Megatrend in the procurement industry highlighted at Gartner event

Artificial intelligence (AI) has become a game changer in the supply chain sector, and the field of procurement is no exception.

Ryan Polk, senior director analyst with Gartner, underscored three key megatrends that are helping to shape procurement. With the adoption of AI surging across the industry, he believes the main challenge is that AI is becoming more agentic.

“The challenge isn’t the tech — it’s the people,” said Polk. “We’re trying to run AI initiatives like IT projects, but they require a total operating model shift.”

Agentic AI models are able to expand the overall context of an operation, apply advanced reasoning and integrate multiple modes or types of information to communicate, process or understand something.

Because of these capabilities, Polk said AI agents will be able to automate routine tasks.

“When we say an agent, what I’m referring to is an AI model that has the ability to, one, perceive an environment, and two, act on that environment, independent of a human,” said Polk. “There are agents that can help with negotiating supplier contracts. There are other agents that are coming online that can help prepare market research reports based on publicly available information and provide those back to category managers and sourcing managers.”

The use of multiagent systems is also on the horizon, which Polk said will automate entire processes in procurement.

A human worker will input a user prompt, or request, and an orchestrator agent will deliver a goal prompt and output to a sourcing, negotiations and contracts agent. Once that output is received, it is reviewed by a human and passed on to a compliance agent before deployment.

Working in unison

While there’s plenty of talk about how AI will replace humans in the workplace, Polk highlighted the need for both to work together to achieve the highest levels of efficiency.

With AI agents taking on routine tasks within an organization, humans will always be needed for edge cases and exceptions that consistently occur in the supply chain sector.

“There’s typically data somewhere within the organization that describes how we go from point A to point B,” said Polk. “It usually exists in policies and procedures. We believe that agents are going to be best suited to support and take over, or at least augment in some way, shape or form, that work because there’s data somewhere within the organization that we can use to train AI models.

“But there’s another portion of work that we all do as well — non-standard, atypical work that doesn’t follow established rules or procedures.”

As the volume of work increases with the use of AI agents for common tasks, the skills required in procurement roles will also shift.

Skills such as human-AI collaboration, data literacy, prompt engineering, inductive analysis and strategic thinking will be more sought after, while data visualization, negotiation and legal and financial acumen may become less in demand.

Geopolitical uncertainty

Polk said three major factors are impacting the geopolitical landscape, one being a rise in regulations across various regions of the world.

“There are new regulations popping up in different locations related to better risk management, more protectionism, more sustainability and more consumer protection,” he said. “We’re seeing the sheer volume of regulations really challenge what we all do — challenge us to comply in different ways.”

Polk also noted that regulations are not only increasing in number but also emerging in different areas.

“What I mean by that is, we’re seeing different regions, different countries around the world regulate toward the same sorts of things, but in slightly different ways,” he said. “Data, data privacy, digital sovereignty offers a great illustration of different countries releasing the same sort of regulation, but in slightly different ways that it’s making it a little bit complex from a compliance aspect.”

And, of course, the elephant in the room is trade and protectionist policies.

Polk said businesses need to reassess their strategies in the face of geopolitical turbulence by considering four options:

Divesting: moving all procurement activities away from their current supply locations;

Decoupling: splitting operations and creating a separate ecosystem that is independent;

Diversifying: adding suppliers outside of current locations while maintaining part of the existing sourcing strategy; or

Doubling down: expanding the supplier network to build robustness.

Not feeling the energy

Polk said the macroeconomics of energy are becoming highly uncertain, with demand rising due to AI data centres, economic expansion and population growth.

He went so far as to say that energy instability will lead to rationing in high-demand countries, such as the U.S., India, Australia, Brazil — and possibly Canada.

“If the current trajectory holds true, what we’re likely to start seeing is more and more electricity rationing,” he said. “We need to think about our energy strategies much more strategically than we are today.”

As energy undergoes a transformation toward more decarbonized, decentralized and digitized sources, Polk said businesses will need to mature their energy management strategies. It will become a critical spend category, and developing strong partner connections will be essential.