Travelling with AI into the Future (and Present) of the Procurement function

Research by SDA Bocconi’s Procurement Lab

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While rapidly expanding within corporate functions, artificial intelligence is also knocking on the Procurement department’s door. Optimizing and innovating procurement systems through AI is one of the new challenges for companies and institutions. SDA Bocconi’s Procurement Lab has taken up the challenge by analyzing AI adoption, prevalence, areas of use and outcomes in the purchasing processes of players in the Italian market, with the support of its main sponsors SAP and Accenture.

Procurement LAB was created with a view to studying the major changes in procurement processes due to market dynamics and the use of the new digital technologies, and to supporting purchase managers in their strategic choices. In addition to its main sponsors, the Lab works with the Chief Procurement Officers (CPOs) of major Italian and multinational companies.

The first research project in 2021 focused on implementing Artificial Intelligence technologies in the various phases of the purchasing process. Researchers surveyed the CPOs of 130 companies in Italy and adopted a broad definition of AI, including both the most complex methodologies such as Machine Learning and Deep Learning and the most deterministic applications like Robotic Process Automation and Optical Character Recognition.

“The picture concerning the use of AI in purchasing processes is clear. One third of our sample companies were already active on AI technologies and cooperated with consulting firms, software vendors and other actors in their supply chains. The remaining two thirds had not yet explored this kind of technologies,” highlights Giuseppe Stabilini, scientific director of Procurement Lab and co-leader of the project with his colleague Luca Molteni.

The research group classified AI projects according to the desired objective (for efficiency/effectiveness) and the degree of innovation in the operational model (existing/new). The projects fell widely into the “optimize” cluster (36%) – using AI technology to improve efficiency and free people from activities with lower added value – and “expand” cluster (31%) – pursuing more effective purchase decisions also thanks to new operational models that improve speed, quality, costs. risk control, and the management of administration processes. In 26% of the projects, AI could constantly improve algorithms thanks to autonomous feedback circuits integrated in the technology. Surveyed CPOs reported outcomes in line with their expectations in 51% of cases, or above them, in 10% of cases.

The research team identified two areas for investment in the future: companies that do not have AI projects yet should move towards this opportunity by acting on strategies and corporate culture with a proactive leadership that is open to external collaborators; companies that do have ongoing AI projects should go for internal training plans to strengthen existing skills and attract new qualified ones. The CPOs said that, in the following years, AI will shift its focus to complex phases in the purchasing process such as Budget Planning & Savings Tracking, Risk Management and Collaborative Planning & Forecasting. Algorithms will need to collect data and process information both from supply chain partners and the external environment.



SDA Bocconi School of Management

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