Ivalua: Businesses Seek to Embrace Gen AI in Procurement

Businesses are starting to deploy generative AI (Gen AI) increasingly across procurement and supplier management sectors. According to research from Ivalua, UK businesses in particular are deploying the disruptive technology across supply chain and procurement and reporting a 44% reduction in manual processes. 

Likewise, 24% of businesses have deployed Gen AI tools within the last twelve months alone, with 55% either in the process of implementing or considering implementing Gen AI. According to Ivalua, organisations are achieving these efficiency savings by using Gen AI for task automation (69%), internet research (67%), document analysis (59%) and content creation (48%).

Ivalua also found that 19% of those it surveyed currently have no plans to implement Gen AI across their operations.

An optimistic outlook for Gen AI in procurement

The exact impact of Gen AI within the procurement industry is yet to be fully realised, as more solutions and tools reach the market. As various procurement and supply chain sectors seek to look beyond the hype, there are starting to be conversations surrounding how Gen AI can offer strong benefits to business leaders looking to excel their competitors.

The findings by Ivalua demonstrate a type of optimism concerning how Gen AI will improve procurement roles in the future. Notably, 54% of survey respondents believe that Gen AI will improve efficiency, with 36% saying the technology will free up time to focus on more complex objectives.

Additionally, 61% agree that harnessing Gen AI will also be crucial when it comes to effective spend management. However, fears over job roles being replaced by Gen AI remain, with 35% of procurement leaders admitting this remains a key concern for them.

To mitigate this, Vishal Patel, VP of Product at Ivalua, suggests that careful change management and education are required to show employees that Gen AI will instead add improvements to their role, rather than replace it.

“Gen AI represents huge productivity gains and resource unlock for procurement,” he comments. “With employees on board, businesses can focus on harnessing Gen AI to eliminate routine and time-consuming tasks while focusing on higher-value activities. But another key barrier remains - addressing a lack of progress on digitisation.”

He tells AI Magazine: "To fully harness Gen AI in procurement and reap the rewards, organisations must consider multiple elements which can impact user adoption, output quality, agility and security."

Embracing digitalisation

Procurement is becoming the ‘department that transformation forgot’, according to Ivalua. Its findings suggest that digital transformation in procurement has stalled in recent years, with organisations saying they have digitised just 48% of their processes, compared to 45% in 2019.

In the wake of the COVID-19 pandemic, which led to such a dramatic digital transformation boom, this limited progress creates additional challenges for businesses in their Gen AI adoption journeys.

With concerns that the workforce is either using Gen AI tools without permission, or inadequately, 68% of those surveyed by Ivalua agree that more regulations must be in place within their company to ensure the accuracy of Gen AI outputs.

“Businesses need a solid data foundation for procurement and supply chain teams to effectively harness AI to improve efficiency and contribute to effective and timely decision making,” Vishal adds. “But the lack of progress in digitisation and common data challenges suggest there is a significant gap to be bridged before Gen AI can deliver more strategic value.

“User adoption must also not be overlooked. To boost adoption and build trust, organisations should clearly communicate their business objectives and benefits for employees, and provide direct user access to Gen AI within their applications. This must be done all while reiterating the fact that Gen AI will help and not replace employees."

The majority of procurement leaders agree that, if their business does not embrace Gen AI in procurement, they will lose out on cost savings and value creation opportunities.

“With the right data foundation in place and user trust, organisations must ensure Gen AI solutions are embedded seamlessly within existing procurement technologies and are able to combine LLMs, enterprise knowledge and internet data in order to best respond to a user request," Vishal tells AI Magazine.

He adds: “Businesses must act now to digitalise and close the technology and data gaps in their procurement function. If not, they will struggle to measure up against AI-powered competitors, potentially losing customers and market share."

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