How AI Will Transform Procurement

Procurement is entering a new era of increasing complexities in which traditional measures of success such as cost savings are no longer the sole focus.

Instead, and as reported in the Deloitte 2021 CPO Survey, “changing business dynamics and increasing layers of complexity” and corresponding “expectations” are transforming the way the industry thinks and acts.

For example, new and more challenging areas such as “climate change, geopolitical stability,” and “increasing societal expectations” are now part of the new equation.

The introduction of these emerging variables is causing organizations to re-examine their digital transformation strategies, including how Artificial Intelligence (AI) can help them address the industry’s challenges.

The SIG Survey

In 2021 SIG surveyed 100 procurement professionals from Fortune 500 and Global 1000 organizations on digital transformation and AI in procurement.

Based on the results, it is clear that those responding to the survey believe that “procurement’s priorities lie with how AI technology can streamline the roles and processes to deliver meaningful and sustainable results.”

Unfortunately, and despite the opportunity for more significant gains, the survey reports that “several obstacles” make it difficult for organizations to “bridge the divide” between the promise of digital AI and the realization of its optimal benefits.

Crossing the Divide

Understanding the importance of AI and identifying the challenges with realizing its potential to redefine and empower procurement to achieve critical objectives is the first step to crossing the aforementioned divide.

However, crossing the divide between potential and promise requires more than acknowledgment and awareness. It requires a deeper understanding of how procurement professionals think and act – and how they can build for the way the world should work versus improving the way it does work.

In this context, the survey identified the following three areas of primary interest for survey participants:

  • The importance of current experience with digital AI technology
  • The extreme challenges with data management and the need for a sound data modernization strategy
  • Improving the procurement management process

With these points in mind, the new GEP/SIG paper “Transform Or Be Transformed” provides compelling and unprecedented insight into how procurement organizations can leverage emerging AI technology to achieve strategic objectives across the entire value chain.

Reimaging Procurement

The results of the SIG survey and corresponding paper confirm that “organizations must reimagine how their procurement function operates and assess the new capabilities it will need to respond better to rapidly changing market dynamics.”

The paper then talks about the need for a “unified approach” and how “leveraging AI must eliminate the loss of value between each step or phase of the end-to-end procurement process by providing a single data-centric system.”

Ultimately, the paper delivers unprecedented insights into how digital transformation leveraging AI is the key to procurement’s future influence and impact in a rapidly changing complex global market through these and other findings.