Companies worldwide are eager to accelerate the digitization of their procurement functions, particularly through the use of emerging technologies like artificial intelligence (AI). A recent study conducted jointly with Digital Procurement World, which surveyed over 200 procurement executives globally, highlighted these ambitious plans. However, deeper insights from in-depth interviews with more than two dozen procurement leaders and their colleagues in supply chain and IT reveal significant challenges standing in the way of successful digital transformation. Three companies featured in the study demonstrate practical strategies to overcome these obstacles and advance their procurement digitization effectively.
A primary challenge cited by multiple sources involves managing change within the organisation. Resistance to new technologies and change fatigue among staff can hamper AI adoption. Successful companies focus on strong change management strategies, including securing cross-functional buy-in and championing digital initiatives at multiple organisational levels. Centralising procurement data and automating data cleansing are also critical steps to deal with poor data quality and siloed information—issues that plague many procurement functions and hinder the accuracy and efficiency of AI systems.
Integration of AI with legacy IT systems presents another frequent barrier. Many organisations struggle to connect new AI tools with their existing procurement platforms, risking fragmented workflows and suboptimal performance. In response, leading companies prioritise seamless integration, leveraging platforms designed for compatibility and scalability. They also invest in hiring or upskilling staff to bridge skill gaps and ensure their teams possess the expertise needed to maintain and innovate with AI technologies.
Beyond operational and technical challenges, companies must address financial considerations. High initial investment costs and unclear return on investment (ROI) can delay or derail AI projects. However, forward-looking firms illustrate that the long-term benefits—faster operations, reduced manual labour, enhanced contract management, and more strategic sourcing—justify these upfront costs.
The legal dimension of procurement digitization is rapidly evolving thanks to AI innovations. AI-driven legal technologies are expediting contract drafting, review, and management processes, delivering substantial time savings while improving accuracy. Firms such as Deloitte, KPMG, and various specialised legal technology providers have harnessed AI to optimise commercial contract workflows and procurement-related legal spending. The automation and standardisation brought by AI in these areas are not only streamlining operations but also helping companies navigate complex regulatory environments, such as new EU AI legislation.
At the same time, responsible AI use is becoming a critical consideration for procurement digitisation. Companies are increasingly aware of the risks surrounding misinformation, data privacy, bias in AI algorithms, and environmental impact. Adhering to ethical guidelines and ensuring transparency and trustworthiness in AI applications is essential for sustainable success and regulatory compliance.
Leading firms showcased in the study demonstrate that overcoming AI implementation challenges in procurement requires a comprehensive approach—addressing data quality, system integration, change management, talent acquisition, and responsible AI governance. By embracing these multifaceted strategies, organisations can unlock the transformative potential of AI, driving faster, more efficient, and smarter procurement processes that support broader business goals in an increasingly digital world.
Source: Noah Wire Services
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