KPMG: How AI & Gen AI Are Shaping Strategic Procurement

Gen AI is pushing procurement into a new strategic era, according to KPMG’s Q1 2025 AI Quarterly Pulse Survey.

As organisations across sectors move beyond experimental stages, procurement leaders are beginning to operationalise AI at scale, using it to reshape tasks, processes and priorities.

The survey shows enterprise leaders plan to invest around $114m in Gen AI in the coming year, up from $89m the previous quarter.

This uptick signals growing confidence in Gen AI’s capacity to deliver strategic value.

For procurement, this transformation means redefining how AI vendors are evaluated, contracts are negotiated and data is used to manage supply chain risks.

Steve Chase, Vice Chair of AI and Digital Innovation, KPMG US, explains: “We’re seeing a clear shift from pilots to scaled execution, with CIOs increasingly leading the charge. While that may seem like a natural decision given the scale of change in both technology and how it’s delivered – AI is also an enterprise transformation.

“It requires rewriting business processes, disrupting offerings, and driving cultural change. Leading organisations are creating space – often through a dedicated AI leader – to fully own that broader vision and protect the transformation from unnecessary risk.”

AI agents enter procurement workflows

Procurement functions are starting to embed AI agents into their day-to-day operations.

According to the KPMG survey, organisations piloting AI agents rose from 37% to 65% since the previous quarter.

While full-scale deployment remains low at 11%, the upward trend shows a clear movement from theory to practice.

AI agents, software tools capable of performing specific tasks using AI models, are increasingly used for supplier recruitment and sourcing.

Twenty-six percent of organisations are now using AI for this purpose, up from 15% in the previous quarter.

Over the next year, a further 60% plan to implement AI agents in recruitment and sourcing roles.

The procurement function is testing AI for several critical tasks.

These include generating and analysing responses to requests for proposals (RFPs) and information (RFIs), identifying and qualifying new suppliers and assessing third-party risk.

The use of AI agents for administrative tasks such as purchase order processing, contract reviews and scheduling meetings has also jumped from 27% to 66%.

A key area where AI is already delivering impact is data analysis.

78%of organisations report using AI agents to review complex datasets – up from 70%.

Gen AI brings efficiency and risk challenges

KPMG’s survey notes that procurement's influence is expanding alongside its responsibilities.

As a function tasked with managing third-party risk and ensuring compliance with regulations, procurement sits at the centre of the Gen AI transformation.

Eighty-two percent of leaders cite risk management as their biggest concern in deploying Gen AI.

Procurement teams must apply careful human oversight to AI-generated outputs, especially when evaluating suppliers or scoring contract terms.

Data also remains a sticking point. Sixty-four percent of respondents say data quality poses a barrier to effective Gen AI strategies.

Procurement systems with outdated or unstructured supplier data may find themselves unable to integrate smoothly with AI tools.

KPMG highlights that 35% of leaders view personal trust in Gen AI as a major challenge.

By 2030, 32% believe issues around trust in the fairness and accuracy of AI systems will still be a global concern. For procurement, which relies on consistent and ethical supplier relationships, trust must be built through traceable, transparent and reliable AI use.

Changing roles and capabilities in procurement

Gen AI’s role in procurement is not about replacing people but augmenting how they work.

Seventy-six percent of surveyed leaders believe AI will automate defined tasks without replacing entire roles. In procurement, this means tasks such as validating invoices, entering supplier data and matching contracts can be automated, freeing up professionals for more strategic work.

This view is shared by 69% of leaders who say AI will help top performers shift their focus to higher-value activities.

As Gen AI becomes embedded in business workflows, its adoption in procurement tools is likely to rise. Already, use of Gen AI has jumped from 24% to 35% in just one quarter.

KPMG suggests that procurement is moving from a focus on manual processes to strategic enablement.

Gen AI can support skills development, automate routine functions and inform daily decision-making.

From risk modelling and ESG analysis to smarter sourcing and supplier performance monitoring, the integration of AI into procurement is becoming both practical and transformative.

The shift from pilot projects to scaled AI deployment signals a major realignment in enterprise operations.

In this environment, procurement is no longer a back-office task but a forward-looking, data-led function central to business resilience and value creation.

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