The Three Gen AI Advancements to Impact Procurement
Agentic reasoning, multimodality and AI agents are the advancements set to redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs), according to Gartner.
Ryan Polk, Senior Director Analyst in Gartner's Supply Chain practice, says: "Agentic reasoning, multimodality and AI agents are coming to procurement. These advancements will usher procurement into an era where the distance between ideas, insights and actions will shorten rapidly.
"Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
According to a Gartner survey conducted in July 2024 with 258 global respondents, 72% of procurement leaders are prioritising the integration of GenAI into their strategies.
This highlights the recognition of its potential to drive significant improvements in efficiency and effectiveness, as well as multiple viable use cases, including by enhancing the contract management process.
The Trio of Advancements
The three advancements in GenAI that will impact procurement include:
Agentic Reasoning
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyse complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyse diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI Agents
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As AI agents become more integrated into procurement technology, they will shift the role of procurement professionals towards strategic decision-making, stakeholder relationship management and innovation.
How CPOs can maximise the value of GenAI
Gartner's research provided three recommendations as starting points for CPOs to maximise the value of GenAI in procurement:
- Double down on data governance: AI models require extensive training data, including data on procurement processes beyond basic performance metrics, to be effective. Ensure that real-world procurement data from internal and external sources is collected, scrutinised and maintained in a structured format to ensure data quality. Standardise and document decision-making models for procurement value streams and invest in process mining to uncover and utilise procurement "dark data" for more comprehensive AI training.
- Develop and incorporate privacy standards into contracts: Work with legal and compliance leaders to understand the AI data privacy risks and draft organisational protections. Develop and cascade policies governing AI data rights to key suppliers. Incorporate data privacy standards as key criteria in supplier evaluations.
- Increase procurement thresholds: In the future, machine buyers will become common, absorbing a significant portion of traditional sourcing and procurement activities. Procurement teams will become smaller and be deployed to manage only the most strategic sourcing activities, manage exceptions and edge cases or advise business stakeholders (or AI bots) on how to do their own buying.
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