In recent years, global disruptions such as the Covid-19 pandemic, climate change-induced natural disasters, and escalating geopolitical tensions have amplified market volatility, challenging businesses to adapt rapidly. Consequently, procurement organisations have been compelled to react. They have had to reassess their strategies, enhance agility, and explore transformative technologies. For example, many have turned to generative AI to drive efficiencies, accelerate decision-making, and strengthen stakeholder engagement.
Generative AI is assuming an increasingly pivotal role in procurement. Therefore, it is imperative for leaders to grasp both its potential and limitations. By adopting a strategic, human-centric approach to implementation, organisations can unlock the full value of this technology while maintaining resilience and a competitive edge.
The generative AI opportunity
Today’s procurement teams handle an overwhelming volume of data, often disparate in format and quality. This complexity can hinder the ability to extract actionable insights and make informed decisions at scale. Managing supplier risk, for instance, has grown increasingly intricate. The process requires vigilance over a myriad of factors, including ESG metrics, geopolitical dynamics, cybersecurity threats, and economic fluctuations. Without advanced technology, it is nearly impossible to track and analyse these risks comprehensively.
Generative AI presents transformative opportunities in this space. It enables procurement teams to process vast datasets, identify early warning signals, and contextualise their impact on the business. Armed with these insights, teams can act swiftly and strategically to mitigate risks. Furthermore, gen AI tools free up procurement professionals from time-intensive tasks, allowing them to focus on strategic priorities. Notably, according to WNS Procurement’s 2024 European CPO Report, 100% of procurement leader respondents have an AI implementation strategy. Specifically, 49% have already implemented gen AI solutions in select processes.
Fuelling gen AI with the right data
While gen AI offers substantial benefits, CPOs must understand that its effectiveness hinges on high-quality, well-prepared data. Many organisations have encountered challenges due to insufficient data standardisation, delaying implementation and diminishing returns. To maximise gen AI’s potential, procurement leaders must first invest in standardising data and creating a unified, reliable dataset.
Manual standardisation at this scale can be an immensely time-consuming and resource-intensive process. Fortunately, AI itself can support this effort. Gen AI and complementary technologies can automate data standardisation tasks, expediting the process and ensuring consistency.
Moreover, enriching datasets with third-party insights allows organisations to contextualise their internal data within the broader supplier, competitor, and market landscapes. This holistic approach is essential for navigating the ever-evolving factors influencing procurement decision-making.
Combining AI and HI
To unlock gen AI’s full potential, it must function as a complement to human intelligence (HI). While AI excels in processing and analysing data, procurement decisions often carry significant risks that require human oversight. CPOs should adopt a ‘co-pilot’ model, leveraging AI to handle processing-intensive tasks while relying on human expertise to validate insights and execute decisions.
For example, Gen AI can accelerate routine tasks like contract generation or spend analysis, enabling procurement teams to focus on strategic, high-stakes activities such as supplier negotiations. By combining AI and HI, procurement leaders can amplify the value and impact of both, while minimising risks. While gen AI enables hyper-accelerated procurement processes and insight generation, HI provides the crucial context and guardrails needed to make sure decision-making is based on the soundest evidence possible.
How to take a human-centric approach
When considering their pathway to implementation, CPOs should begin by identifying pain points and manual tasks that could be streamlined through AI. Simultaneously, they should evaluate which decisions demand heightened human oversight. Understanding these dynamics helps prioritise gen AI implementation where it will deliver the most value.
Organisational readiness is another critical factor. CPOs should assess their teams’ familiarity with gen AI, identify areas requiring upskilling, and start implementation in receptive areas before scaling. Organisations that yield the best value from gen AI tend to take a more iterative approach to implementing it – identifying and mitigating issues as they go, rather than rushing to adopt too much too soon.
By having a clear picture of their current realities – as well as future needs – leaders can better determine how gen AI may support teams, what training would be required, as well as the potential success rate it may have in different parts of the business. Just like any other transformation, the impact of gen AI adoption on procurement’s people, processes and other technology must be carefully considered.
Unlocking gen AI’s potential
When powered by robust data and integrated with human intelligence, gen AI can transform procurement operations, driving unprecedented productivity and strategic value. As the procurement landscape grows increasingly complex, CPOs must shift the conversation from whether to implement Gen AI to how best to do so. By leveraging this technology effectively, leaders can position their teams to meet rising demands, navigate complexities, and deliver lasting business impact.