AI is going to take your procurement job! (And other stories that keep us up at night.)

TL;DR: Procurement professionals are wondering how AI will impact their jobs, or if they will even have jobs in the future.  From my perspective, the short-term impact of AI is likely over-estimated and, as with most new technologies, the benefits will be felt over time.  Meanwhile, there is no singular AI tool that will magically make life, or work, better.  Rather, productivity will continue to be driven at the individual and team levels with local, personal, productivity tools which use AI to make tasks easier.  Artificial intelligence isn’t going to take your procurement job, other procurement professionals using artificial intelligence are going to take your job. Jump in and start experimenting now. 

Uses for AI Within Procurement

Artificial Intelligence (AI) has dominated headlines in the last year, propelled by the emergence of Large Language Models (LLMs) such as OpenAI's ChatGPT and Google's Gemini. Within the realm of procurement, voices are declaring that the industry is on the cusp of a transformative shift. Notably a research paper from IBM predicts a staggering 40% of the worldwide workforce will need reskilling training within 36 months.  The same study estimates that 97% of workers in the procurement industry specifically will have their work impacted.[1]

However, as with previous technological waves, it is crucial to dissect the hype and evaluate the true impact of AI on the procurement landscape. This document aims to provide a nuanced perspective on the potential role of AI in procurement, debunking myths, and highlighting practical strategies to harness its potential.

For many though, AI may still be more of a concept than something they work with regularly so let’s look at some ways in which AI may impact procurement.

1.       Automation of Routine Tasks: AI can automate repetitive and time-consuming tasks, especially in the tactical procure-to-pay arena, such as data entry, invoice processing, and purchase order generation.

2.       Data Analysis and Insights: AI can process vast datasets, such as spend cubes, identify patterns, and offer insights that may be challenging for humans to discern (quickly).

3.       Improved Supplier Management: AI can help Category Managers find new sources of supply and stay updated on news and information in the public sphere about their incumbent supply base.

A Reality Check:

The technology consultancy Gartner coined a model called the “Hype Cycle.” This predicts, when a new technology is created, there is significantly overblown, short term, expectations followed by a lull or even crash before the true value of the technology later emerges.  The history of technological advancements supports this pattern and AI, in its current form, will most likely be no exception.

Just think back over the last 10 years and the predictions made about virtual reality, 3D printing, cryptocurrencies, and self-driving cars.  Over time all will have major impacts on how we live our lives.  But if you listened to the hype, you might think that by now we would be using bitcoin to pay for our 3D-printed, self-driving cars so that we could play virtual reality games while we are transported effortlessly to work.  This may happen someday, but it sure feels a long way off, doesn’t it?

While AI has demonstrated its prowess in natural language processing, machine learning, and problem-solving, the short-term displacement of human workers on a massive scale seems unlikely.  That sort of disruption to society would likely lead to an economic crash like we have never seen. In the short run, the implementation of AI in procurement will likely enhance efficiency, streamline processes, and augment decision-making. However, the true transformative power of AI lies in its long-term impact which will be gained as organizations acclimate to these technological shifts and the tools are refined to fit very specific needs.

AI and Procurement Employment: A Shift in Perspective

Let’s start by acknowledging that there is a difference between being told you need to “learn AI” compared to “learning AI tools.”  Learning AI feels ambiguous and scary whereas learning new tools feels specific and approachable.  We’ve already learned how to use literally dozens of software tools in our lives after all.  Further, the companies developing the tools know that their users are people like you and me, and not necessarily software developers.  As a result, they are designed to be user-friendly and as easy to learn as possible.

Even the scary numbers cited in the IBM paper are pure speculation based solely on executive surveys.  It is headline grabbing though, right?  In fact, the same paper quotes data from the World Economic Forum which predicts that AI will disrupt 85 million jobs globally between 2020 and 2025 while creating 97 million new roles.  As with any major technological advancement, there will be people left behind and others who learn the new skills and thrive in the new paradigm.

Decentralized Productivity: AI as an Individual Procurement Tool

Rather than perceiving AI as a monolithic, enterprise-wide solution, organizations are much more likely to leverage AI for individual, and team, productivity. It may be helpful to think of this as each person or team having their own personalized, local “tech stack,” similar to those used in software development, marketing, and sales.  When harnessed at the individual or team level, AI can act as a force multiplier, augmenting human capabilities and enabling workers to accomplish more in less time.

This decentralized approach empowers individuals to become more agile and adaptable, fostering a culture of continuous improvement and innovation within the procurement landscape.  A list of my individual top tools already on the market will be included in the appendix to this article and each has its own set of features and benefits.

The Imperative of Learning AI Tools: Yesterday and Today

If you, or your company, aren’t using these tools you are already behind the curve.  There is an old saying that the best time to learn a new skill was yesterday, but the second-best time is today.  Embracing AI is not just an option but a necessity for staying competitive. Investing in AI education, tools, and training will allow individuals to continue to be valuable contributors to their organizations while learning the skills they will need to remain relevant in the future.

Shifting Procurement Skills 

The prevailing discourse around AI requires a balanced and informed perspective. While the hype suggests imminent workforce reductions and systemic changes, a closer examination reveals a more nuanced reality. AI has the potential to revolutionize procurement, but its true impact depends on how individuals and organizations harness its capabilities.

The integration of AI in procurement will clearly necessitate a shift in skills. For many, their jobs will become more strategic, with the AI driven efficiencies removing many low-value tasks from their daily work.  For others, whose roles were more administrative, there will be an opportunity, and need, to upskill and acquire knowledge or they will risk becoming redundant.

Appendix: Alan’s individual AI-enabled “tech stack”:

1. Otter.ai - Otter.ai is a transcription tool that utilizes AI to transcribe audio recordings into text in real-time. It can recognize multiple speakers and differentiate between them, making it useful for meetings, interviews, and lectures.
2. Evernote - Evernote enhances written note-taking by using AI to recognize handwriting so that they can be categorized and searchable for future reference.
3. PhraseExpress - PhraseExpress employs AI to enhance typing efficiency. It learns from your typing patterns and frequently used phrases to predict and suggest text as you type.
4. Pipedrive - Pipedrive leverages AI sales pipeline or contract management and optimization. It analyzes sales data, customer interactions, and historical trends to provide insights and recommendations for optimizing the sales or contract management process.
5. Perplexity/ChatGPT - These models understand and generate human-like text based on the input they receive. They can answer questions, engage in conversation, and perform various language-related tasks by understanding context, syntax, and semantics. Additionally, they can assist in information search by providing relevant and coherent responses to user queries.

About Alan Veeck

Alan Veeck is the CEO and founder of Summit Procurement, Inc., a company that offers a full suite of procurement managed services to help clients get more value out of their spending with suppliers of goods and services. He has over 30 years of experience in the procurement industry, with a PhD in Science from the College of William and Mary and UC Berkeley.

About Summit Procurement

Summit Procurement enables enterprise clients to hit peak procurement performance. Our flexible managed services, staff augmentation, strategic training, and human-in-the-loop services are designed to lift procurement execution and create operational efficiency. 

[1] https://www.ibm.com/downloads/cas/NGAWMXAK