Generative AI can boost the procurement function, says Roland Berger

With innovative tools becoming increasingly important to a wide range of industries, leaders continue seeking the best use cases for GenAI. A report from Roland Berger highlights the important role that GenAI will likely play in the procurement function going forward.

The procurement functions in businesses across different sectors have been struggling. In the past few years, chaos has reigned in supply chains: inflation, the pandemic, and geopolitical instability have all contributing to the problem, which has only just started to improve. Meanwhile, procurement teams are under pressure to deliver on the ESG goals of companies.

Going forward, Roland Berger points to innovative technology like GenAI as the future saving grace for procurement functions across Europe. GenAI applications like advanced data analysis tools and chatbots will introduce new levels of efficiency and optimization to procurement.

A total of 56% of respondents to the survey from Roland Berger indicated the source-to-contract process as the area where they believe GenAI will have the strongest impact. And for good reason: tedious manual contract processing tends to cost businesses a lot of money.

The processes that involves identifying and qualifying potential suppliers, verifying compliance, and generating RFQs (requests for quotations) all require very large amounts of data to be collected and analyzed. Without GenAI, it calls for a lot of manual, time-consuming work.

The report reveals that procurement leaders expect GenAI to benefit a number of different functions. For example, leaders foresee a 100% improvement in compliance, 30% lower CO2 emissions, and 50% higher savings, among other bonuses.

Complying with regulations and keeping to ESG initiatives will increasingly be top of the agenda for major companies. GenAI will help procurement leaders glean valuable insights from huge amounts of data in order to make the best possible decisions in line with their goals.

“Both far-reaching ESG legislation and stakeholder expectations require companies to ensure transparency about their carbon footprint throughout the entire supply chain and to initiate appropriate optimization measures based on these insights,” reads the Roland Berger report.

“GenAI can help to consolidate scattered and often only indirectly available information and analyze complex and partly unstructured datasets related to greenhouse gas emissions. It offers effective approaches and tools for automatic pattern identification.”

GenAI may not yet be totally ripe for procurement functions, considering procurement requires strict processes with which companies have to verify provenance data and other information on companies they do business with. That still appears to require the human touch – for now.

Despite that, it certainly is an area of growing interest for GenAI tools. Other areas (like customer service and sales, for example) have already been adopting AI tools at a significant rate. As GenAI reaches new levels of maturity, new use cases will begin to make more sense in the medium term.