A recent study by Fairmarkit has revealed that a significant 84% of procurement leaders believe a recession is already occurring or is imminent by the end of 2025. This sentiment reflects broader economic anxieties, as procurement teams face increasing pressure to adapt to rapidly evolving market conditions. Interviews with over 100 senior procurement professionals indicate that rising economic volatility is not just straining budgets but is also highlighting a gap in AI readiness among procurement teams, particularly as suppliers adopt more advanced AI technologies.
According to Fairmarkit’s findings, a substantial 94% of procurement leaders reported that their suppliers are already leveraging AI in negotiations. However, this rapid adoption has raised concerns within the procurement community. Nearly half of the respondents expressed apprehension about relying on AI-generated data, fearing that it may be inaccurate or incomplete. Additionally, 39% voiced concerns that AI might lead to unfavourable deals during fast-paced negotiations. This anxiety often stems from a lack of strategic implementation, as companies may turn to unapproved or inadequate tools rather than investing in robust AI solutions tailored for procurement.
As the threat of recession looms, the stakes are reportedly higher. Procurement leaders highlighted primary challenges such as managing tighter budgets and navigating ongoing supply chain disruptions. With cost management now more critical than ever, many are looking towards AI as a means to enhance decision-making and operational efficiency.
Despite a strong executive mandate for AI adoption—cited by 91% of organisations—challenges remain significant. Key barriers include concerns over data privacy (64%), resistance to change (57%), and governance issues (55%). Furthermore, 52% noted that their teams lack a comprehensive understanding of how to effectively utilise GenAI tools, hampering progress.
Contrary to fears that AI may eliminate jobs, the report suggests a different narrative. Many procurement leaders anticipate that AI will reshape roles rather than replace them, with 44% expecting workforce growth as a direct result of AI adoption. A majority of organisations are investing in training for AI capabilities, focusing on essential skills such as data interpretation and strategic decision-making.
These findings resonate with insights from other relevant studies. For instance, a report by The Hackett Group suggests that while AI has the potential to transform procurement roles significantly, leaders must address an efficiency gap wherein expected workloads are set to grow far quicker than budgets. Meanwhile, a sponsored study by Icertis indicates that 90% of procurement leaders are considering AI agents to optimise operations, ensuring they generate value beyond mere cost savings.
In the broader economic context, analysts have remarked on the hesitance of companies to pursue substantial AI investments amid economic uncertainties. The Financial Times highlighted how market volatility has led many firms to scale back on capital expenditures, despite long-term projections by firms like Goldman Sachs forecasting substantial AI-related investments in the coming years.
As the procurement landscape continues to evolve, the call for faster operations, smarter negotiations, and strategic decision-making in the face of AI-driven competition has never been more urgent. Failure to act decisively may leave procurement teams at a disadvantage relative to increasingly sophisticated suppliers. The pressing need for effective adaptation strategies appears vital for navigating potential economic downturns while capitalising on opportunities that AI technologies provide.
In summary, while the adoption of AI in procurement presents both significant opportunities and substantial challenges, the momentum is clearly shifting. Companies that embrace this technology effectively may find themselves better equipped to tackle the complexities of a changing market landscape.
Reference Map
[1] Fairmarkit press release
[2] Financial Times article
[3] The Hackett Group study
[4] Icertis report
[5] Hackett Group insights on Gen AI
[6] World Metrics report
[7] Keelvar report
Source: Noah Wire Services
Subscribe to Industry Updates
