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The advancement of Procurement technology: An interview with artificial intelligence

Digital adoption and investment in innovative technology is increasing at a spectacular rate, with most FTSE100 companies increasing their investments in technology to support digital transformation and improve operational efficiency. The top 10 FTSE100 companies alone invested an estimated £27^ billion in technology across the 2022 fiscal year.

Author:

Craig Hill 

Managing Director

15th May 2023

So, what does the future hold for Procurement and where will we expect to see the biggest gains in innovation and efficiency through adoption of new technology?

With all of the recent hype and news coverage on the use of OpenAI ChatGPT, it only seemed appropriate that we interviewed ChatGPT on the topic and see what technology thinks about technology!…

The following conversational Q&A was performed by using ChatGPT, the answers are unaltered from the original response. As such there are some limitations to its responses (see OpenAI), however the results were both interesting and insightful.

The Interview

Q “Hello ChatGPT, how are you today?”

ChatGPT – Hello! As an AI language model, I don’t have emotions, but I’m ready and willing to assist you with any questions you may have on the topic of procurement technology. Let’s get started!

Q “What do you see as the biggest disruptive technology for Procurement over the next 5 years?”

ChatGPT – There are several emerging technologies that have the potential to disrupt the procurement industry over the next 5 years, but one of the most significant is likely to be Artificial Intelligence (AI).

AI has already shown promise in a number of procurement-related applications, such as spend analytics, contract management, and supplier management. With the development of advanced machine learning algorithms and natural language processing, AI can automate many of the repetitive and time-consuming tasks involved in procurement, such as data entry, invoice processing, and contract review.

One area where AI is expected to have a particularly significant impact is in the area of predictive analytics. By analyzing historical procurement data and external market trends, AI can help procurement professionals identify potential risks and opportunities, optimize supplier selection and negotiations, and improve overall procurement performance.

Another emerging technology that could disrupt procurement is blockchain. Blockchain technology offers a decentralized and secure way to store and share data, which can be particularly useful in supply chain management and procurement. By using blockchain, procurement professionals can ensure the authenticity and traceability of products, improve payment processing and reduce fraud, and increase transparency and trust in their supply chain relationships.

Overall, while there are several emerging technologies that are likely to disrupt procurement over the next 5 years, AI and blockchain are two of the most promising and are expected to have a significant impact on the procurement industry.

Which sectors first?

Q “Which industry sectors do you expect to adopt AI and Blockchain technology first?”

ChatGPT – AI and blockchain technologies have the potential to revolutionize various industry sectors. While the adoption timeline may vary depending on factors such as industry-specific challenges and regulatory considerations, here are a few sectors that are expected to adopt AI and blockchain technologies early:

 1. Finance and Banking: The finance industry has already shown significant interest in both AI and blockchain. AI can improve fraud detection, automate processes, and enhance customer service. Blockchain technology can enhance security, enable faster and more secure transactions, and streamline regulatory compliance.

 2. Healthcare: The healthcare sector can greatly benefit from AI and blockchain technologies. AI can help in medical diagnosis, drug discovery, and patient data analysis. Blockchain can securely store and share medical records, ensure data integrity, and facilitate interoperability between different healthcare providers.

 3. Supply Chain and Logistics: Supply chain and logistics operations involve complex networks and large volumes of data. AI can optimize routes, predict demand, and enhance inventory management. Blockchain can provide transparency, traceability, and immutability, ensuring secure and efficient supply chain management.

 4. Retail and E-commerce: AI-powered chatbots, personalized recommendations, and virtual shopping assistants are already being used in the retail and e-commerce sectors. Blockchain can be used for supply chain transparency, authenticity verification of luxury goods, and secure digital payments.

 5. Energy and Utilities: AI and blockchain technologies can be utilized to optimize energy consumption, predict maintenance needs, and manage renewable energy grids efficiently. Blockchain can enable peer-to-peer energy trading, ensure transparent energy transactions, and enhance grid resilience.

 6. Insurance: AI can automate underwriting processes, improve risk assessment, and enhance fraud detection in the insurance industry. Blockchain can simplify claims management, streamline contract execution, and enable secure sharing of customer data.

 It’s important to note that these are just a few examples, and AI and blockchain technologies have the potential to impact various other sectors such as manufacturing, agriculture, transportation, and more. The pace of adoption will depend on factors like industry-specific challenges, regulatory frameworks, and the readiness of organizations to adopt these technologies.

The future impact to procurement roles

Q “How will you see technology impacting Procurement roles in the future?”

ChatGPT – Technology is already having a significant impact on procurement roles, and it will continue to do so in the future. Here are some ways in which I believe technology will impact procurement roles:

Automation: One of the most significant impacts of technology on procurement roles is automation. Automated systems can handle repetitive and time-consuming tasks, such as invoice processing and purchase order creation. This can free up procurement professionals to focus on more strategic tasks, such as supplier management and contract negotiation.

Data Analysis: Another impact of technology on procurement roles is the ability to analyze large amounts of data quickly and accurately. This can help procurement professionals make more informed decisions about supplier selection, pricing, and risk management.

Collaboration: Technology can also facilitate collaboration between procurement professionals and other departments within an organization, such as finance and operations. Cloud-based platforms and other tools can help procurement professionals work together more efficiently and effectively.

Artificial Intelligence: With the help of AI, procurement professionals can automate processes like spend analysis, market research, and supplier evaluation. AI can also help predict future demand and provide insights into potential supply chain risks.

Blockchain: Blockchain technology can be used to create secure, transparent supply chain networks, making it easier for procurement professionals to track the movement of goods and ensure compliance with regulations.

Overall, I believe that technology will continue to transform procurement roles, making them more efficient and effective in the future. However, it’s important to remember that technology should be used to enhance human decision-making, not replace it. Procurement professionals will still need to use their expertise and judgement to make strategic decisions that benefit their organizations.

Technology challenges

Q “What are the biggest challenges in implementing and adopting Procurement technology?”

ChatGPT – There are several challenges that organizations may face when implementing and adopting procurement technology. Some of the biggest challenges include:

  1. Resistance to change: One of the biggest challenges organizations face when implementing procurement technology is resistance to change. Employees may be used to existing processes and tools and may be resistant to learning new technology. This can result in a slow adoption rate, which can delay the benefits of the technology.

  2. Integration with existing systems: Another challenge is integrating procurement technology with existing systems. This can be difficult if the technology is not compatible with the organization’s current systems. It may require significant customization or even replacing existing systems, which can be time-consuming and costly.

  3. Data quality and accuracy: Procurement technology relies on accurate and timely data to function effectively. If the data is incomplete, inaccurate, or outdated, the technology will not be able to provide the desired results. This can be challenging if the organization’s data is stored in multiple systems or is not standardized.

  4. Security and privacy concerns: Procurement technology often involves the storage and processing of sensitive information, such as supplier contracts, financial information, and personal data. Ensuring the security and privacy of this information can be a significant challenge, particularly if the technology is cloud-based or accessible from multiple locations.

  5. Cost: Procurement technology can be expensive to implement and maintain, particularly if it requires significant customization or integration with existing systems. Organizations may need to invest in additional hardware, software, and training to ensure successful implementation and adoption.

  6. Supplier adoption: Procurement technology often involves collaboration with suppliers. Getting suppliers to adopt the technology and use it effectively can be a challenge, particularly if they are accustomed to working with traditional procurement processes.

 Overall, implementing and adopting procurement technology requires careful planning, effective communication, and a willingness to adapt to new processes and tools. Organizations that can successfully overcome these challenges can benefit from increased efficiency, improved supplier relationships, and reduced costs.

Researching procurement technology

Q “Final question, what are the best sources of information on procurement technology?”

ChatGPT – When seeking information on procurement technology, it’s helpful to consult a variety of sources to gain a comprehensive understanding of the subject. Here are some recommended sources:

  1. Industry Publications and Magazines: Publications such as Supply Chain Management Review, Procurement Leaders, and Spend Matters cover procurement technology extensively. These sources provide insights, news, analysis, and case studies related to the latest trends and developments in the field.

  2. Research Reports and Market Analysis: Research firms like Gartner, Forrester, and Deloitte often publish reports and conduct market analysis on procurement technology. These reports provide in-depth analysis, market trends, vendor comparisons, and insights into emerging technologies and their impact on procurement.

  3. Vendor Websites and Blogs: Visit the websites of leading procurement technology vendors. They often provide detailed information about their products, whitepapers, case studies, and thought leadership articles. Subscribing to vendor blogs can also keep you updated on the latest industry trends and best practices.

  4. Professional Associations and Networks: Organizations such as the Institute for Supply Management (ISM), Chartered Institute of Procurement & Supply (CIPS), and Procurement Leaders have resources, webinars, events, and publications dedicated to procurement technology. They provide valuable insights from industry experts and facilitate networking opportunities with other professionals in the field. 
  1. Conferences and Events: Attending industry conferences and events focused on procurement technology is an excellent way to stay updated on the latest advancements. Events like ProcureCon, Procurement Leaders World Procurement Congress, and Gartner Supply Chain Symposium offer insights from industry leaders, solution providers, and interactive sessions on procurement technology. 
  1. Online Communities and Forums: Joining online communities and forums dedicated to procurement technology can be a valuable source of information. Platforms like LinkedIn groups, Reddit’s r/procurement subreddit, and specialized procurement forums allow professionals to share insights, ask questions, and discuss various aspects of procurement technology. 
  1. Webinars and Podcasts: Many organizations and experts conduct webinars and podcasts on procurement technology. Platforms like Procurious, Art of Procurement, and Spend Matters regularly host webinars and podcasts featuring industry leaders, technology experts, and practitioners, providing valuable insights and discussions on procurement technology topics.

 Remember to critically evaluate the information you find, consider multiple perspectives, and assess the credibility and relevance of the sources to ensure you’re gathering accurate and up-to-date information on procurement technology.

^ Technology spend estimated using 2022/23 financial statements, director reports and market intelligence

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