Imagine you’re a procurement manager in a specialist manufacturing company. You’ve got to source the industrial materials and technical parts which determine the quality of the final product your customers receive. There’s a continual stream of evaluations and requests with suppliers to make sure they’re reliable, compliant and high-quality. Keeping track of that information and balancing it all to select the right suppliers can be an overwhelming task. Each decision can have multi million dollar implications on the business. Oh, and the team is using the same tools as two decades ago.
20 years after sales teams began centralising their prospect data en masse with CRMs, many procurement teams still deal with unnavigable supplier databases. With supplier data scattered across an unwieldy tangle of Excel sheets and enterprise resource planning (ERP) systems, tracing the full length of a procurement process, never mind continual supplier communication, is no easy task.
This may have just about worked when procurement teams were largely expected to be reactive cost-cutters. But in recent years, their function has shifted in a more strategic direction. Sustainability initiatives, legislative requirements and geopolitical realities have contributed to a new perception of procurement as a “key value function instead of a simple support function.” With a growing internal voice comes a growing mandate to drive long-term risk reduction and quality improvements in the supplier base, instead of responding to new sustainability guidance or supply chain shockwaves as they happen.
As well as broadening their focus from cost management, procurement leads are also keen to adopt new technologies. They rank adopting an AI strategy at the joint top of their list of digitisation priorities. But as a comparatively underdigitised function, before letting AI loose on their supplier data, teams must move it out of Excel and into an intuitive system designed with procurement’s new strategic mandate in mind.
Traditional ERP systems, still the primary tool for many procurement teams, were not purpose-built for procurement. They’re typically designed primarily for cost management and have inflexible data models. This makes them ill-suited to capture the new breadth and depth of data which the strategic shift in procurement now demands.
At Oxx, we believe that this presents a huge opportunity for next-generation software tools. In this deep dive, we share our thinking on the different categories of software in the procurement space, and on how they can help procurement teams towards the ultimate goal of proactive, forward-looking and AI-augmented supplier management and spending.
But before we start – what actually is the procurement function, and what personas are involved in procurement processes?
The ‘who’s who’ of procurement
Broadly, procurement is the process of identifying the goods and services an organisation needs to operate efficiently. Procurement professionals research potential suppliers, negotiate contracts and oversee timely, cost-effective deliveries. They also manage spending, maintain communications with suppliers, and ensure purchases adhere to company and regulatory guidelines.
In our exploration of procurement challenges, we identified three key professionals who interact with suppliers: Supply chain professionals, sourcing professionals, and risk and sustainability professionals. Whether or not they are part of a ‘procurement team’ or a differently titled team depends on their organisation’s structure – but they all deal with challenges related to procurement.
Quick definition:
Procurement is the process of identifying the goods and services an organisation needs to operate efficiently.
Key area
Supply Chain Professionals
Sourcing Professionals
Risk and Sustainability Professionals
Responsibilities
Oversee production, logistics, and supplier performance.
Source suppliers, negotiate contracts, and manage spend.
Evaluate suppliers for compliance and sustainability.
Key challenges
Managing scattered data for actionable insights.
Balancing sourcing with supplier collaboration.
Accessing up-to-date compliance and risk information.
Tools needed
Supplier governance and data visibility tools.
Strategic sourcing and spend management tools.
Compliance and risk evaluation tools.
Supply chain professionals
The most general of the three categories, supply chain professionals deal with the overall management of all stages of production, inventory management, logistics, transportation, and distribution. They have a wide variety of individual role titles and can cover everything from sourcing raw materials to delivering finished goods.
Leaving aside logistics and inventory management (as they would deserve their own articles), the supply chain professionals who are the most involved in communicating with suppliers may have titles like ‘supplier governance manager’ or ‘supplier quality manager.’ They handle supplier onboarding, audits, and the continuous evaluation and tracking of supplier compliance and performance.
For these professionals, a major challenge is managing the huge amounts of data which exist across the supply chain. One VP of Supplier Governance told us “data is everything for us…we need visibility into their supply chain and ability to action on the recommendations.” With onboarding, audit and request for purchase data scattered across different forms and Excel sheets, it is difficult to turn these vast amounts of data into actions that will help to improve the quality of the supplier base.
Sourcing professionals
These professionals specifically deal with the sourcing portion of the supplier relationship. They are most commonly known as strategic buyers. They’re also sometimes responsible for negotiating contracts and managing spend across the business, so their function has historically been closely related to finance. They’re the hoop other departments often have to jump through to make large investments.
The extent to which supply chain and sourcing functions are merged is largely company-dependent. Companies with a category management strategy (i.e. distinct business units for different spend categories, such as production components or office supplies) may have one person responsible for both sourcing new suppliers and maintaining relationships with existing ones. In practice, this would involve assigning a category manager to every supplier. The category manager would be responsible for sourcing suppliers within their category, then work with those suppliers to set KPIs and manage performance.
As a result, some ‘procurement tech’ tools focus on helping users to choose the right suppliers – this is the segment known as strategic sourcing. Other tools focus on collaboration with suppliers and maintenance of the supplier relationship, in addition to sourcing. Another category of tools helps procurement manage departmental spend requests and optimise overall company spend.
Risk and sustainability professionals
When risk and sustainability professionals interact with suppliers, they focus on just that: evaluating suppliers for risk, compliance and sustainability records. They are specialised on one thing, and their roles are a response to the growing burden of volatile supply chains and increasingly demanding sustainability laws. The most important factor for them to do their job well is easy access to up-to-date information on supplier compliance (and potentially a risk score based on this information).
Just as the above personas sit on an axis from generalist (supply chain) to specialist (risk and sustainability), so does the software they buy to help them interact with suppliers.
What does the procurement stack look like?
The procurement process can be divided into two halves. Source-to-contract (S2C) covers the steps leading up to and including a finalised supplier contract – supplier research, evaluation, selection, negotiation, and contract management. Procure-to-pay (P2P), meanwhile, covers the operational processes after contracts are in place, including purchase order creation, goods receipt, invoice management, and payment.
The enterprise stack
Many large companies anchor their procuretech stacks within a suite; Coupa and SAP Ariba are the two leading vendors. They complement one-size-fits-all approach with additional vendors. A less common approach is to integrate specialist vendors together to achieve the same results.
More sophisticated source-to-contract tooling, beyond Excel, is mostly found in the enterprise segment. Currently, many large companies use the supplier management modules within the large incumbent suites. However, our research revealed that for all of the personas we discussed, these modules have limitations. In theory, suites have functionality for supplier onboarding forms, spend management, storing supplier information, and even collaborating with suppliers. But many don’t live up to expectations. They lack the depth to compete with specialist solutions and the velocity to develop advanced and predictive technology. Supply chain professionals we spoke to called them “inflexible”, “hard to extract data from”, “not user-friendly”, and “not good for pulling in custom risk evaluation metrics.” Frustration with user experience in legacy tools is also very common, with one VP of supplier governance saying “it was a glorified database: unintuitive, laggy and had bad support.”
A more fundamental problem with using suites for procurement is their underlying data model. If supplier quality is becoming a value driver for high direct spend companies, these companies need a flexible data model that is capable of capturing all of the complexity of quantitative and qualitative supplier and product information, tracking it over time, and channelling it into predictive features. The legacy data models of the suites, however, were conceived when the only goal of procurement teams was spend control. Newer tools can differentiate themselves by building information systems around data models which are purpose-built to capture evaluative data on purchase decisions – and to adapt to whatever evaluation criteria customers deem important.
In summary: we see a lot of opportunity for companies to bring new S2C software solutions in to the enterprise.
The SMB stack
Smaller companies are digitalising away from using Excel.
Mid-market and SMB procurement teams are priced out of ERPs, and will therefore buy cheaper software tools that help automate the most cumbersome procurement tasks. These may be particular types of analysis (risk or environmental scoring) or particular processes within procurement (spend management, invoice automation). They are typically the first piece of software that procurement teams in smaller companies will buy.
On the S2C side, many SMBs will not have purchased their first piece of software yet. Those who have may purchase an e-sourcing tool if they have particular trouble finding suppliers – but otherwise, as Max Kent, solutions consultant at Procure Services Ltd., told us, “if you go below the £1bn turnover mark, it’s loads of procurement people running their main supplier sheets on Excel spreadsheets.”
In the true SMB segment, experts feel that Excel could well be enough. One CEO of an e-sourcing tool told us that “if you have 100 suppliers, you can manage them in Excel. He added that “bringing digitisation to small businesses which had no SRM at all is working out at the 10k price point, but it’s a nice to have”.
The mid-market is more dynamic. Digital procurement advisor James Meads told us that “mid-market companies tend to move from point solutions to all-in-one procurement platforms”. But we have reason to believe that this will not land them as customers of the big suites – because as well as often being priced out of those suites, mid-market customers share enterprise customers’ grievances with the inflexible data models and clunky UX. Meads adds that “the companies that succeed will be the ones that centralise supplier data, carry out supplier quality management and auditing, and handle contract lifecycle management all in one platform, because managing these in an ERP is a nightmare.”
In summary: we see a lot of opportunity for companies to help mid-market companies transition towards a more sophisticated procuretech stack.
What forces are driving the transformation of procurement?
Supply chain volatility and risk
Ardent Partners, a supply management research firm, succinctly sums up the challenges facing global supply chains with ‘the 3 Ws: weather, war, and western diversification.’ As the world lurched from the shock of the pandemic into multiple geopolitical crises in the Middle East and Eastern Europe, supply chain disruptions were thrust into the spotlight.
In the longer term, as protectionism makes a comeback, geopolitical conditions are likely to continue imposing constraints on supply chains. As if this weren’t enough to contend with, the impact of climate change and extreme weather will become increasingly evident. The droughts which cut Panama Canal traffic by a third in the summer of 2024 are a textbook example.
Weather, war, and western diversification – the three W’s of supply chain risk
Ensuring not just lean and cheap supply chains, but resilient ones, is therefore top of mind for supply chain leaders. This has spawned a proliferation of startups focusing specifically on the challenge of risk anticipation and mitigation (see our market map below). However, it has also inspired a new focus on the role of high-quality data and supplier visibility. 67% of respondents to McKinsey’s global survey of supply chain leaders have implemented digital dashboards for end-to-end supply chain visibility. “Comprehensive, accurate master data” is the bedrock of these dashboards, and requires a modern approach to data management.
The increased importance of risk management therefore provides opportunity not only for dedicated supplier risk software, but for ‘supplier information management’ tools. These tools are the data layer behind predictive risk analytics.
Sustainability and compliance
European governments have ramped up sustainability regulations in recent years, with important consequences for supply chain leaders. The best-known of these is the Corporate Sustainability Reporting Directive (CSRD) of 2023. Since the CSRD was passed, it has become a legal obligation for companies with extensive supply chains to provide a full picture of their suppliers’ sustainability practices – and companies are feeling the pressure from their investors to do this too.
In Germany, the Act on Corporate Due Diligence in Supply Chains (LKSG) has been in force since 2021 and imposes both environmental and human rights protection requirements along the supply chain. We spoke to several supply chain managers in Germany who felt that the LKSG increased the urgency of “centralising supplier information” and engaging in “active supplier management.”
All EU member states are set to follow suit with the Corporate Sustainability Due Diligence Directive (CSDD), which was approved by the European Parliament in June 2024 and similarly contains both environmental and human rights requirements. We expect them to largely follow the German example and buy software to make compliance evaluation easier.
Even beyond Europe, while there are fewer regulations focusing specifically on sustainability, supplier diversification is an equally important regulatory imperative. 81% of respondents to Amazon Business’s (global) 2024 State of Procurement survey reported that they had mandates to buy from certified sellers, such as sustainable, local, or disadvantaged group-owned businesses. For 85% of respondents, “sourcing suppliers that follow sustainable practices is a challenge.”
In light of new compliance obligations, procurement teams need to thoroughly screen potential suppliers for sustainability during the sourcing process. After selecting suppliers, they need to continuously track their suppliers’ sustainability practices and ensure that they have easy access to up-to-date information for reporting. This calls for sourcing, supplier onboarding and supplier information tools which are up to the task.
Inflation and cost management
As mentioned earlier, cost savings have long been viewed as the core of the procurement team’s role. While more demanding risk and sustainability requirements add complexity to this task, it is fundamentally as important as ever: Gartner found that cost savings were the top priority of Chief Procurement Officers (CPOs) in 2024. As complex global trade conditions pile on inflationary pressure, we can expect this to continue into 2025.
What has changed is that procurement leaders are increasingly willing to incorporate new technology into spend management strategies. In The Economist’s 2024 procurement survey, “CPOs (49%) and CSCOs (43%) cite spend analytics as the main drivers for digital transformation in procurement.” This demand has created an opening for technology that is more advanced than the spend management offerings of legacy ERP systems (see ‘The promise of AI’). James Meads told us that being more systematic about spend analytics will often lead to procurement teams becoming more strategic in other ways: “spend analytics can open the Pandora’s Box to a bunch of other questions that will guide strategy.”
Some survey results suggest that procurement leaders are willing to forego short-term cost savings if additional investments in technology lead to more efficient and performant supplier bases in the long term. Tellingly, for the first time, both digitisation and sustainability surpassed cost savings as priorities for procurement leaders in The Economist’s survey.
From cost-cutting to value creation
Another finding from The Economist‘s survey is the expanding influence of procurement within organisations, and its emerging role as a driver of value. One clear indication of this shift is the significant rise in the number of respondents indicating that procurement now reports to the COO, increasing from 26% in 2023 to 44% in 2024.
The adjustment in reporting dynamics will reshape the scope of procurement’s involvement in business discussions. Instead of focusing solely on cost reduction and savings, procurement is now positioned and even expected to contribute to broader strategic topics. This includes a holistic examination of the value chain and a new focus on driving innovation and performance in the supplier base.
In particular, over half of respondents in the life sciences, oil and gas, mill products, and chemical industries confirmed this reporting structure. Notably, the procurement teams in these industries are responsible for sourcing materials which go directly into the product that gets sold to customers. In other words, these are high direct spend industries.
We believe that the more pronounced strategic shift of procurement in these industries reflects a growing realisation that supplier performance drives top-line revenue and quality – and not just bottom-line cost cuts. Lance Younger, procurement consultant and CEO at ProcureTech, told us that “manufacturing companies care more about product lifecycle management and total cost management”, and so holistic supplier data is particularly important in this sector.
In high direct spend industries, we expect the topics of end-to-end supplier visibility, robust data layers for supplier information, and advanced and predictive supplier analytics to become even more important. BCG corroborates this in their supply chain recommendations for the chemical industry.
Who is filling the gap?
Below you can see our market map and visualisation overview of the market, and the key players within each category.
Supplier relationship management
Mix of disruptors and established players, generalist
Supplier relationship management (SRM) tools are the most generalist of the new-gen tools we cover on this map. They usually start as specialists in supplier information, risk, performance, innovation, or collaboration management. They subsequently broaden out into more than one of these functions, thus covering the entire relationship between suppliers and buyers. For example:
Our portfolio company Kodiak Hub excels at supplier performance management. However, customers can use it as a supplier risk, innovation, or information management tool thanks to the diversity and customisability of the data it collects. Modules for supplier audits and onboarding enable customers (typically companies for whom supplier quality is critical) to tie these data points into their collaboration with suppliers.
Graphite Connect originated as a supplier information management platform, but it has developed a strength in automating supplier RFX and approval workflows. Many customers use Graphite Connect for indirect spend, meaning it can straddle the line with the orchestration category. Graphite Connect raised $23.5 million of Series A venture funding in a deal led by Pelion Venture Partners in February 2023.
Historically, there has been some confusion surrounding the definition of SRM. In an SRM, the core supplier information management and collaboration software always sits at the centre, but after that, each vendor has their own various strengths in a wide variety of categories. This diversity can make the category and its impact difficult to understand.
However, the diversity of the SRM category is also its strength. This is because SRMs have a unique combination of ‘bigger-picture’ data capture (which solutions like EcoVadis lack) and deep, flexible data models (which ERPs lack). More broadly, the shift from ERPs towards SRMs could well be procurement’s “Salesforce moment.” Using CRMs as a central repository for prospect data enabled sales teams to move from reactive conversation-logging to proactive performance-driving activities.
Our take is that the SRM category is well positioned to become the central repository for supplier data reporting platform for procurement teams. As procurement teams mature beyond controlling spend and begin taking on a larger strategic mandate, SRMs are uniquely placed to provide the deep, diverse and usable data on suppliers which will power their strategic decision-making.
Supplier information management
Mix of disruptors and established players, generalist
Many SRMs started their lives as information management platforms, so the category distinctions can be blurry to all but procurement nerds. However, the difference is that supplier information management tools have a more specialist focus (than SRMs) on providing a data warehouse tailored for procurement.This means that they excel at cleaning, managing, and centralising supplier data.
Apexanalytix have similarly broadened their focus from risk management to full-cycle supplier information management. They excel at data cleaning and validation, but also collect deep data on several dimensions of supplier risk (from financial risk to legislative compliance). Apexanalytix was bought out by KKR in 2022.
As more procurement teams embrace AI, clean, high-quality data will play an increasingly important role in training models to make accurate predictions and analyses of supplier performance; making supplier information management tools a key part of procurement’s AI transformation.
Procurement orchestration
Disruptors, specialist in supplier onboarding
These are newer tools which automate and centralise intake requests, vendor selection, purchase order creation and invoicing. When used effectively, they reduce the manual overhead to process activities with non-strategic vendors. Their core value proposition is to make cross-functional approval workflows involving suppliers easier.
ORO focuses on simplifying procurement through automation of sourcing and supplier collaboration. Its modular approach allows businesses to tailor workflows for sourcing, contract management, and supplier engagement. One of Oro’s key selling points is its ability to integrate with any other procurement tools. ORO raised a $34M Series B from Felicis Ventures and Norwest Venture Partners in 2023.
Omnea combines an automation-first approach to supplier onboarding, spend management and collaboration with AI-powered suggestions for improving spend and negotiation strategies. As is fairly typical for the orchestration segment, its customers include major tech companies. Omnea raised a $20 million Series A in 2024 led by Accel.
Strategic sourcing
Disruptors, specialists in sourcing
These are newer tools which automate and centralise intake requests, vendor selection, purchase order creation and invoicing. When used effectively, they reduce the manual overhead to process activities with non-strategic vThese are solutions which started out exclusively as supplier scouting tools. Many later expanded into spend analytics and contract lifecycle management. Their customers tend to be SMB and mid-market companies moving away from using Excel for supplier management. Consequently, they have a strong spend management component (i.e. are oriented towards finding the cheapest suppliers). They are usually cheaper and more lightweight software tools themselves.
Tacto focuses on automated supplier evaluation, dynamic sourcing workflows, and real-time insights into procurement data, for a largely SMB to mid-market customer base. Tacto raised a $53 million Series A from Sequoia and Index in 2023, with the aim of broadening out their product beyond e-sourcing and the initial SMB segment.
Mercanis started as an SMB-focused supplier scouting tool and spend analytics dashboard, and evolved into an end-to-end platform covering everything from supplier scouting to contract management – though it still has a strong focus on spend control. Mercanis raised a $10 million seed round from Signals.VC, DI Technology and Speedinvest in August 2023.
Risk and sustainability solutions
Mix of disruptors and established players, specialist in one axis of supplier assessment
These are newer tools which automate and centralise intake requests, vendor selection, purchase order creation and invoicing. When used effectively, they reduce the manual overhead to process activities with non-strategic vThese are solutionsUnsurprisingly the most specialist category, these solutions evolved to help customers deal with the growing workload required for risk management, sustainability and compliance. Today, they often fall under the remit of dedicated sustainability or compliance teams as opposed to procurement departments.
Anecdotal conversations suggest that if a SMB to mid-market company has a particularly heavy risk and compliance workload, or a particular emphasis on sustainability, this category may be the first S2C software purchase they make – as it addresses their needs much more directly than a suite or SRM. As their procurement function grows, they may move towards a more generalist solution once they need a wider variety of data
These are rapidly developing categories with many more vendors, including Ecovadis, Exiger, Riskmethods, Responsibly, Certa, Daato and many more emerging vendors.
Prewave is a risk, sustainability and compliance platform, helping clients anticipate and manage potential issues with supply chain resilience and regulatory compliance. Its selling point is the diversity of risk types it covers, and its AI-driven predictive analytics features. Prewave raised a $63m Series B led by Hedosophia in June 2024.
Autonomous contract negotiation
Disruptors, specialists in spend optimisation and contract management
This is a next-generation category, channelling advances in reinforcement learning into ‘contract negotiation agents’. These platforms leverage AI agents, combined with more traditional machine learning and rule-based automation, to assist contract talks between two or more parties without requiring continuous manual intervention. They are particularly useful for speeding up negotiations with large numbers of lower-priority suppliers, freeing up strategic buyers to focus on high-priority suppliers.
Keelvar specialises in “intelligent sourcing” and automated procurement, using AI to streamline negotiations for logistics, packaging, direct materials, and more. Their software combines sourcing optimisation (advanced scenario analysis for awarding complex bids) with sourcing automation (autonomous negotiation and event management). Keelvar raised $24M in Series B funding from 83North in July 2022.
Pactum specialises in automating vendor or supplier negotiations, particularly focusing on “long tail” suppliers—where there may be thousands of small‐to‐medium contracts that are too resource‐intensive to negotiate manually. Their platform uses a conversational AI chatbot that effectively “talks” to suppliers, negotiating terms in real time. Pactum raised $20 million in Series B investment from Maersk and Karma Capital in July 2024.
So, what’s next?
No deep dive would be complete without a look to what’s ahead. We see three themes emerging: supplier data tools will transform, integrations to the data layer will become even more important, and AI will, naturally, also revolutionise procurement.
1) The transformation of supplier data tools
Focusing on a particular category of supplier data can be great for achieving unrivalled data depth – after all, this is how EcoVadis grew to over $100M in revenue. But in order to make strategic decisions about their supplier base, procurement teams need easy access to a range of information – spanning performance, price, sustainability and risk.
Currently, many such solutions sell specifically to personas whose job titles focus on compliance, sustainability, and risk – often outside of procurement teams. But as the procurement team is the traditional owner of the supplier relationship, as their remit expands from simply cost-reduction to becoming a value-driver, they start facing supplier data fatigue with data stored across systems.
This places specialist tools at a crossroads. If their new buyers are more generalist personas on procurement teams, as opposed to dedicated risk or sustainability professionals, they may need to broaden out their focus or develop a clear technical edge. We can see this strategy at play in vendors such as Prewave. Prewave is billing itself as “the world’s first supply chain superintelligence platform”, going all-in on AI-powered predictive risk analytics.
Some of these risk-, compliance- or sustainability tools could also broaden their approach by collecting other forms of supplier data.
2) The importance of integrations and the data layer
An alternative – and in our opinion more likely – evolution for these supplier data tools is to double down on their specialism by evolving into “data providers” who feed in to supplier-centric procurement tools. As Magnus Bergfors, a former Gartner analyst and VP of Research at Ardent Partners, put it to us, “long-term most large companies will have 3-10 specialist data providers. E.g. a Dun & Bradstreet for financial risk information.” This is because supplier-centric procurement tools and supplier data tools have a complementary and symbiotic relationship.
Just as point solutions can only be fully effective if their data can be analysed and contextualised alongside other types of supplier data, so does the effectiveness of an SRM depend on the quality of the data fed into it. Lance Younger emphasised that “Supplier performance management risk management, sustainability, innovation management – all categories [of SRM] need to be backed up with granularity of data and process.”
A key shift enabling this transformation is the increasing commodification of data integrations. More and more companies demand data portability – and the presence of low code and no code integration tools means that procurement vendors can deliver integrations at scale.
Together, this becomes our view the future S2C stack:
One generalist, centralised hub for supplier data and analytics surrounded by multiple “data providers” delivering the types of various types data each company needs.
The generalist software may sometimes be an ERP or suite and sometimes be an SRM – the latter being more likely if the company’s suppliers are heterogenous and business-critical. Indeed, based on our experience with Kodiak Hub, supplier risk data is already commonly delivered to customers through such data integrations.
3) The promise of AI
No “What’s next?” section in 2025 would be complete without a discussion of AI. The urgency of developing an AI strategy is not lost on procurement teams: according to Gartner, over the next 12-18 months, 48% of executives aim to use AI to improve procurement process automation.However, data that is strewn across multiple homegrown systems and Excel sheets is not exactly fit for training AI. Before implementing an AI strategy, procurement teams will need to ensure that their supplier data is clean, complete, and appropriately structured and stored. While this is often the case with highly structured, transactional spend data, it’s rarely the case for unstructured supplier data.
Over the next 12-18 months, 48% of executives aim to use AI to improve procurement process automation.
Gartner, 2025
The procurement leads we spoke envision a wide range of potential AI applications in procurement. Supplier approval workflows require many administrative tasks which are ripe for automation. Examples include processing data from invoices, T&Cs, and contracts; advances in natural language processing makes these extremely simple.
Although there is enthusiasm for adopting AI amongst procurement leads, there is also awareness that AI is a ‘hyped’ technology – and wariness of purchasing AI tools just because they are shiny and new. As one strategic buyer remarked, “AI is nice, but you need to know what you can do with it.” We believe AI in procurement will start out with decidedly practical use cases – processing data from invoices and T&Cs; generating draft contracts; categorizing suppliers and purchases; recommending suppliers given a company’s particular needs; automating communication workflows with suppliers. This focus on automating everyday workflows will free up procurement professionals to work on bigger-picture, strategic tasks.
That isn’t to say that there are not more ambitious applications for AI in procurement. Predictive supplier analytics will be a helpful contributor to procurement teams’ strategic shift. Next-generation autonomous contract negotiation tools like Pactum and Keelvar leverage AI agents to place AI in a more proactive role, rather than simply using it to compute and crunch data.
Looking even further, we expect that these tools are merely the first procurement application of a broader trend towards agentic AI. This involves AI agents that can initiate and manage tasks end to end. Rather than waiting for a user to trigger each step, these agents could monitor internal data feeds, external market signals, or supplier performance metrics—and automatically decide when to launch a new round of negotiations, update contract terms, or send a message or request to a supplier. They could dynamically adjust objectives (e.g., prioritising delivery times over cost savings if an urgent supply chain disruption arises), and seamlessly hand off exceptions to human stakeholders if issues demand deeper scrutiny. By orchestrating workflows—collecting fresh data, analysing it in context, and taking real-time actions—AI agents could contribute to the ongoing evolution of procurement from a reactive to a proactive function. The next time a department complains that procurement put the brakes on a new supplier request, there may only be an AI to blame.
Procurement is evolving from a reactive, cost-cutting role to a strategic driver of value. We’re excited by the opportunity for next-generation tools to reimagine supplier data management, help procurement teams to become AI-ready, and deliver the ‘Salesforce moment’ of procurement.
