Sourcing and Procurement

Is generative AI a hanging sword above procurement jobs?

Generative AI (GAI) is still in its early stages of adoption within business processes, but if the hype and excitement are anything to go by, it has the potential to revolutionise the way processes are done today. The Business Process Outsourcing (BPO) industry which employs millions of people around the world will be the first to be impacted by the disruption from GAI.  The industry is already facing challenges due to automation, and as GAI becomes more sophisticated, it will only accelerate the trend by automating more and more of the tasks that were once performed by human workers. In addition, customers are demanding more personalised and customised services, so it’s but obvious for BPO companies to levitate towards investing more in AI / GAI to drive efficiencies, reduce cost and improve user experience. Let’s face it, the inevitability of job losses in the GenAI world is written on the wall.

Or is it? Such concerns are not new. Throughout history there have been numerous occasions when the introduction of new technology spread similar fear and susceptibility – (remember the advent of AI/ML/RPAs or computers and office automation in the 20th century or even the industrial revolutions in the 18th century). Such technological revolutions are imminent, and necessary. And while job displacements may be inevitable, GAI may not necessarily be a "hanging sword."
In this article, we intend to draw a juxtaposition between the boons of generative AI in procurement and their impact on procurement jobs.

Efficiency and automation: Generative AI can automate various tasks within procurement, such as autonomous sourcing, analysing supplier data, and even negotiating contracts. This can significantly reduce the time and effort required for routine tasks.

  • Impacts: Routine and repetitive tasks were already being taken over by AI, potentially affecting certain roles within procurement. With GenAI now, more complex processes can also be taken over. Processes like predictive/prescriptive analytics and category management, market intelligence and insights, which were earlier considered resource-intensive, are now being explored for automation.
  • Opportunities: Organisations adopting AI in procurement will require professionals with expertise in implementing and integrating AI technologies. These specialists will be responsible for evaluating AI solutions, designing implementation strategies, overseeing data integration, and ensuring seamless deployment. They play a crucial role in maximising the benefits of AI in procurement functions.

Data analysis and decision support: Generative AI can process and analyse vast amounts of data to provide valuable insights for procurement decisions. It can identify trends, predict demand, assess supplier performance, and recommend optimal sourcing strategies.

  • Impact on jobs: AI's ability to process large amounts of data quickly can free up time for procurement professionals to focus on strategic initiatives, value creation, and innovation. AI relies on data to generate insights and make informed decisions. GenAI can extract meaningful information from large datasets, identify patterns, and provide actionable recommendations to optimise procurement processes and supplier performance.
  • Opportunities: Procurement involves relationship building, negotiation, and strategic thinking. While AI can assist, the human touch is crucial for handling complex supplier relationships and negotiations, and making strategic decisions that consider broader business goals. Therefore, rather than job replacement, the emphasis could shift towards job augmentation, where AI tools become collaborators. Procurement professionals could work alongside AI to make better-informed decisions and focus on tasks that require human judgment and creativity. As AI adoption increases, the demand for data analysts and scientists who can collect, analyse, and interpret procurement data will rise as well.

Market insights: Generative AI can gather and process market data to provide real-time information on pricing trends, supply chain disruptions, and emerging suppliers. This enables procurement professionals to make informed decisions and adapt quickly to market changes.

  • Impact on jobs: As GenAI matures with more data, it will become and more accurate and aligned with business objectives. Initially, there will be a need for human oversight to ensure that AI-generated documents, negotiations, or decisions are of high quality and comply with regulations. Over time, we will see it becoming more skilled in generating near-perfect insights.
  • Opportunities: With the integration of AI in procurement, organisations will require professionals who can develop AI strategies aligned with their procurement objectives. These roles involve identifying AI opportunities, assessing risks, establishing governance frameworks, and ensuring ethical and responsible AI practices in procurement. AI strategists and governance professionals play a critical role in leveraging AI effectively and managing associated risks. To stay relevant, procurement professionals will need to upskill and acquire knowledge in areas like AI literacy, data analytics, contract law, and relationship management. This can enhance their ability to manage and oversee AI-driven processes.

Ethics:  The introduction of AI has raised ethical concerns that require human oversight. For example, AI-generated contracts or negotiation outcomes might inadvertently include biased clauses or raise questions about accountability in case of disputes. Professionals with expertise in ethics, compliance, and legal matters will continue to be essential. These professionals will address concerns related to privacy, fairness, transparency, and compliance in AI applications. They play a crucial role in building trust and responsible AI adoption within procurement functions.

The rise of GAI in procurement has opened up opportunities for entrepreneurs and startups to develop specialised AI solutions tailored to the procurement domain. These solution providers can offer AI-powered platforms, tools, and services that cater specifically to procurement needs leading to job creation within these organisations. Also, for companies offering BPO services, investing in GAI is not a matter of choice but of necessity. BPO companies are taking steps to reskill and upskill employees to take on the new roles that are being created. It is now up to procurement professionals to embrace AI as the future of procurement.

It is important to note that while technological revolutions can lead to job losses, they can also create new jobs. While the adoption of generative AI in procurement could reshape certain tasks and roles, it also presents opportunities for professionals to evolve, upskill, and contribute strategically to their organisations. The focus should be on adapting to and collaborating with AI technologies to enhance procurement practices and deliver greater value.

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