AI is making waves in procurement. Once a mostly transactional function, procurement is now being redefined as a more strategic player in business operations. AI’s influence goes beyond basic automation, and it is reshaping how procurement teams collaborate with suppliers, make decisions, and drive savings.
More companies now view AI in procurement as a critical way to cut costs, manage supplier risks, and boost efficiency. In 2023, global investment in AI for procurement reached around $2.5 billion, with projections to grow by about 20% annually over the next few years. These investments are concentrated in areas like spend analysis, supplier risk management, contract analytics, and automation.
Key Areas of AI Investment in Procurement
Spend Analysis and Savings Identification
With natural language processing (NLP) and machine learning, spend analysis is faster and more accurate than ever. Procurement teams can categorize and assess spending data quickly, uncovering savings opportunities and enforcing purchasing rules with less effort.
Supplier Risk Management
AI analyzes financial reports, news, and social media to deliver real-time risk insights. This is critical for teams navigating complex global supply chains.
Contract Analytics and Automation
NLP-powered tools can scan contracts to flag risks and identify optimal terms, improving both the speed and transparency of contract reviews.
Trends Driving AI Adoption in Procurement
Organizations are moving from descriptive analytics to predictive and prescriptive analytics. This enables better forecasting, anticipation of supply issues, and optimized procurement strategies. AI is also enhancing supplier collaboration by providing data-driven insights for better negotiations and partnership building. In addition, AI-driven marketplaces are improving the procurement experience with personalized recommendations, price comparisons, and automated ordering.
How AI in Procurement Impacts Pricing Power
The adoption of AI in procurement is transforming vendor management, supplier selection, and pricing dynamics. This shift has several implications for pricing professionals:
- Improved Spend Analysis and Demand Forecasting – Granular insights into spend categories, usage patterns, and demand fluctuations.
- Enhanced Negotiation Capabilities – AI-powered negotiation tools identify optimal pricing points and terms.
- Automated Supplier Evaluation – Real-time performance scoring on delivery, quality, and reliability.
- Predictive Contracting and Dynamic Pricing – AI can adjust terms and pricing in response to market conditions.
- Value-Based Vendor Selection – Assessing suppliers for long-term value, not just lowest cost.
- Total Cost of Ownership (TCO) Analysis – Factoring in lifecycle, maintenance, and durability in cost decisions.
Procurement vs. Pricing Software Market Growth
The global pricing software market is on the rise, valued at approximately USD 734.2 million in 2022 and projected to reach USD 1.24 billion by 2029 (8.1% CAGR). Pricing optimization software is forecast to grow from USD 856.39 million in 2023 to USD 2.45 billion by 2030 (16.2% CAGR).
In comparison, the procurement software market, especially AI-driven solutions, is expanding at a faster pace. In 2023, it was valued at USD 7.30 billion and is projected to hit USD 18.28 billion by 2032 (10.8% CAGR).
Why Pricing Professionals Must Keep Pace with AI in Procurement
AI-powered procurement is becoming a data-driven powerhouse, and pricing teams must adapt to stay competitive. This means strengthening analytics capabilities, understanding how procurement uses AI tools, staying informed on procurement trends that impact costs, and advocating for pricing optimization software.
The future of competitive pricing will depend on matching procurement’s speed, insight, and adaptability. Pricing teams must ensure they are not overshadowed by AI-driven procurement advancements.
Ready to strengthen your pricing strategy alongside AI-powered procurement? Contact us today to get started.
Stephan Liozu, Ph.D., Chief Value Officer at Zilliant, is a global expert in pricing, innovation, and value management with 20+ years of experience. He has authored 15+ books, including Pricing—The New CEO Imperative (2021) and Value-Based Pricing (2024)
