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Procurement teams that do not embrace AI face cost and agility deficit says Gartner

Procurement AI

A new report from Gartner urges CPOs to plan now for the implementation of AI, in a bid to address the significant predicted impact it will have on people, processes and execution.

It warns that those who fail to act will be left behind, finding themselves at a cost and agility deficit compared to their competitors.

In its new Predicts 2024: CPOs Adjust to Technology’s Impact on Procurement report, the global research and consulting firm says AI will dramatically change how procurement’s work is carried out through skill augmentation, with technologies such as generative AI (GenAI) taking over most communication-focused tasks.

It predicts that this will force procurement teams to learn more hard technical skills in order to stay relevant and maintain their edge, as AI will allow people with little experience to carry out tasks on par with a well-skilled procurement practitioner.

By implementing AI technologies, organisations will see sourcing simplify as GenAI takes on the work of collecting requirements, building a sourcing event and identifying suppliers – therefore providing a competitive advantage.

Interest in AI-use cases for procurement increased by 17 times in 2023 compared to 2022, according to the report, which highlights how procurement is constantly evolving and adapting to the increasing demands and requirements of the business.

It predicts a high number of AI pilots in 2024 as organisations explore the different ways in which to drive efficiency and cost savings through the practical adoption of AI.

To get ahead now, Gartner recommends procurement leaders should:

  • Explore which types of work can be commoditised by examining where vendors are focusing research funding and cataloguing, while identifying which types of work are typically given to staff newer in their career
  • Start soft-skill replacement pilots now by prototyping how well current versions of GenAI can replicate typical internal presentations, white papers and training materials
  • Build a roadmap by mapping the technologies already in place for key areas such as collaboration, negotiation and sourcing, and recording how well they support advanced technologies

To find out more, download the full report here.

PASA will be running an exclusive three-part series from Antonia Macrides, chief growth officer at FinTech, ahead of ProcureTECH ‘24 – the largest independent eProcurement conference in the ANZ region.

Starting next week in PASA’s Insider newsletter, Antonia will explore how AI automates and optimises procurement – from improving control and reducing errors to managing expenses, streamlining workflows and handling contracts – leading to both time savings and long-term value. Keep an eye on your inbox every Tuesday!

There will also be several key speaking slots addressing AI uses in procurement at ProcureTECH ’24 on 20-21 March, including a robot that teaches negotiation skills and a sales manager forging an AI proposal in real-time.

Procurement practitioners can get free online tickets here

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