Agentic reasoning, multimodality among the AI advancements expected to shape procurement’s future

Are you familiar with Agentic Reasoning AI? If not, and you are in procurement, you should be learning all about it. The technology is one of three advancements in the artificial intelligence space that Gartner believes will shape the future of procurement. The others are multimodality and AI agents.

“Agentic reasoning, multimodality, and AI agents are coming to procurement. These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” said Ryan Polk, senior director analyst in Gartner’s Supply Chain practice. “Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology.”

According to Gartner’s previously released 2024 Hype Cycle for Procurement and Sourcing Solutions, rapid adoption and multiple use cases will move Generative AI into the “Plateau of Productivity” within two years.

“GenAI can already enhance many different workflows in procurement and 73% of procurement leaders at the start of the year expected to adopt the technology by the end 2024,” said Kaitlynn Sommers, senior director analyst with Gartner’s Supply Chain Practice. “This level of adoption, along with promising use cases, such as contract management, means GenAI will rapidly move through the Hype Cycle and reach the Plateau of Productivity at a faster rate than is typical for most emerging technologies in procurement.”

GenAI use cases set to explode

According to a Gartner survey from this summer, 72% of procurement leaders are prioritizing the integration of GenAI. The past year has seen the number of Gen AI use cases expand, with additional capabilities being added by vendors across the sourcing and procurement landscape, Gartner noted. These include contract management, sourcing and supplier management with additional expected use cases to include supporting supplier performance management, P2P and analytics.

“The window for building competitive advantage through early adoption of GenAI in procurement is narrowing,” said Sommers. “Despite this, procurement technology leaders should remain aware of the obstacles to successful implementations, notably in the areas of data quality and integration of GenAI with their current systems.”

Sommers added that companies should look to launch “targeted use-case pilots” that can help clarify what capabilities are scalable. Also, monitor developments in the market and look for opportunities to leverage Gen AI without the need to build proprietary infrastructure.

AI advancements ready for prime time

In its latest note, Gartner has identified the following three AI advances as shaping the future of procurement.

Agentic reasoning

Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.

Multimodality

Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.

AI agents

AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases. As AI agents become more integrated into procurement technology, they will shift the role of procurement professionals towards strategic decision-making, stakeholder relationship management, and innovation.

Gartner went on to advise firms to increase their data governance as AI models require extensive data and that data needs to be accurate. It also suggested incorporating privacy standards in contracts so all parties understand AI data privacy and associated risks, and to increase procurement thresholds. On the last point, Gartner noted that as more procurement becomes machine-driven, procurement teams will be deployed to manage only the most strategic sourcing activities and manage exceptions.

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