CPOs Pivot AI Focus from What’s Possible to Implementation

Procurement departments continue to invest in technology as chief procurement officers have shifted their focus on what is possible to focus on how to do it. That is one of the conclusions of an annual procurement study from Keelvar, which provides strategic sourcing solutions and software.

“2023 marked the beginning of the automation and AI revolution,” Alan Holland, founder and CEO of Keelvar, said. “Last year was a year of exploration—procurement leaders were evaluating, learning, and looking to see who took the first step and the pitfalls to avoid. The predominant question asked by CPOs then was, ‘Tell me what's possible.' Now the question being asked is, ‘Tell me how best to do it.'”

The annual Voices of Sourcing survey found that 59% of procurement and sourcing teams plan to adopt advanced technology, including artificial intelligence and automation technology, with 42% saying those are their top tech items.

The ramping up of technology is in part to offset growing workloads and a flat or declining workforce. Sixty-three percent said workloads are increasing while 38% cited the workforce as an issue. Almost three-quarters (72%) expect unpredictability, inflation and disruption to continue to be major issues in 2024. That number is up from 59% in 2023's survey.

“2024 will be the year when true leaders and innovators get started with AI and automation and begin to separate from the pack,” Holland said.

Automating the sourcing of non-strategic spend was cited by 42% of procurement leaders as their top digital transformation initiative. It is believed an additional 10% to 15% in cost savings is possible there. This is in line with the survey's finding that 68% list cost management and operational efficiency as their top priority in 2024.

The research found that leaders see the benefits of automation as:

• 57% reducing time spent on repetitive tasks
• 42% freeing up teams to be more strategic
• 33% enhancing supplier visibility and competition
• 15% controlling maverick spend
• 14% responding quickly to market changes and reducing human error
• 12% improving governance and oversight

While Generative AI is being met with enthusiasm, it is not without concerns. More than half (56%) of respondents expressed concern about the need to closely monitor and frequently correct Gen AI data. Leaders' interest in the technology, though, is mixed, with only 18% saying it is due to industry hype, and 11% saying it is because of the mandate from the C-suite.

“AI will be a game-changer for procurement,” Holland said. “But due diligence and caution are encouraged with generative AI.

“It's critical for procurement leaders to ensure they are looking at the true value and applicability of GenAI and not getting caught up in the hype,” he added.

While interest in ESG and diversity objectives remains high at 62% and 64%, respectively, few procurement leaders—just 12%—expect to deliver on these goals in 2024.

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