The Rise of AI in Procurement

Published March 24, 2024
Businesses all over the world will never be the same thanks to the application of artificial intelligence. AI has been a field of academic study since the 1950s and, nowadays, most of the companies have already introduced it into their workflows.
This new technology offers procurement professionals new opportunities to increase efficiency, cost savings, and improve decision-making. In this article we will cover the main key points regarding the artificial intelligence in procurement, including:
  • Understanding AI in procurement
  • Benefits of AI in procurement
  • Best practices of AI in procurement
  • Conclusion

Understanding AI in procurement

Artificial Intelligence refers to the area of computer science centered in creating intelligent machines capable of mimicking human cognitive functions and with enhanced efficiency, speed, and accuracy.
For procurement, AI can solve tasks such as supplier selection, purchase order processing, contract management, demand forecasting, and inventory management. Furthermore, this technology enables companies to better understand their procurement processes and identify potential supply chain risks before they occur.
AI encompasses in the procurement area various technologies like machine learning, natural language processing, and data analytics employed to automate tasks, which helps to make better-informed decisions and add more value to the business.

Benefits of AI in procurement

The implementation of AI in procurement brings a plethora of benefits for supply chain professionals. Moreover, the applications of this new technology in procurement are diverse and continuously evolving. Some of the most important ones are:
Improve efficiency and decision-making: Artificial intelligence automates repetitive tasks, freeing up professionals for strategic activities and supplier relationship building. Moreover, AI can analyze vast amounts of data to make better sourcing decisions and generate corresponding transactions in enterprise systems, improving efficiency and reducing errors.
Enhance cost-savings: AI can identify cost-saving opportunities for better deals. Furthermore, it can deliver cost savings of up to 40% by automating tasks.
Improve sourcing and supply chain operations: AI has the ability to recommend the best suppliers and it can streamline internal business operations, even in large companies with numerous business units or geographical locations.
Predictive Analytics: AI can look for and capture data on vendors, external factors, market trends, etc. Therefore, it can make better predictions about prices, maintenance needs, demand and stock market forecasting.
Use of virtual Assistants: Virtual assistants can handle routine inquiries from suppliers, automate responses, and improve communication efficiency.
Risk mitigation and enhance security: Thanks to the artificial intelligence, patterns of fraud and potential supply chain disruptions can be detected. Moreover, AI suggest strategies for better negotiation and it ensures greater legal protection with the management of procurement contracts.
Simulate different scenarios: AI can showcase possible simulations for different scenarios and new opportunities, thanks to the data it has access to. Thus, procurement professionals will be more aware of what is happening and will be able to take action sooner in case an anomaly occurs.

Best practices of AI in procurement

In order to implement successfully the artificial intelligence in procurement, it is important to plan it beforehand. Here are some practices to implement procurement AI:
Define clear objectives: the very first step is to define clear objectives for implementing procurement AI. It is important to identify in which areas AI can make a significant impact in your company.
Start small: start small and work your way up. The best option is to choose cases that have the potential for quick wins or small pilot programs, since you can evaluate the effectiveness of AI. Piloting also helps build confidence among stakeholders and address any potential issues before implementing AI on a larger scale.
Choose the appropriate technology for your company: it is essential to use the right technology for your company. It is important to use a tailored technology into your procurement procedures in order to integrate it into your existing systems.
Combine human with machine collaboration: AI in procurement is not an isolated effort. It is crucial to involve procurement professionals in order to ensure a holistic approach to the implementation.
Ensure data quality: Data is the fuel that powers AI algorithms. Therefore, it is important to ensure that your data is accurate and free from errors and inconsistences. Invest in data governance practices to maintain high-data quality.


The rise of AI in procurement is changing the way businesses operate, offering professionals a way to work more efficiently. In the future, it is likely that most companies will be investing in this technology to remain competitive, as organizations using these types of technologies will have a significant advantage over those who do not.
AI is clearly becoming a key piece for procurement since it can automate routine tasks, improve decision-making and contribute to a more streamlined and resilient supply chain, contributing to the overall success of the organizations.

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