Sanjay Kumar, chief data officer at Exponentia.ai, explores how artificial intelligence and machine learning are shaping the future of strategic spend analytics.

Procurement is undergoing a transformation, shifting from a purely operational function to a strategic pillar of business growth. At the core of this evolution is spend analytics which leverages data to gain a comprehensive understanding of procurement activities, supplier performance, market trends, and industry benchmarks. The integration of artificial intelligence (AI) and machine learning (ML) is challenging traditional procurement practices, enabling organisations to go beyond the basics of cost, quality, and delivery. By tapping into the vast amounts of data available, procurement teams can transform themselves into value creators, driving innovation, reducing risk, and contributing to the organisation’s strategic goals.

Overcoming legacy challenges with new technologies

For years, procurement teams have relied on manual or semi-automated processes to manage data, often grappling with uncategorised spend, limited spend visibility, high manual processing, poor data quality, and inconsistencies. These challenges often result in siloed data and incomplete insights, preventing procurement leaders from making informed decisions and driving up costs.

For example, even identifying the top 10 suppliers by geography can become a tedious task when relying on outdated methods. In contrast, new technologies are capable of processing vast volumes of data with a speed and accuracy that surpasses human abilities, enabling organisations to see their spending patterns more clearly and react faster to change.

Value delivered by AI and ML in spend analytics

Spend analytics, a critical component of procurement, has emerged as a prime area where AI and ML are delivering transformative results.

A recent WBR Insights survey found that 76% of procurement professionals such as procurement strategists and operational professionals reported that their organisation's ability to develop strategic insights using AI-powered analytics was either “advanced” or “above average.”

This finding highlights the growing role AI and ML play in enhancing the decision-making capabilities within procurement teams. It was also found that significant time was being saved through these technologies. 62% of organisations were able to reallocate time previously spent on manual tasks toward more strategic-level planning. By automating labour-intensive processes, procurement teams are focusing on executing the opportunities revealed by these insights.

Automating for time and cost efficiency

Procurement teams are automating routine processes, freeing up time for higher-value tasks. For strategically sourced items, AI streamlines competitive bidding, speeding up sourcing and securing better pricing. For non-strategic supplies, ML identifies preferred products or alternatives, enabling quick, cost-effective purchasing decisions. By consolidating spend across departments, procurement teams gain greater negotiation power, reducing the time spent on manual searches and reordering. This allows procurement professionals to focus more on strategic sourcing, supplier relationships, and other high-impact initiatives.

Be compliant and choose the right suppliers

These technologies can analyse vast amounts of data to flag potential supply chain disruptions, such as supplier financial instability or geopolitical risks, well before they impact operations. By continuously monitoring supplier performance and external market conditions, AI helps procurement teams proactively manage risks. Procurement teams can also automatically detect compliance issues such as non-adherence to regulatory standards or ESG risks among potential suppliers, ensuring that businesses have GSS visibility and are committed to their sustainability goals.

The future of procurement with AI and ML in spend analytics

The future of procurement lies in transitioning from reactive cost management to proactive value creation. The ability to synthesise and act upon complex data in real time will soon distinguish market leaders from the rest. However, AI and ML alone aren’t enough. To fully unlock their potential, modern cloud platforms like Azure and AWS are essential in offering the scalability, visualisation and processing power that traditional methods lack. The question isn’t whether procurement will adopt these technologies, but how quickly and effectively companies will embrace the shift.

At Exponentia.ai, we are helping businesses leap to the forefront of this innovation with our Procurement Spend Analytics (PSA) solution, helping businesses confront their procurement challenges head-on with AI and ML capabilities.

As procurement evolves, the question remains: will procurement teams embrace these advancements and take the lead, or will they risk being left behind by those who do?