Generative AI will drive strategic procurement in 2024

Done right, Generative AI is a genuinely transformative technology that can transform workplace processes and drive improvements to the bottom line and speed-to-market. CFOs can apply Generative AI to improve productivity and gain a competitive advantage.

Generative AI can also deliver insights into corporate requirements and cut costs through autonomous sourcing. AI-powered technology will make a real difference when it comes to optimising company spend across procurement, eliminating outdated manual sourcing models. At the same time, leaders must develop closer and mutually-supportive supplier relationships, start to think long-term, and work to attract top talent. 

McKinsey says procurement leaders who demonstrate value to the enterprise can rapidly become full-fledged strategic partners to CEOs, CFOs, and COOs.

This is long overdue, and Finance can take the lead in helping unlock innovation and unleashing employee productivity through the power of AI. As a result, procurement leaders can help the organisation recover millions in dollars that would otherwise be lost due to unmanaged or poorly managed indirect spend.

Automating repetitive tasks frees up time and resources, allowing managers to focus on strategic activities. In 2024, FP&A managers need to join procurement colleagues in looking for opportunities to leverage automation in spend management to drive better decision-making, increase productivity and efficiency, and deliver savings.

Two-thirds of FP&A professionals believe AI will transform the function, according to a recent survey by Thomson Reuters. Autonomous sourcing technology delivers 10-20% cost savings, 70% efficiency gains, and 20x ROI. Automated spend management platforms also reduce the risk of non-compliance. So, the FP&A manager will do well here to start championing automation to identify critical factors and link them to financial performance with data. 2024 will see a lot of positive developments on this matrix. 

Over the next 12 months, CFOs will be prioritising cost control and cash accumulation. They’ll be doing so with a focus on technology, digital transformation, and skill.

A new approach to procurement technology will enable business stakeholders to self-serve quickly and easily, driving bottom-line improvements and allowing procurement to focus on strategic aspects. We need to do this quickly, as today’s sourcing tools lack advanced automation and machine learning (and thus AI) is absent in many tools.

It’s now proven that AI-driven autonomous procurement can increase sourcing efficiencies, improve ROI/TCO, and maximise cost savings; leading global companies like Europe’s BT, Tesco and Santander Bank have adopted the power of AI to maximise returns at billions of dollars on annual spend each on the platform.

CFOs need to start working with CPOs to introduce AI-powered sourcing quickly and so get the results the organisation increasingly needs to meet the challenges of today's uncertain global economy.

In parallel, procurement leaders are under pressure to improve their operating models. To get there, more self-service is needed, as moving corporate spend to self-service without sacrificing compliance or risk management multiplies operating efficiencies and cost savings, freeing up procurement talent to focus on value-driven strategic tasks.  

Effective self-service can only really happen via a better user experience (UX) than we see today. The key to improved UX is to redesign today’s clunky and often overly manual processes to be more user-friendly, digital, and intelligent. Here, forward-thinking CPOs are adopting intelligent, autonomous sourcing platforms to optimise the sourcing process and enable their teams to operate in a more agile manner. 

This approach will enable procurement to deliver better business outcomes and help organisations survive and thrive. By embedding intelligent insights into a company's business processes, it also allows procurement teams to access and act upon valuable information and insights — driving better outcomes across the entire organisation. 

ESG (Environmental, Social and Governance) strategy is too often seen as a hindrance to rather than a driver of growth — but global corporations can take a number of positive “Enterprise Spending for Good” procurement actions, like spending more money locally and by trying to work with outstanding smaller and diverse firms.

Autonomous sourcing and spend management technology makes this possible by removing the frictions that have so far prevented us from doing this efficiently and ensuring that quality expectations will be met, while also maintaining good governance, transparency and compliance. A trailblazer here is Logitech, which is actively using the power of procurement to support greater gender equality.

If ESG is reframed as “Enterprise Spending for Good” instead of an expensive overhead, we can influence suppliers to operate more sustainably, using intelligent digital technology to prioritize suppliers who contribute to better business and social outcomes.