One of the most counterproductive misconceptions about AI is that it is capable of immediately solving your biggest procurement challenges straight out of the box. AI isn’t a magic wand. Rather, it’s a tool that – when applied in the right places and ways – can significantly accelerate progress towards your procurement and business goals.
How you should apply AI will vary depending on what you want to achieve. So, when planning your AI transformation journey, it’s important to carefully consider how the needs of both your procurement organization and the wider business are set to change over the coming years. Below are five questions to consider when setting out on the path to AI-enabled procurement hyper-acceleration.
1. What are our strategic goals for the next three to five years, and how can the procurement function enable the business to achieve those goals?
This question can be segmented into three phases. Start by identifying high-level business objectives, such as expanding into new markets or improving profitability. Next, consider how procurement could drive progress toward those goals. Finally, think about the tools, data, and capabilities procurement would need to be as effective as possible.
For example, if a company’s long-term goal is to increase profitability by 20%, procurement might focus on AI tools that improve cost visibility or optimize supplier selection for cost-efficiency. By combining AI analytics with human insights, the procurement team could identify trends in spending, optimize contracts, and negotiate better rates with suppliers. This combined approach helps align procurement with financial goals and makes better-informed spending decisions that resonate throughout the business.
2. What are the biggest challenges our procurement organization is facing today that prevent us from delivering maximum business value?
This question will help you identify key points of friction that AI may be able to help you transform across the procurement function. The blockers you identify might not always be things that are easily solved using AI, but they will almost always represent some of the most impactful transformation opportunities within procurement.
When identifying these challenges, it’s crucial to evaluate external and internal factors that may limit your ability to deliver maximum business value. A few common obstacles include outdated processes and inefficient workflows, data silos, lack of real-time visibility, or manual tasks that drain time and resources. By pinpointing these challenges, you can prioritize where AI solutions will have the greatest impact.
3. What is it that we fundamentally want procurement to be able to do more of, or deliver more of?
With so many potential applications of AI in procurement, it can be useful to start by identifying what you want procurement to achieve more effectively. Then, explore how AI could support your teams in delivering those outcomes, both directly and indirectly.
For example, if you want your team to negotiate better prices and contracts with strategic suppliers, those are complex tasks you might not fully entrust to AI. However, AI can indirectly support this by automating time-consuming tasks like invoice processing or managing the supplier onboarding process. This frees up your team to focus on strategic contract negotiations.
4. What are the most important outcomes of transformation for our team and our stakeholders?
Remember, when you’re transforming procurement, you’re also transforming daily workflows for many of people. While it is helpful to understand what people want to change, your focus should also be on identifying the best processes for your specific environment and context. Engage with your team and key stakeholders to gain alignment on these optimized processes. This will help you pinpoint areas of inefficiency where AI can have the most impact, while also increasing your stakeholders’ readiness for change by demonstrating a more effective way forward with AI capabilities.
Successful transformation isn’t solely about introducing new technologies but about aligning those changes with the goals and needs of everyone involved early in the transformation process.
5. As the needs of your business change, how will ways of working evolve across procurement in the years to come?
By starting your AI implementation journey, you’re entering the next chapter of procurement’s AI-enabled future. Don’t just consider what you want to transform today – think very carefully about how your procurement organization is likely to evolve over the coming years. Then, consider how AI could best support your desired state for procurement, not just augment your current one.
The transformative power of AI in procurement lies not in its immediate ability to solve every challenge but in its strategic application tailored to your organization’s specific needs and long-term goals. AI’s success depends on critical planning and a clear understanding of how procurement's role will evolve in the coming years. By asking the right questions and aligning AI with your overarching business objectives, you can unlock AI's true potential to accelerate procurement performance and deliver lasting value across the organization.
