AI miles away from changing the procurement, suggest Experts

The transformative potential of artificial intelligence (AI) has been a topic of great interest and speculation across various industries. In recent years, procurement and supply chain professionals have been closely monitoring the advancements in AI, hoping for enhanced efficiency and effectiveness in their operations. 

However, experts speaking at the Procurement & Supply Chain Live NY, emphasized that AI's impact on procurement is still a distant reality. Despite its promise, AI is not yet ready to revolutionize the procurement landscape. 

A panel of experts that included Dean Ocampo, who is the Director of Product Marketing at ServiceNow, Rajeev Karmacharya, the Head of Strategic Sourcing and Category Management at Fannie Mae, Clive Rees, Fujitsu Chief Procurement Officer and Mark Gilham, Evangelist at Enable held the talks on AI and its development. 

AI miles

Current State of AI in Procurement

According to renowned AI researchers as well as keynote speakers, AI in procurement is currently at a nascent stage. While there have been notable advancements in the field, AI systems are yet to mature enough to handle the complexities of procurement processes. These speakers also emphasized that AI should be seen as an enabling technology, rather than a replacement for human decision-making. 

Human expertise and judgment are still essential in procurement, as they involve intricate negotiations, relationship management, and strategic decision-making, which AI systems are currently unable to replicate.

One of the key challenges faced by AI in procurement is data quality and accessibility. A few speakers have also stressed that AI algorithms heavily rely on high-quality and well-structured data to generate meaningful insights. 

However, many organizations struggle with data fragmentation, inconsistent formats, and data silos, hindering the effective application of AI in procurement. Improving data governance practices and investing in data management capabilities are crucial steps toward harnessing AI's potential.

Limitations and Ethical Concerns

Despite the advancements in machine learning and natural language processing, AI still faces limitations in understanding contextual nuances and making subjective judgments. This is particularly relevant in procurement, where decisions are often influenced by factors that go beyond pure data analysis. 

Studies also suggest that relying solely on AI algorithms may lead to overlooking crucial aspects such as supplier relationships, market dynamics, and ethical considerations. Ethical concerns, such as bias in AI algorithms and their potential impact on marginalized communities, need to be carefully addressed before widespread adoption in procurement.

Human-AI Collaboration

Rather than AI replacing human procurement professionals, the consensus among experts is that the future lies in collaboration between humans and AI systems. Dr. Evans highlighted that AI can augment human capabilities by automating routine and repetitive tasks, allowing procurement professionals to focus on higher-value activities such as strategic sourcing, supplier relationship management, and risk mitigation. 

This symbiotic relationship between humans and AI can lead to significant improvements in procurement efficiency and effectiveness.

Pathway to AI Adoption

To fully leverage AI's potential in procurement, organizations must invest in the necessary infrastructure, talent, and cultural transformation.

This includes developing data literacy, understanding AI algorithms, and cultivating critical thinking skills to interpret and validate AI-generated insights. Additionally, organizations should foster a culture of experimentation and learning, encouraging collaboration between procurement professionals and data scientists.

How is AI far away from changing procurement?

As per the words of Dean Ocampo, “As a technologist I love ChatGPT but in terms of procurement and supply chain we're a long way off seeing meaningful changes to our business.”

He further stated, “There are parts of the business its going to be great at, such as virtual agents, but regarding learning algorithms that generate recommendations, we're a long way off.”

Adding to his claims, Clive Rees from Fujitsu said that AI is only a part of the solution for procurement and it's not going to solve everything. Rees further suggested that we should not depend on it and also not expect much, as in procurement we have lots of data depending on which we have to make a lot of decisions. He also stated that it should only be regarded as something that could give us suggestions and that we should not let it make our decisions. 

Gilham further proclaimed that Data on its own isn't that useful. We need to understand that the business to which the data relates, that is exactly where it's going to as it requires a lot of manual knowledge in most businesses.


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