Kloepfel Group Conducts Survey on AI in Supply Chain Optimization

The Kloepfel Group, specialized in procurement and supply chain optimization, surveyed 421 professionals and executives worldwide across various industries on the use of Artificial Intelligence (AI) in procurement from mid-February to mid-March 2024. Participants ranged from SMEs to large corporations.

The majority of respondents (90.9%) are procurement managers with and without leadership responsibilities. The participants come from countries including Pakistan, Turkey, Germany, Ghana, Nigeria (Lagos), Austria, Uganda, the United States, and Kenya. Despite the growing trend towards digitalization in many areas of the economy, the current survey shows that the use of AI in procurement is still in its infancy.

Currently, 36.4% of respondents are using AI technologies in procurement, while a significant majority of 63.6% are not yet utilizing AI. However, most participants are optimistic about the future: 75.9% plan to integrate or expand AI in their procurement processes. In contrast, 24.1% have no plans to use AI in procurement.

Marc Kloepfel, CEO of the Kloepfel Group, explains: “The areas where AI is already being applied or planned for use vary from direct procurement activities to supplier negotiations, contract management, spending analytics, and risk management.”

More than half face challenges in implementing AI in procurement

Among those using AI, more than half of the participants, namely 58.2%, have experienced difficulties in implementing AI technologies. In contrast, 41.8% of respondents who use AI in their daily work reported no significant issues integrating it into their processes.

Kloepfel: “We often see that the (implementation) costs of introducing AI are a hurdle, and there are concerns regarding data security. However, costs should be viewed as an investment in the future to manage procurement more sustainably and resiliently in the medium term thanks to AI. AI will only have a future in companies if the prerequisites for data security are established during its use.”

94.5% of AI users in procurement report that their use has contributed to an improvement in their procurement processes. There is only a small group of 5.5% who have not noticed significant improvements from using AI.

AI Integration Rate: Share of Humans and AI in Procurement

Among those using AI, the distribution of AI and human involvement is as follows: A very small number (1%) primarily rely on AI with an 80/20 distribution (80% AI, 20% workforce). 5.8% of respondents report a balanced 50/50 split between human workers and AI. Meanwhile, 13% state that 20% of the work is done by AI and 80% by human workers. For 14.5%, the human workforce accounts for 90% and AI for 10%.

Kloepfel notes: “The integration of AI in procurement is still in its early stages. However, various approaches to collaboration between AI and human employees are already evident.”

Large majority recommends using AI in procurement

A significant majority of 87.3% of study participants advocate for the use of AI in procurement. In contrast, 12.7% of respondents do not make such a recommendation.

Efe Duran Sarikaya, Managing Director of Kloepfel Consulting, says: “No company can avoid AI. AI can replace skilled workers in parts, which is a great help given the current shortage of skilled labor. Additionally, there are many (sustainability) risks for supply chains. AI can detect these early to mitigate them. AI is also a game-changer in procurement and can significantly boost the procurement return engine.”

Participants by Annual Revenue

The group of participants from companies with an annual revenue between 10 and 200 million USD represents the largest share at 42.3%. A quarter of respondents work in companies with an annual revenue of less than 10 million USD. 23.1% of respondents come from companies with an annual revenue between 200 million USD and 1 billion USD. 9.6% are employed by companies with an annual revenue of over 1 billion USD.

Photo: © Kloepfel