Sourcing and procurement and its future with Gen AI

Making waves in sourcing and procurement, Generative AI is helping organisations to boost efficiencies, unlock value, generate new digital capabilities, and revolutionise the source-to-pay (S2P) processes. 

What is Generative AI?

A type of artificial intelligence (AI) technology, Generative AI (Gen AI) can produce various types of content including text, images, audio, video and synthetic data. The recent hype has been driven by the simplicities of its capabilities coupled with its quality output at speed. 

Emerging innovations such as ChatGPT have made the technology much more accessible and adaptable in different applications including procurement. Deloitte highlights Walmart’s recent pilot of an AI-based tool known as ‘Pactum’ for autonomous negotiations with suppliers. 

“While Walmart finds it helpful for landing a good bargain, three out of four suppliers prefer negotiating with AI over a human. This strongly indicates that the ecosystem is ready to embrace this disruption,” explained a Deloitte spokesperson. 

Sourcing and procurement

While sourcing and procurement have been known to be at the forefront of technological disruption, the function continues to grapple with the challenges of efficiency optimisation, risk management, and cost management. 

According to Deloitte’s 2023 Global Chief Procurement Officer (CPO) Survey, procurement leaders have been driving their focus towards improving operational efficiency by utilising hybrid operation models, automation, and centralised processes to gain more control, increase visibility, enforce policy, and reduce process errors.

CPOs are also adopting an agile strategy when it comes to talent development to avoid a one-size-fits-all approach and develop personalised skill development programs.

Deloitte’s survey also indicated that 70% of CPOs are seeing a rise in disruption over the last 12 months, as such risk evaluation tools are needed to monitor external risk factors and perform advanced analytics for predictive and preventative measures. 

However, at the top of the list, CPOs are reporting high inflation pressures as the number one risk putting additional pressures on procurement organisations. 

Generative AI’s value in sourcing and procurement

“To address the above challenges, CPOs have continually invested in enhancing digital capabilities. Digital transformation remains the no. 3 priority over the next 12 months, with 80% of CPOs reporting it as their organization’s top priority,” explained a Deloitte spokesperson. 

In particular, Gen AI holds great potential for the S2P function, particularly in proactive risk management, process automation, and decision-making. “In an increasingly uncertain world, instant access to accurate information is vital for mitigating and managing risk and empowering organisations,” said a Deloitte spokesperson. 

As such Gen AI can help to automate the ‘create’ processes in S2P such as documentation and transactions. It can also help when it comes to compliance, strategy development, textual data analysis, and predictive modelling.

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For more insights into the world of procurement read the latest edition of Procurement Magazine and be sure to follow us on LinkedIn & Twitter.

Other magazines that may be of interest: Supply Chain Digital, Manufacturing Digital

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