AI adoption by procurement teams

AI has not been widely adopted by Australian procurement teams

While there has been a lot of hype around Artificial Intelligence (AI), specifically Generative AI, over the past two years since ChatGPT first saw the light of day, Australian Procurement teams have not yet adopted its use.

Our 2024 Annual Procurement study, Stronger Together, shows 70% of teams said that they do not use AI in document creation and 63% say they do not use AI in any other form.

Given the large amount of written information, the complexities of the supply chains they deal with and the large amount of procurement related data every organisation creates on a daily basis, this is somewhat surprising.

Only 5% of respondents say that they have had some successes using AI and another 5% say they have implemented AI, but it is not (yet) delivering the anticipated benefits.

Given the numbers above, it is fair to say that AI has not been adopted widely.

We expect this to change dramatically over the next couple of years. Already, many procurement teams, including clients using our spend analysis software SPAT, have successfully implemented AI in supporting their analytics.

This first generation of AI technology, often ‘baked-in’ in other solutions, is used to sort invoices and their components into procurement categories and therefore enables category management.

ChatGPT and similar products require the end-user to change the way they operate. This requires procurement professionals being familiar with prompting a chatbot, training they may not have had. Those who have tinkered with AI chatbots have used the technology to improve writing, simplify documents, to conduct preliminary market research or to summarise large amounts of information.

The next step will be for procurement professionals to find a way to automate the creation of specifications and tender documents, at least to a point. Or to automatically analyse all contracts the organisation has in place to enable better contract and obligation management. Or maybe to automatically score tender responses. Or maybe to not just categorise the spend but to offer insights and recommendations. Or maybe to improve the customer experience by saving them time not having to read reams of procurement guidance, but simply and quickly getting the right answer from a chatbot, trained on your organisation’s procurement policies and guidance.

What is it that you have tried in how to use AI in your procurement function? Share your thoughts and ideas with Stefan, book a meeting.