Maximizing Value Potential from AI in Procurement by BCG – Summary & Key Insights

This report, titled Maximizing Value Potential from AI in Procurement, is a guide for CEOs and procurement leaders to understand the role of AI in revolutionizing their functions. The report aims to help leaders navigate AI and turn its potential into real profit in 2025. This can be done by addressing key questions about how AI will reshape procurement, the value it will bring and how to get started with this. It emphasizes that AI can help companies achieve a competitive advantage, resilience and long-term profitability. Let’s look at some key insights from this report.

Key Insights:

• A typical digital transformation consists of 70% people, processes, and organization; 20% technology and data; and 10% AI.
• AI and GenAI capabilities are already being deployed across the procurement value chain, leading to immediate impact.
• Procurement functions can automate up to 75% of their tasks using AI and GenAI
• AI-driven procurement can reduce headcount to approximately 70%.
• Only 70% of a buyer’s capacity will be needed in the future, freeing up resources for strategic tasks.
• GenAI can eliminate approximately 90% of manual spending data analysis efforts.
• The knowledge management tool saves approximately 50-75% of research time, which is an efficiency gain of up to 20 minutes per search.
• The offer analyst tool results in a 50% faster comparison of offers, leading to an efficiency gain of up to 2.5 hours per tender.
• GenAI can achieve time savings of around 85% when writing supplier letters, reducing the time from 60 minutes to 10 minutes.
• The use of AI can lead to up to 15% in savings depending on the category.
• GenAI can double process speeds.
• An AI tender assistant can reduce tender creation time by 40% and improve negotiation results by 2-3%.
• A manufacturer can achieve a more than 50% time efficiency gain in procurement processes with GenAI, reducing tendering time by 50% and internal knowledge search time by 50-75%.
• AI can halve the risks along the entire supply chain by providing real-time evaluation of the supplier base.
• The savings potential over the next three years as a percentage of category spending is: IT development (23-45%), marketing creation (22-42%), customer services (18-38%), admin and professional services (17-37%) and recruiting and training (16-31%).

Conclusion

The path to a successful AI transformation in procurement can be conceptualized through four pillars: a digital maturity assessment, selecting the best-suited technology, upskilling the team, and capturing value from suppliers. The report states that in order to successfully execute an AI transformation, leaders should follow five key steps: start small with quick wins, focus on value (e.g., cost savings, efficiency, sustainability), integrate tools in real-time, explore different implementation models (fully integrated, standalone or bespoke) and focus on people by enabling and upskilling teams from day one. Those who act today to integrate AI into their procurement functions will be the leaders of tomorrow’s market.

You can download the full report here.