How AI is changing procurement

Inform your discussions and decisions this week. Procurement and supply chains, long seen as dull domains buried in spreadsheets and involving repetitive tasks, are moving faster and becoming more automated. Artificial intelligence (AI) now helps firms to refine—and at times rethink—how they source, make and move goods. As the technology takes on more tasks, however, executives need to decide how far to trust it: can AI keep sprawling networks in line, uphold green goals and guide strategic choices?

Our latest research programme, Next-gen supply chains, sponsored by GEP, a procurement-software firm, examines how firms across America and Europe are integrating AI into their procurement and supply-chain operations. Drawing on a survey of over 400 executives familiar with their organisation’s procurement strategies, we categorised firms according to the breadth of their AI adoption and the type of supply-chain operations they use the technology for.

We find that around three in ten firms in America and Europe can be considered “AI enthusiasts”. They deploy the technology across five main supply-chain domains: supplier selection, inventory replenishment, demand forecasting, logistics planning or sustainability tracking. Yet the majority of firms are not as advanced as this. Around a fifth use AI in a single supply-chain area or are still experimenting with the technology, while about a tenth of firms do not report using it at all.

Where firms adopt AI, the benefits can be substantial. Executives report significant improvements in forecasting accuracy, more effective risk management and better inventory control. Take Walmart, an American retail giant. It uses advanced forecasting AI to anticipate extreme weather and proactively manage crop-supply disruptions, allowing it to reduce shortages and protect price stability.

The most significant gain could come from autonomous AI agents—digital systems that could independently onboard suppliers, negotiate contracts, track shipments and optimise logistics. Today, adoption of AI agents is limited: only around one in ten firms say they have implemented them across their procurement and supply-chain operations. However, early deployments are already showing promising results. At BMW, a German carmaker, for example, AI agents have automated repetitive data-entry and approval tasks, enabling human planners to dedicate their time to areas where intuition and strategic insight remain crucial.

AI can also help firms make their supply chains more sustainable, although the technology’s increasing use also contains a paradox. Nearly half the executives surveyed say AI systems—some more sophisticated than others—already improve how they track and reduce supply-chain emissions, and they ensure ethical sourcing. One example comes from Unilever, a British consumer-goods giant, that deploys satellite-powered AI to monitor its palm-oil sourcing for deforestation risks. Yet roughly the same proportion of executives voice significant concerns about the environmental cost of AI itself, because training and running powerful models consumes large quantities of electricity.

Also in this issue, Heidi Barnard , head of sustainability at NHS Supply Chain , the procurement arm of England’s health service, shares her views on how changes in procurement operations can drive sustainability. Plus, discover the first instalment of the Solutionist series, on the AI data-centre boom. The first article describes how the surge is reshaping energy geography, and the latest piece considers the social and political trade-offs.

Our latest research programme explores where AI is delivering results, where it is stalling—and how regulation could accelerate progress.

After a two-year period of experimenting with GenAI, companies are now focusing on long-term use cases at scale. How can businesses move beyond the pilot stage to drive value, revenue and success?

Join us at AI Innovation Asia on December 2nd in Singapore as 500 senior leaders confront AI’s ROI challenge.