Agentic & Generative AI: The Next Revolution in Procurement

Introduction

We can’t get away from it, and it’s a subject that everyone is talking about. With global supply chain disruptions, increased cost pressures, and rising sustainability demands, organisations are turning to artificial intelligence (AI) to drive smarter, faster, and more strategic decisions.

But we’re now moving beyond automation. The latest frontier? Agentic and Generative AI – intelligent systems that not only analyse data but also act, negotiate, and learn autonomously.

What Is Agentic AI in Procurement?

Agentic AI refers to autonomous AI “agents” capable of making decisions, executing tasks, and interacting with other systems (or even other AI agents) to achieve specific outcomes.

In procurement, this means moving from traditional, rule-based automation to self-driving procurement functions that can:

• Negotiate contracts and pricing dynamically
• Manage supplier communications
• Optimise sourcing strategies
• Identify risks and recommend mitigation actions
• Generate summaries, reports, and insights instantly

Think of it as having an intelligent digital co-buyer – one that never sleeps and constantly learns from every transaction.

Generative AI: Transforming How Procurement Thinks

While Agentic AI focuses on actions, Generative AI (GenAI) focuses on creation. Using large language models (LLMs), generative AI helps procurement teams:

• Draft contracts, RFPs, and supplier communications
• Generate category insights and spend analysis summaries
• Create negotiation scenarios and what-if analyses
• Automate data cleaning, classification, and report generation

According to The Hackett Group (2025), nearly half of organisations now use embedded GenAI tools within procurement platforms, while another 30% are experimenting with custom implementations.

Real-World Use Cases

Leading enterprises are already implementing AI in their procurement workflows:

1. AI-to-AI Negotiations

Imagine a buyer’s AI agent negotiating directly with a supplier’s AI system – adjusting terms, prices, and delivery based on real-time conditions. This “invisible handshake” is becoming a reality.

2. Autonomous Supplier Risk Management

AI models monitor data across global news, logistics feeds, and ESG reports to flag potential supplier risks before they impact operations.

3. Dynamic Spend Optimisation

Agentic systems can reallocate budgets and identify alternate suppliers based on performance and availability, reducing waste and maximizing value.

Benefits of Agentic & Generative AI in Procurement

• Cost Savings – Identify savings opportunities across indirect and direct spend.
• Speed & Efficiency – Cut sourcing and contracting times by up to 50%.
• Data-Driven Decisions – AI converts unstructured data into actionable insights.
• Smarter Collaboration – AI co-pilots assist humans during negotiations or reporting.
• Resilience & Sustainability – Improved supplier visibility and ESG compliance tracking.

Challenges and Considerations

Despite its promise, AI in procurement isn’t a magic bullet. Key challenges include:

• Data Quality – AI depends on clean, well-structured procurement data.
• Change Management – Teams must adapt processes and trust AI-driven insights.
• Ethics & Governance – Transparent, auditable AI decision-making is crucial.
• Skills Gap – Procurement professionals need hybrid skills – business acumen + AI literacy.

A Gartner (2025) survey found that 74% of procurement leaders say their data isn’t yet “AI-ready.”

The Future: A Collaborative Intelligence Model

The most successful organisations won’t replace procurement professionals with AI, they’ll augment them. Agentic and Generative AI will handle repetitive, data-heavy tasks, freeing humans to focus on strategy, relationship-building, and innovation.

This new human-plus-machine model is where procurement becomes not just a cost centre, but a value creation powerhouse.

Conclusion

Agentic and Generative AI represent a seismic shift in procurement, one that’s redefining how organisations source, negotiate, and manage suppliers.

Those who embrace this technology early will gain a decisive competitive edge: faster decisions, deeper insights, and stronger supplier ecosystems.

The procurement function of the future isn’t automated.
It’s intelligent, autonomous, and agentic.