Why procurement will be the ‘key enabler’ for AI adoption

Will PhillipsIt is “imperative” that procurement is at the heart of AI adoption, the World Economic Forum (WEF) has warned in a report published earlier this year. Unpacking the report here, is reporter with Supply Management magazine at Haymarket Business Media, Will Phillips, MA.

Procurement is a “key enabler” in the adoption of artificial intelligence, and is best placed to establish an ethical implementation of such technologies, according to the World Economic Forum, in its report compiled in partnership with procurement software provider GEP, entitled Adopting AI Responsibly: Guidelines for Procurement of AI Solutions by the Private Sector.

“Procurement is best positioned within an organisation to help the C-suite define and create a holistic blueprint for the organisation’s Al strategy,” the report said.

It added that procurement is essential and needs to take a “high degree of control” to ensure that AI delivers “ethical, responsible, and reliable solutions, instilling confidence”, and noted that AI in procurement must be approached in a “comprehensive and collaborative manner”.
The AI market was valued at $136bn in 2022, and is expected to expand at a compound annual rate of 37.3% from 2023 to 2030. The technology’s growing prevalence, alongside the emergence of advanced GPT models – a form of AI language models used in the likes of ChatGPT – “underscore an ever greater need to establish standards for responsible AI practices and procurement”.
The report noted there are a number of benefits to AI in procurement, including automation of repetitive tasks, reducing errors or risks, accurate demand forecasting, and enabling investment decisions.
However, it warned the private sector was struggling to navigate the procurement and deployment of AI technology because of a lack of skills, defined strategy, weak data, and the lack of established playbooks on the matter.
To overcome these challenges, the report emphasised the need for a “robust procurement framework” and a “holistic approach for acquiring and deploying” AI solutions.
Procurement can adopt an integrated approach by taking a lead on teams including IT and cybersecurity, data management, and commercial. Doing so will enable coordination of IT infrastructure, data gathering, project strategy, risk management and system implementation.
From there, the report suggested procurement create an AI framework which would encapsulate the entirety of the business case, procurement strategy, and implementation.
This framework would require a clear understanding of the business strategies that are driving the need to procure an AI solution, the commercial implications of the decision, the quantity, quality and security of the data involved, the governance necessary for accountability and risk management, and the impact on the organisation’s ethics and sustainability policies.
Once an organisation has a clear understanding of these values, it said firms will be able to conduct an effective AI procurement that safeguards organisational interests and “accelerates the achievement” of business targets.
“The growth of AI has been exponential in the past decade, and AI technology is now achieving goals that seemed very distant just a few years ago,” the report added. “Organisations worldwide are increasingly adopting AI and machine learning to support business growth, improve efficiency and gain a competitive edge.
“In many cases, these AI solutions are deeply embedded into the organisation’s enterprise applications, making recommendations and predictions and influencing critical decision-making.”
The report warned that “internal separation and lack of communication” within an organisation can obstruct the effective functioning of artificial intelligence systems.
“The procurement team – or, at an enterprise level, the procurement leadership team – for whom these guidelines are primarily designed, can serve as the central point to ensure that all stakeholders are involved in a timely and appropriate manner, leading to a cohesive effort in acquiring the solution.”

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