When we were working on the Forrester Wave™ about source-to-contract suites (see “The Forrester Wave™: Source-To-Contract Suites, Q4 2019 — The 11 Providers That Matter Most And How They Stack Up“), we found that several vendors were using the concept of “autonomous procurement” to describe the future state that they were working toward. Autonomous procurement, as they portray the concept, is not just augmented or assisted procurement in which AI embedded in purchasing and contracting software helps people do their purchasing activities more effectively. Instead, it is a future world in which the software handles most of the tasks of purchasing, from deciding what to buy and who to buy it from to making the purchases without human involvement.
Our immediate reaction was that this was not just a bad idea — it was a really bad idea. Here’s why:
- Where “autonomous procurement” makes sense, it is already old news. It’s called vendor-managed inventories for direct materials. These rules-based systems automatically trigger replacement purchase orders whenever inventory stocks hit predefined drawdown thresholds and have been around for 20 years or more. But even here, people oversee these systems to reset these triggers — for example, when product lines are discontinued.
- It overpromises and will underdeliver. The AI technology to power autonomous procurement is still primitive. At best, the source-to-contract or procure-to-pay software products have the AI capabilities of an eighth-grade human equivalent and only then for specific tasks. Indeed, the vendors we included in the Wave evaluation acknowledged that their current products were nowhere close to delivering autonomous procurement in the sense of software that fully automated purchasing processes with little or no human involvement. Instead, they highlighted specific activities in which they were using AI to help make people more effective in doing their purchasing or contract-related jobs.
- It scares sourcing and procurement professionals. Autonomous procurement has the clear implication that AI tools and robots will do their jobs, making them redundant. That’s not really a message that any company wants to send to employees who are managing the critical activities of sourcing, contracting, managing, and executing purchases with the suppliers of goods and services.
- It is hostile to employees. We have heard from vendors that the chief procurement officers (CPOs) they talk to love the concept of autonomous procurement. We’re not sure who they are talking to, but any CPO who thinks that way is clearly focused on just one goal: cost reduction. If that is the CPO’s only goal, then he or she will view employees as the enemy — people who refuse to follow company purchasing guidelines and thus keep the company from capturing the discounts the CPO has negotiated with suppliers. But employees are not the enemy. If they aren’t using the preferred vendors, it is mostly because those vendors don’t offer the products or services they need, don’t support the locations where they work, or are too hard to find or order from. Moreover, employees often have good reasons for choosing the products or vendors that they pick. CPOs need to respect those wishes. As an extreme example, does it really make sense to tell the award-winning advertising director that she can’t buy the special colored pencils she uses to sketch out the storyboards for the company’s ads instead of the standard No. 10 black pencils on the approved purchasing list? The CPO’s job should not be just to cut costs; it should also be to help employees get the best suppliers and the right products and services. That is the opposite of autonomous procurement.