GenAI
Generative AI can be defined as a technology that leverages deep learning models to generate human-like content in response to complex and varied prompt. GenAI has the potential to quickly boost business efficiency and innovation by automating tasks and analyzing data.
Whilst there are limitations, GenAI has the potential to transform the procurement function. There is a marked performance improvement from GenAI users; 12.2% more tasks completed on average, 25.1% faster and a 40% higher result quality. The potential is enormous.
GenAI in Procurement
Process automation is already being affected; first GenAI solutions have been implemented and GenAI is already established in procurement core processes (Plan-to-Strategy, Source-to-Contract, Procure-to-Pay and Supplier Management) as well as Support Processes such as spend analytics, contract & risk management and market intelligence. Procurement technology applications are already using AI to enhance their software and equip users with GenAI tools.
GenAI will shift the focus from the procurement function we know today to a more strategic approach in the future. Already, we see three changes happening:
- GenAI will transform operational procurement functions, so that
- Freed-up FTE procurement resources will be re-allocated to strategic activity, and
- Strategic management will be boosted by GenAI
A widening gulf between procurement functions with and without GenAI
Whilst the use cases are only just forming, already we can see the where there will be significant advantages and this will lead to significantly better outputs for companies where GenAI is utilized in procurement to those without the use of GenAI.
Is it still hype? Finding the right use cases are key for CPOs
Insights from our 2024 CPO Roundtable reveal real-world impacts of GenAI in procurement.
Firstly, GenAI in Procurement is already on the Agenda of the CPOs – but the framework conditions at company level are often a prerequisite. In many cases, access for procurement was limited or companies had yet to allow company-wide usage. Despite this, the majority of CPOs were using or planned to utilize GenAI.
Secondly, finding the first and right Use Cases was considered key. CPOs were clear in where they saw the benefits but with significantly different timeframe perspectives.
