In the era of intelligent sourcing, automation is no longer an option, but a necessity, according to Keelvar's webinar titled The AI & Automation Boom, which summarized the findings and lessons learned from the Voices of Sourcing research.
In the survey, executives and procurement professionals from companies of different sizes and market segments on five continents shared their views and experiences on the impact of AI on procurement.
The automation revolution that unfolded in 2023 has given rise to autonomous procurement systems. In this respect, last year was a year of discovery: procurement leaders learned and evaluated the new technologies, keeping a watchful eye on each other to see who is one step ahead, what pitfalls to avoid, and what can be learned from each other's mistakes.
However, 2024 is the year of action, when it will be decided who the true leaders and innovators of the future are. In the past, CPOs wondered what was possible; now they are more and more curious about how to do it best.
In a dynamic and challenging market environment like today's, it is not enough to just keep up with the rest of the market. The competition itself is changing radically and companies simply cannot afford to be left behind.
The obstacle course
The survey shows that CPOs expect to continue having to navigate a complex situation with significant challenges.
Supply chains will continue to be negatively affected by the problems around two key trade routes, the Panama and Suez Canals. 74% of CPOs see these as a major obstacle to their company's development.
However, almost three quarters of them (22 percentage points more than last year) see inflation and rising costs as the main problems.
The uncertainty of the situation is illustrated by the fact that the top five problems cited by respondents include the pressures of the economic crisis and geopolitical risks.
“It’s crucial to not just react to changes, but to proactively anticipate them. As we’ve seen in recent years, adaptability and resilience are key” – emphasizes Dylan Alperin, VP of Professional Services at Keelvar.
Do more with less
The research shows that procurement organizations are under increasing pressure to achieve better results with fewer resources. While 63% of respondents said the biggest challenge is increasing workloads, 38% are facing a stagnating or shrinking workforce and 37% are concerned about the risk of burnout.
In addition, many reported that over-complicated procurement processes hindered their work.
These phenomena point to the need for solutions that promote operational efficiency and employee well-being. However, only 26% of respondents plan to expand their team in 2024, while 33% prepare to reduce staff and budgets.
2024 will have to be a year of efficiency
In this complex situation, procurement professionals need to explore new ways to create value and maximize the resources available. The research shows that buyers are focusing their efforts mainly on three key areas:
● Cost management and operational efficiency (68%)
● Adopting advanced technologies (59%)
● Category strategy and planning (57%)
In the future, procurement teams will need to achieve even more savings from already tight budgets, so they are looking for new ways to manage costs. Many are turning to dynamic discounts, bulk purchasing or renegotiating contracts.
However, 42% of respondents are prioritizing automation to give their team more time to focus on strategic tasks, and 41% are looking to implement more efficient ways of tracking savings.
Encouragingly, 62% of procurement professionals prioritize ESG and sustainability, and 64% consider diversification equally important. However, not much change is expected in these areas in 2024, with only 12% of respondents actually prioritizing their implementation.
Lack of automation risks being left behind
According to respondents, the main benefits of automation are reduced time spent on repetitive tasks (57%), freed-up human resources (42%), increased supplier competition (33%), control of expenditure (15%), faster response to market changes and reduction of human error (14%), and improved governance and control (12%).
Automation has therefore become inevitable: it is the only way for procurement to achieve its efficiency and strategic goals.
There is tangible enthusiasm towards generative AI, but most procurement experts remain cautious.
While many are considering using AI in procurement, more have expressed concerns about quality and accuracy, with 56% worried that AI requires constant monitoring and correction.
Hype vs. value – and applicability
18% of business leaders said they are interested in adopting AI because of the hype in the industry, but it is vital that this is accompanied by experts looking at the real value and applicability of the technology.
Respondents identified a number of areas where they believe generative AI can be used effectively.
| ● Data analysis and predictive insights ● Better user experience ● Automated content generation ● Process automation and optimization ● Personalized customer experiences ● Language translation and communication enhancement |
41% 34% 33% 32% 15% 11% |
The road to intelligent sourcing
One of the key benefits of procurement automation is that machines learn and adapt, so the technology can be used to increase the reach, impact and influence of procurement.
According to business leaders, the two main benefits of smart systems are:
● operational agility (63%)
● advanced data analysis and predictive insights (41%).
Procurement will be transformed in 2024
The research concludes that this year promises to be a landmark for procurement, thanks to the rapid adoption of artificial intelligence, automation and intelligent systems.
72% of respondents expect rising costs and recession, and 59% are using advanced technologies to increase efficiency.
42% of managers are increasing the efficiency of their organization through automation, while 56% are cautious about the use of generative AI.
