Industry executives and experts share their predictions for 2025. Read them in this 17th annual VMblog.com series exclusive.
By Kevin Frechette, CEO and Co-Founder, Fairmarkit
For decades, the procurement world has been yearning for a technological leap forward-a transformation that redefines how supply chains operate, how sourcing decisions are made, and how enterprises manage increasingly complex systems. That moment has finally arrived.
With the explosive rise of Artificial Intelligence (AI), specifically Generative AI (GenAI), procurement leaders are standing at the edge of a monumental shift. 2025 will be a pivotal year for AI adoption in enterprise procurement, marking the point where innovation and necessity collide to revamp the way procurement teams operate, as well as elevate the way companies value procurement as an essential force in their operating model.
From Automation to Intelligence: The Evolution of Procurement Technology
Procurement has long benefited from technology-whether through Enterprise Resource Planning (ERP) systems, spend analysis tools, or supplier management platforms. Yet, these systems were primarily transactional, designed to facilitate processes, not transform them.
Enter AI. Unlike traditional tools, AI thrives on complexity. It analyzes multimodal inputs-text, images, and even voice-delivering actionable insights in real time. For instance, consider a procurement team tasked with sifting through hundreds of contracts to extract key terms like start and end dates. Historically, this would take days of manual effort. With GenAI, the technology handles the heavy lifting across disparate document formats, enabling teams to spend less time on repetitive and mundane tasks and more time on strategic initiatives that drive companies forward.
This is more than efficiency; it’s empowerment. By freeing teams from repetitive work, AI unlocks the bandwidth needed for innovation and value creation.
Why 2025 Will Be the Year of AI Adoption in Procurement
The procurement industry has raced through the AI adoption curve faster than anyone anticipated. What once seemed futuristic is now essential. Several factors are converging to make 2025 the tipping point for AI adoption in procurement:
- Proven ROI: Early adopters are already showcasing measurable results, from cost savings and enhanced team efficiencies to improved supplier relationships. These successes will create a domino effect that inspires others to follow suit.
- User-Friendly AI: Low-code and no-code solutions have drastically lowered the barriers to entry for AI adoption. Procurement leaders will flock to AI platforms that require minimal IT support for deployment, enable seamless integration into existing workflows, and deliver an intuitive user experience.
- Cultural Readiness: Organizations will further embrace a mindset of experimentation, diving head-first into AI initiatives without the long adoption curves that typically come with such transformational changes, largely due to the first two reasons above.
Game-Changing Applications of AI in Procurement
The opportunities for AI in procurement are as vast as the challenges it seeks to solve. Here are three areas where AI is set to make the most significant impact:
1. Delivering Smarter Sourcing
AI-powered platforms will further accelerate in their abilities to analyze supplier performance, market conditions, and cost variables to identify optimal sourcing strategies. With GenAI, sourcing events will no longer be one-size-fits-all, but rather dynamic and tailored to specific needs.
Agent-based AI technology, or agentic AI, will be a huge driver here. Teams of virtual assistants will handle everything from generating cost analyses to automating supplier communications. What used to take weeks will now be completed in minutes.
2. Enhancing Spend Visibility and Compliance
Spend categorization has traditionally been a labor-intensive process. AI will change that by ingesting data from multiple sources and applying contextual understanding to categorize spend accurately. This real-time visibility will enable better budget allocation and more strategic procurement planning.
With AI supercharging their capabilities, procurement teams will stand to take on more spend under management, and thus ensure that more spend meets their category strategies and overall compliance requirements. AI tools will also enable those strategies and compliance policies to apply across the organization, making for a seamless operation.
3. Leveling the Playing Field
Beyond operational efficiencies, AI will drive societal change within procurement. By enabling greater transparency and accessibility, AI will better promote fair competition among suppliers and amplify opportunities for minority-owned businesses. Imagine a procurement platform that automatically identifies diverse suppliers for sourcing events, leveling the playing field and fostering an equitable ecosystem.
2025: The Start of a New Era
As we approach 2025, one thing is clear: AI is no longer optional for procurement leaders. It’s the catalyst for a new era, one where technology and human expertise come together to achieve unprecedented outcomes.
Multichannel, multimodal, and multi-model AI systems will become ubiquitous, delivering deeply personalized experiences that feel less like technology and more like an extension of the team. AI will enable procurement leaders to drive business growth, create jobs, and build a more inclusive global economy.
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ABOUT THE AUTHOR
Kevin Frechette is the CEO and Co-Founder of Fairmarkit, recognized by Forbes, Inc, Deloitte and others as a leading AI-powered autonomous sourcing platform that helps organizations source more competitively at scale. Prior to founding Fairmarkit, Kevin held numerous roles across the technology landscape, working with IBM and Dell. He resides in the greater Boston area.
