for deeper value
- Improve risk mitigation
The Empower Phase
During this stage, procurement teams will focus their efforts on complex and strategic activities - leaving sourcing, contracts and suppliers to business users with powerful AI tools.
“AI will empower end users to handle common procurement tasks with minimal human intervention,” Wayne points out.
“Procurement’s outcomes will shift toward value-chain optimization, proactive risk management and strategic supplier engagement.”
Covering the full trajectory of AI and its ability to redefine procurement teams, Wayne concludes by outlining his predictions for the future of this powerful piece of technology.
“AI will render the procurement function as we know it obsolete. What will emerge is a smarter, more agile operation with data and digital tools at its core,” he highlights.
“This new model will allow procurement teams to focus on high value activities while empowering business users to manage simpler tasks themselves.”
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