What 2024 Taught Us About AI in Procurement

2024 was a big one for Artificial Intelligence (AI) and the supply chain, with this incredible tech shifting from promising concept to a pivotal component, reshaping the way procurement functions. As you read on, you will quickly discover that AI’s footprint has been unmistakable over the past year. 

So, let’s look back at the key AI advancements that have defined procurement over the last 12 months, and explore what 2025 might hold.

A Turning Point for Generative AI

One of the biggest buzzes in 2024 was the rapid rise of Generative AI (GenAI) in sourcing. According to Gartner’s 2024 Hype Cycle for Procurement and Sourcing Solutions, Generative AI has hit the peak of inflated expectations (that’s the second of five phases in their Hype Cycle framework). This means while everyone’s hyped up about the technology, some scepticism is creeping in about how practical it really is. 

That said, the adoption rate of Gen AI is impressive – according to Gartner, 73% of procurement leaders expected to implement Generative AI by the end of 2024. In fact, it’s already found its way into many procurement workflows – across contract management, sourcing, and supplier management. Procurement tech vendors aren’t missing a beat either – they’re all busy integrating third-party large language models (LLMs) to bring more accessible and budget-friendly Gen AI capabilities to the table. 

For example, integrated procurement platform, Zycus, introduced its Merlin Assist Chatbot in 2024, which integrates seamlessly with Microsoft Teams and acts as the “front door” to procurement. Users can interact with procurement processes directly – asking questions, extracting contract details, generating summaries, and streamlining workflows. They’ve also launched Merlin GenAI Power Apps through their AppXtend platform. Zycus claims these apps can unlock 10x efficiency and effectiveness by tackling critical tasks like automating contract risk management, simplifying sourcing, enhancing accounts payable, and more.

AI-Powered Invoicing and Analysis

AI-powered invoice processing has also been making its mark with AI and machine learning (ML) being applied to automate the procure-to-pay cycle. This progress can be seen in Basware’s newly developed technology – SmartPDF AI, which virtually eliminates the tedious task of manual data entry and field mapping. 

In fact, the AI automates the conversion of machine-readable PDFs into e-invoices with – over 97% accuracy, the company claims. It achieves this by learning from historical invoice data to automatically extract key information and adapt seamlessly to new suppliers or changing invoice formats – no additional configuration required.

Adding to this innovation is Basware’s SmartCoding which takes invoice automation even further. This machine learning-powered tool recommends coding for invoices without purchase orders by analysing historical financial data to suggest the most appropriate codes. Over time, it continuously learns and improves, becoming more accurate with every transaction it processes.

AI-Powered Spend Analysis

For procurement teams, scattered, incomplete, and inconsistent spend data has long been a major source of frustration. GEP SMART has taken on that challenge by developing an AI-powered solution that reimagines how organisations understand and optimise their spend.

GEP SMART’s advanced AI engine work dives deep into vast datasets, assigning accurate categories even when the details are fuzzy. Line by line, it evaluates invoices, leveraging probabilities, matching rules and historical patterns to classify spend intelligently. 

For example, if a supplier primarily provides steel bearings but occasionally offers engineering consultancy, the AI uses business unit data to make the right classification. These types of dynamic learning and retraining processes promise to take spend data and make it a coherent whole, ready to support strategic decisions.

AI in Procurement Integrations

Another notable use case that emerged in 2024 is the use of AI to solve integration challenges. Proactis, through its Rego platform, exemplifies this with SnapLogic’s AI-driven integration technology at its core. The AI powers intelligent, adaptive connections between procurement systems and ERP, finance or supply chain platforms. 

Now, instead of relying on static configurations or developer-heavy setups, the AI dynamically handles tasks like data mapping, process alignment, and information exchange in real time. This means faster implementation, improved spend visibility, reduced compliance risks, and accelerated benefits from existing technology investments.

Leveraging AI to Optimise Procurement Choices

Traditionally, identifying and onboarding suppliers has taken a good slice of time, requiring procurement teams to sift through data and negotiate alignment across supply chain needs. AI, however, has entered the chat to offer tailored, data-driven insights that streamline supplier management and expand sourcing options.

Take Oracle, for example, which has introduced supplier recommendation capabilities in its Fusion Cloud Supply Chain platform. Their solution uses advanced AI algorithms to help procurement teams identify potential suppliers that align with their product categories and organisational requirements. The technology takes it a step further by integrating product descriptions and purchase categories into the recommendations, ensuring that suppliers meet specific operational needs.

AI in Supplier Management

AI is being used in supplier management too. Using AI-powered tools, procurement teams are able to gather and analyse data from multiple sources – supplier records, market trends, historical performance, and even external factors like geopolitical risks or compliance issues. This multidimensional analysis supports a far more accurate and nuanced understanding of a supplier’s reliability and risk profile.

For instance, JAGGAER has launched an AI-driven supplier management tool that uses advanced algorithms to continuously monitor supplier behaviour and performance metrics. Specifically, the tool will flag potential risks, such as declining delivery times or quality issues, before they escalate into critical supply chain disruptions.

So Long to 2024’s Breakthroughs – What’s Next?

The examples shared in this article are just the tip of the iceberg when it comes to AI’s role in procurement. 

In 2024, it seemed no vendor worth its salt skipped the opportunity to launch an AI-powered feature, with countless solutions rolling out to transform everything from spend analysis to supplier management. And this is only the beginning. 

As 2025 gets underway, the innovation pipeline is buzzing with even more ambitious developments, promising to push the boundaries of what AI can do for procurement teams. Expect AI to tackle more complex procurement challenges, from end-to-end supply chain forecasting to autonomous decision-making tools that preempt and resolve disruptions before they happen. 

We might also see vendors double down on AI-powered integrations that bring siloed systems together, or AI-powered ESG solutions to help meet sustainability targets, and real-time risk management capabilities.

For procurement teams, the future looks not just promising but transformative. Only time will tell how far AI can take us.

How do you see AI shaping the Procurement profession in 2025? We’re interested in hearing your thoughts on the past year and predictions for the future, especially if your organisation is making a point of pushing on with an AI agenda this year.