Episode 46: AI in procurement
- Embedded IT
- Jul 7, 2025
- 3 min read
Updated: Jan 16
Artificial intelligence is beginning to reshape how procurement teams work. While much of the activity in procurement relies on data, analysis, and decision-making, AI can support many of the tasks that sit behind these processes. Let's explore where AI can have the biggest impact, how it fits into sourcing and contract management, and why human relationships will always remain essential.
If you’re thinking about adoption more broadly, we cover organisational readiness in how to prepare for artificial intelligence.
How AI supports the sourcing process
Procurement involves a significant amount of data gathering and analysis. Sourcing is a good example, as it typically starts with defining requirements. Writing requirements can be difficult, especially when stakeholders are unsure what they need. AI tools can provide a starting point by generating a draft set of requirements based on a specific prompt. Stakeholders can then review and refine these, avoiding the challenge of working from a blank page.
Once requirements are set, procurement teams usually perform market intelligence and desk-based research. This can involve identifying suppliers, gathering case studies, checking accreditations, and reviewing financial information. AI can automate much of this legwork in seconds, enabling faster, more consistent research.
When it is time to send out requests to suppliers, AI can support the preparation of RFPs and supplier lists, especially within advanced source-to-pay platforms. AI can also summarise supplier responses, compare requirements, and present prices and risks in a clear, consistent format. It can even provide recommendations based on pre-defined criteria.
How AI can support contracting and contract management
Once sourcing is complete, contracting begins. AI has the capability to review terms and conditions, spot potential risks, and highlight areas for negotiation. This helps streamline early contract discussions, especially where teams do not have in-house legal support.
After a contract is awarded, AI can be used to monitor performance. By ingesting metrics, SLAs, and operational data, AI engines can compare real performance against contractual commitments and summarise trends. This can make reporting easier and allow procurement teams to focus on higher-value work.
AI can also support invoice processing by connecting contract performance or delivery data to finance systems. As long as the service is delivered and meets contractual terms, the system can progress payment automatically.
Why humans remain central to procurement
Despite the efficiencies AI brings, the human element of procurement will not disappear. Relationship building, stakeholder engagement, and supplier management require emotional intelligence and trust, and these areas cannot be automated in the short or medium term.
In the future, machine-to-machine procurement may emerge, where AI agents negotiate with each other on behalf of buyers and suppliers. While technically possible, this is still several years away and not yet mature enough for widespread adoption.
For now, the real opportunity in procurement is to use AI to remove repetitive tasks and free up time for meaningful human interactions.
Preparing procurement data for AI
The biggest barrier to adopting AI in procurement is usually the availability and structure of data. If contracts, suppliers, and performance metrics sit in different formats or locations, AI tools will struggle to use them effectively. Centralising data will make it easier to take advantage of emerging tools.
Some AI-driven features, such as copilots in applications like Word, can still support procurement teams even without perfect data. These tools can automate smaller tasks and make everyday work more efficient.
Embracing AI as part of procurement’s evolution
AI should not be seen as a threat to procurement roles. Instead, it represents another shift in how work is done, similar to the industrial revolution or the rise of automation in other industries. Procurement teams that understand how AI works and prepare their data will be well-positioned to benefit from the opportunities ahead.
For procurement teams looking to understand how AI can support their sourcing and contract management processes, get in touch.
