Chief procurement officers (CPOs) remain skeptical of the positive impact artificial intelligence (AI) will have on their workload as well as procurement and supply chain operations.

66% of CPOs surveyed by McKinsey & Co. believe generative AI is still years from producing substantive business results. But there are pockets of success.

“Many CPOs question the transformative impact that generative AI (GenAI) can deliver,” McKinsey says. “The arguments range from overly niche functionality to concerns about the accuracy and security of using the large language models (LLMs) that underpin it.”

Despite a lack of buy-in from some organizations, there are distinct AI applications that can facilitate more efficient procurement procedures, McKinsey says.

Insights and trends from the external market and internal priorities

“It includes supplier performance attributes, demand specifications, and risk management,” McKinsey says. “A multilayered generative AI tool can generate a robust end-to-end category strategy in far less time than was previously possible, coordinating input from many sources and contributors. Over the past year, we saw GenAI models formulate strong strategies in categories ranging from highly specialized precision-machined parts to more mundane temporary labor.”

Interactive engagement

Generative AI enhances internal and external relationships by eliminating friction due to different time zones, busy schedules, and overwhelming data,” McKinsey says. “Instead, it aids conversations with talking points that better reflect the counterparty’s priorities.”

Examples include negotiator pilots who craft scripts based on multiple scenarios.

“Gen AI can play different roles in mock negotiations to pressure test a strategy by examining arguments and counterarguments,” according to the research and consulting firm.

Faster software programming

Generative AI models can take script code from one system and bridge it into others. That greatly accelerates digital sourcing transformations and tool adoption, McKinsey says.

“For some CPOs, this has taken years off their technology road maps and shifted the return on investment (ROI) in favor of greater automation and analytic horsepower,” according to McKinsey. “It is a terrific illustration of GenAI and traditional AI working together to create leapfrog progression in procurement capabilities.”

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