Organisations are facing a stage of disillusionment when it comes to using generative AI for procurement, according to Gartner, Inc.

While some early adopters are seeing benefits, many organisations are experiencing uneven ROI or falling short of expectations, highlighting the need for a more measured and strategic approach.

“GenAI is proving to deliver process efficiency, better data insights, and cost savings for procurement organisations,” said Kaitlynn Sommers, senior director analyst in Gartner’s Supply Chain practice.

“However, fragmented and low-quality data across procurement systems can hinder accurate outputs, and integrating stand-alone GenAI solutions with existing platforms is often complex, due to differing technical specifications. Despite these challenges, its applicability across the source-to-pay spectrum continues to drive strong interest and adoption.”

Applications

GenAI-enabled procurement applications will focus on automating time-consuming repetitive tasks such as knowledge discovery, summarisation, contextualisation, workflow, and execution.

As these tools are adopted, procurement, organisations can expect to boost productivity and efficiency, reduce operational costs, and free up staff to focus on higher-value activities like strategic decision making and supplier management.

Text-to-process and workflow automation are emerging as common use cases for GenAI in procurement, enabling users to generate workflows or instruct agents using natural language.

These capabilities support tasks such as automating contract management, project scoping, supplier recommendations, and autogenerating ‘Request For’ documents (RFx). GenAI offers the potential for significant cost savings while maintaining or even improving output quality, and early adopters are positioned to gain a strategic edge over competitors.

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Adoption Obstacles

Organisations face several obstacles in adopting GenAI for procurement, including fragmented and low-quality data, job security concerns, skepticism about AI-driven insights, and resistance to change.

High and unpredictable costs, complex integration with existing systems, and emerging regulatory requirements further complicate adoption. Unclear regulations also raise concerns around privacy, intellectual property protection, and trust.

“Organisations  that delay action on integrating GenAI into procurement processes risk falling behind as early adopters overcome these challenges and realize tangible benefits,” said Sommers. “Gartner projects that GenAI for procurement will become a fully productive technology within five years.”

CPOs seeking to integrate GenAI into their operations should:

• Invest in data infrastructure to standardize and integrate information across procurement systems for more reliable insights.
• Explore vendors offering embedded GenAI capabilities and assess how these solutions align with enterprise strategies and desired business outcomes.
• Evaluate process-specific AI tools for areas such as sourcing, contract management, and supplier risk where early adopters are seeing benefits.
• Prioritize change management by encouraging learning and adaptation of procurement processes using data insights and automation.
• Monitor evolving regulations to ensure compliant implementation and seek expert guidance as needed.
• Upskill teams in digital dexterity, human-machine interaction, and prompt engineering to prepare for more AI-enabled processes.