UK businesses embrace Gen AI in procurement for efficiency gains

Almost a quarter of UK businesses have deployed Generative AI tools in procurement and supplier management in the last 12 months, according to new research from Ivalua. The study, which surveyed 300 supply chain and procurement leaders in the UK, revealed significant efficiency gains in companies that have adopted these tools.

Organisations that have incorporated Generative AI (Gen AI) tools into their processes reported a 44% reduction in manual tasks. Functions such as task automation (69%), internet research (67%), document analysis (59%), and content creation (48%) have seen notable improvements. Furthermore, 61% of the respondents believe that harnessing Gen AI will be crucial for effective spend management.

The research also highlighted that while 24% of businesses have already implemented Gen AI tools, another 55% are either in the process of doing so or are considering adoption. Not all are on board yet, with 19% indicating no plans to implement Gen AI.

On expectations from Gen AI in the future, 54% of respondents anticipate that the technology will improve efficiency, and 36% believe it will free up time to focus on strategic objectives. However, concerns remain, with 35% of procurement leaders worried that Gen AI might replace their roles.

Vishal Patel, VP of Product at Ivalua, commented, "Gen AI represents huge productivity gains and resource unlock for procurement. But to succeed, careful change management and education are required to show employees Gen AI will enhance their role rather than replace it. With employees on board, businesses can focus on harnessing Gen AI to eliminate routine and time-consuming tasks while focusing on higher-value activities. But another key barrier remains - addressing a lack of progress on digitisation."

The report indicates that digital transformation in procurement has stalled over recent years. On average, organisations report that they have digitalised 48% of their procurement processes, compared to 45% in 2019. This stagnation presents challenges to Gen AI adoption, compounded by issues such as poor data quality, lower technical skills, and insufficient operational guardrails.

Poor data quality was cited by 22% of procurement leaders as a challenge to Gen AI adoption. Additionally, more than a quarter (28%) of leaders pointed to user resistance as a significant hurdle, suggesting a lack of digital skills or technical confidence. Furthermore, 33% of respondents are concerned about the unauthorised use of Gen AI tools, with 68% agreeing on the need for better guardrails to ensure the accuracy of AI outputs.

Patel emphasised, "Businesses need a solid data foundation for procurement and supply chain teams to effectively harness AI to improve efficiency and contribute to effective and timely decision making. But the lack of progress in digitisation and common data challenges suggest there is a significant gap to be bridged before Gen AI can deliver more strategic value. Most procurement leaders agree that if their organisation doesn't embrace Gen AI in procurement, they will lose out on cost savings and broader value creation opportunities. So, businesses must act now to digitalise and close the technology and data gaps in their procurement function. If not, they will struggle to measure up against AI-powered competitors, potentially losing customers and market share."

The survey conducted by Sapio Research was based on responses from supply chain and procurement decision-makers in the UK.