Enabling Capability Through Generative AI

Nearly 70 percent of CPOs say their companies have yet to adopt generative artificial intelligence (AI), a recent survey by source-to-pay solutions leader Zycus found. Why have they been slow to respond? Are they wary of new technology? Or are there other reasons why they haven’t jumped on the gen AI bandwagon?

“We’ve seen generative AI become mainstream in so many different conversations,” said Jim Fleming, CPSM, CPSD, who is Manager, Product Development and Innovation at Institute for Supply Management^® (ISM^®). “What we’re observing is individuals are almost ‘drinking from a fire hose’ when it comes to the AI environment.”

But many organizations are still undergoing digital transformations, shifting from a tactical focus to a strategic one, Fleming added during a Zycus webinar last week. It’s not that CPOs or companies don’t want to adopt generative AI, “it’s the rate at which they can absorb,” he said.

During “The State of GenAI in Source-to-Pay,” Fleming said that organizations are faced with continuing change happening at an ever-increasing pace. “At the rate of change that is coming at them,” he said, “it’s their ability to absorb it in addition to every other strategic priority that they’re struggling with.” That rapid rate of change likely will result in companies adopting generative AI more quickly in the next few years, he said.

It’s not that organizations are necessarily slow to adopt, Fleming added: “I think we're in a natural transformation that is going to really pick up speed here in the next one to two years.”

A Strategic Advantage

While 70 percent of CPOs say they have yet to adopt generative AI, there still is another 30 percent that have, said speaker Richard Waugh, vice president, corporate development at Zycus. “There will always be early adopters (as well as) pragmatists who wait to see that it's real, that it works, that there are benefits,” he said.

For early adopters, generative AI offers numerous benefits, including a potential competitive advantage. “AI enables employees to do things better, faster and to accomplish more tasks,” said speaker Marijn Overvest, founder of Procurement Tactics, a procurement education company. Whether early adopters or not, he said, organizations should start experimenting with generative AI.

Clockwise, from left: Jim Fleming, CPSM, CPSD, Manager, Product Development and Innovation at Institute for Supply Management^® (ISM^®), Marijn Overvest, founder of Procurement Tactics, and Richard Waugh, vice president, corporate development at Zycus, during a webinar last week.

Generally, about 10 percent to 15 percent of companies are early adopters, while an equal percentage is typically resistant to change, Fleming said. One concern about generative AI is its potential impact on procurement roles, including the possibility of job elimination.

In most procurement organizations, he said, a large amount of spend is managed by smaller staffs. “And the amount of spend is going up while head counts continue to go down,” he said. That means organizations must create or expand strategic roles — and tools like generative AI can enable employees concentrate on strategy and innovation rather than mundane tasks.

A Case in Point

Overvest shared a story about how he once had forgotten to put together a slide deck for a presentation that was in several hours. He said he turned to the company’s generative AI for inspiration. “I asked, ‘I have an investor meeting at 5 p.m.; which 12 slides do we need to present?’ The answer was exactly the 12 slides that I wanted to prepare,” he said. As the next step, Overvest asked which points should be included on the slides.

“This isn’t a procurement example,” he told webinar viewers. But it is an example of how of individuals — including procurement professionals — can use AI to accomplish tasks faster, he said.

Fleming responded, “It’s at those moments, I think, the light bulb goes off that (generative AI) isn’t a monstrosity; it’s actually a functional tool that we can utilize.”

For procurement organizations, AI enables practitioners to spend less time on administrative processes and, Overvest said, “more time to do things that we really enjoy, like managing our suppliers or negotiating either for better prices or for better deals.”

Procurement organizations are being asked to pick up more supply chain functions, such as logistics and materials management — areas where use of technology, including generative AI, can make an impact, Fleming said. As roles change, such technology can help practitioners understand, manage and develop additional skill sets, enabling them to become business leaders rather than procurement employees.

The use of generative AI is going to continue, evolve and expand. The snowball effect, Fleming said, will be the creation of more capable organizations.

(Top image credit: Getty Images/BlackJack 3D)