“Procurement will look very different in a year, a year-and-a-half from now,” said Remko van Hoek, a professor of supply chain management in the Sam M. Walton College of Business at the University of Arkansas. “It requires an across-the-spectrum rethink.” 

Van Hoek was speaking at the DPW (Digital Procurement World) 2024 conference in Amsterdam, in front of a packed hall of 1,300 attendees (and an estimated 2,000 livestream viewers) in the city’s gothic 19th century Beurs van Berlage building, which sits near the site of the world's first stock exchange.

That radical rethink, most agree, involves an extreme automation makeover, including the adoption of various technologies, particularly large language model artificial intelligence, or generative AI.

Most companies are dragging their heels, though. The estimate of progress actually made toward the nirvana of procurement process automation varied — from 15% to 50% — depending on the views of a range of speakers on the first day of sessions on October 9. But what emerged as a persistent theme at this year’s event — DPW’s sixth in Amsterdam, with an inaugural conference in New York earlier this year — was that a better, more transparent and efficient procurement function could, in multiple ways, lead to a better world. These include reversing environmental decline, income inequality, food insecurity and inadequate healthcare.

How? “Procurement has a role in this journey, these lofty goals,” said Shashi Mandapathy, chief procurement officer at healthcare giant Johnson & Johnson. DPW Amsterdam host Andrew Moskos put it more baldly. “Procurement does not have a seat at the table. It is the table!” he said at the opening ceremony. “We don’t just control the spend, we control our sustainability and our supply chain.”

Mandapathy referenced the dramatic shift in the Business Roundtable’s language in its Principles of Corporate Governance about whose interests publicly traded companies should serve — from purely shareholders in 1997, to “stakeholders” in 2019, including customers, employees, suppliers, communities and shareholders. “Procurement is a rare business function, because it covers all of these, and has an impact on them,” Mandapathy said.

Perhaps the most heartfelt presentation came from Paul Polman, former chief executive officer of Unilever, and author of Net Positive, a new book that offers “key lessons from Unilever and other pioneering companies around the world about how you can profit by fixing the world’s problems instead of creating them.”

Polman argued that 80% of technologies that improve sustainability and other outcomes now pay for themselves; it’s just a question of finding the resources and the willpower to go after those outcomes. He pointed to an example of Unilever’s former strategy of using “contingency” workers in developing countries so that it could avoid the expense of providing full employee benefits. As a result, the workers struggled to make a living wage. When Polman as CEO changed the policy to switch to more secure employment terms, “everything got better. Productivity got better. Attrition got better,” Polman said. The same mentality needs to be brought to many other issues, including wasteful exploitation of the world’s resources, which has left humans threatened by climate volatility and trash. “The truth is that we’re at the point now where the cost of not acting is higher than the cost of acting,” he said.

Read More: Procurement Teams ‘Need to Think Ten Times Bigger’ DPW Founder Says

Kris Timmermans, author and senior managing director of Accenture Strategy's supply chain, operations and sustainability practices, sounded a gloomy note when contemplating a supply chain that is not embracing AI-enabled automation as quickly as possible. “I don’t want to sound like Dr. Doom,” he said, "but there are some challenges emerging in supply chain that are really serious. The growth strategy of most companies is increasing the complexity of supply chains.”

He pointed to an increase in trade restrictions as a prime example — including tariffs, sanctions and other regulatory barriers such as those aimed at eliminating any form of U.S. dependency on China. “We need to get rid of the assumption that we can have a seamlessly connected supply chain,” he said. Extreme weather events, cybersecurity risks and regulations on climate and deforestation all add to the increasing complexity, and there’s no way to manage it all efficiently without AI helping humans, he warned. “It is humanly impossible to optimize this. We have to put it in the hands of network optimizers. We have to release the power of digitized data.” Even what-if scenarios, currently popular as a proposed fix for unpredictable supply chain events, are “outdated,” he said. “We need continuous supply chain planning and execution.”

As a hopeful contribution to the day’s events, Jag Lamba, CEO of third-party risk management software platform Certa, gave a demonstration of what is currently possible, and what will soon be, when AI is unleashed on procurement. “The capabilities of generative AI are perfect for procurement,” he said. He showed how GenAI can, for example, scan a supplier’s website for environmental, social and governance (ESG) reports, and automatically fill in required questionnaires or flag real risks embedded in policies and reports. It can also gather information about multiple EU regulations from all over the internet, and synthesize them into protocols that guide a procurement orchestration process.

Most speakers agreed that the actual functions where AI is being deployed so far need to radically expand, because they’re still mostly clustered in the operational and administrative areas of business. Lamba said that, in the last five years, there’s been a move from traditional IT to adopting AI as a kind of operational “co-pilot.” But where we need to go is using AI as an “agent” or co-worker, then as an engine of innovation, and finally as a nerve center of business organization.

“This will lead to a productivity revolution,” Lamba predicted, likening it to the Industrial Revolution and the birth of information technology. “And like all revolutions, it brings change. You have to decide how you’re going to respond. You don’t want to be a blacksmith in the Industrial Revolution.”

Vision and bold leadership are required to move into the next phase of automated procurement, all agreed. “AI is not going to replace any human being,” said Timmermans. “AI is going to replace every human being who does not want to move with you.”