Procurement’s overlooked revolution: AI adoption lags despite strategic potential

While procurement professionals see AI as vital for strategic decision-making, leadership prioritisation remains low, risking a widening gap that could undermine supply chain resilience amid economic pressures.

Despite the growing recognition of artificial intelligence (AI) as a transformative tool across business functions, procurement remains notably overlooked in AI investment priorities, according to recent research by SAP Taulia. Their global study reveals that onl...

y 35% of leadership teams prioritize AI adoption in procurement and supply chain management, significantly trailing finance (43%), data analytics (39%), and cybersecurity (38%). This under-prioritization comes at a time when procurement professionals are facing intensified demands, with 72% reporting increased workload pressures over the past year and 44% believing AI could fundamentally address these challenges.

The research highlights a clear paradox within the procurement function. While procurement leaders see AI as a key enabler for tackling issues such as risk detection, strategic data-driven decision-making, spend analysis, and process automation, actual investment at the leadership level remains inconsistent and regionally disparate. For instance, only 20% of UK leadership teams prioritise AI in procurement, compared to much higher rates in Australia (44%), Singapore (41%), and the USA (37%). This uneven adoption landscape underscores a persistent perception of procurement as more operational than strategic.

Procurement professionals, however, are already tapping into AI tools. The study finds that 55% are utilising AI-powered procurement platforms such as SAP Joule, Ivalua, and JAGGAER, while 63% employ generative AI platforms like ChatGPT, Gemini, or Microsoft Copilot. The practical effects of such tools are significant: 90% of procurement leaders report that AI frees them up to engage in higher-value activities like relationship management and long-term value creation, and nearly 9 in 10 believe AI supports stronger data-driven insights and greater strategic influence within their organisations.

Barriers to broader AI adoption in procurement remain formidable. Over one-third of procurement professionals point to low awareness or understanding of AI’s benefits among senior leaders, while concerns from leadership focus heavily on data security and compliance (36%), insufficient AI expertise, lack of alignment with wider digital strategies, and limited training (each around 33%). Operational challenges include uncertainty over integrating AI with existing workflows (31%) and poor data quality (30%). These impediments align with findings from other industry reports, which also highlight practical difficulties such as IT restrictions, trust issues with AI outputs, and the need for clear governance and collaboration between procurement and technology departments.

Economic pressures further heighten the urgency for AI adoption. A Fairmarkit study indicates that 84% of procurement leaders believe a recession is underway or imminent by the end of 2025, intensifying the need for procurement teams to harness AI capabilities. This study notes the risk that procurement’s slow AI readiness could leave organisations vulnerable as suppliers themselves become more sophisticated in deploying AI tools, potentially increasing competitive pressures.

Cultural and organisational resistance also play a significant role in delaying AI integration. Insights shared by industry experts pinpoint ethical and privacy concerns, fear of job displacement, mistrust in AI decisions, and a lack of education about AI’s strategic augmentation role as key factors fostering hesitation. Procurement leaders urge a shift in mindset, framing AI not as a risk to jobs but as a tool to automate routine tasks, thereby allowing teams to dedicate more resources to strategic activities like negotiation, relationship building, and value creation.

Industry voices reinforce this call for change. Danielle Weinblatt, Chief Product Officer at SAP Taulia, emphasises that procurement sits at the centre of business resilience and supply chain security and that AI offers a significant opportunity to elevate procurement’s strategic contribution. John Roberts, Senior Director at NTT DATA, underlines that AI is vital not just for cost reduction but for building resilient supply chains and enabling true risk detection. Ashifa Jumani, Director of Procurement at TELUS, highlights the need for leadership to champion AI adoption by focusing on its role in empowering procurement teams rather than threatening them.

The consensus among experts and research alike is clear: procurement must overcome structural, cultural, and knowledge barriers to fully embrace AI. Doing so promises to transform procurement from a traditionally operational function into a strategic business partner capable of enhancing resilience, efficiency, and long-term value, especially in an era marked by economic uncertainty and global supply chain volatility. It remains essential for organisations to commit both immediate and long-term investment to AI in procurement to unlock these benefits and secure future agility and competitiveness.

Source: Noah Wire Services