R&D procurement has come a long way. Procurement’s evolution has been marked by monumental shifts; from analog to digital, manual to automated, local to global, siloed to consolidated, and transactional to strategic. Beginning in the 2010s, advanced analytics and big data became the new buzz words, with the rise of AI and automation technologies not far behind. According to a McKinsey Global survey, one-third of respondents stated that their organizations are already using generative AI (GenAI) in at least one business function, with 40% saying that their organizations will increase their investment in AI in the near future. The AI industry is estimated to reach a value of $500 billion by 2024. Though the use of AI for procurement is still in its early stages, its impact on the procurement function of the future cannot be underestimated. So, here’s the question on everyone’s mind: Will AI be friend or foe to the R&D procurement organization of the future?
According to John Dickson, a forty-year sourcing industry veteran and former Astra Zeneca Chief Procurement Officer, the answer of whether AI is a threat or an opportunity to R&D procurement all depends on how you look at it.
In Procurement Unleashed: From Cost Cutter to Strategic Innovator, Diaries of a CPO, a recent webinar with Dickson and Florian Wegener, co-founder and CEO of lab supply marketplace ZAGENO, the ramifications of AI to procurement and many other pressing topics were explored.
Dickson shared, “If you look at AI as a threat, then you won’t embrace it the right way. Over forty years, procurement has evolved significantly and will continue to evolve over the next ten years. I don’t think procurement will disappear in ten years, but will evolve into something different.” It is important to examine how AI will augment and accelerate sourcing, as well as the challenges it poses to the function itself.
There are many ways to harness the power of GenAI to improve R&D procurement strategy and overall efficiency. Per a 2023 Accenture report, “Once integrated into the rapidly evolving digital procurement landscape, GenAI applications can transform a wide range of procurement capabilities. They’ll do this by augmenting teams on routine tasks and, by acting as a co-pilot to category leaders, providing strategic value-add through inspiration on-demand.” The list of how AI can revolutionize the procurement function is ever-growing, and includes:
With any new technology, there are always risks posed to the workforce employing it. Automation has long been perceived as a possible threat to those whose livelihoods depend on the tasks being offloaded, and it is very possible for procurement to view AI with the same hesitation. Potential concerns include:
Despite these challenges, it’s an exciting time for R&D procurement. According to Dickson, the procurement function won’t go away, but must adapt and change. “If we put our heads in the sand, we will struggle,” he said.
To continue to evolve, procurement must harness the upsides of AI to help stakeholders navigate and thrive in these uncharted waters. By embracing AI technologies and incorporating them strategically into procurement processes, R&D procurement can further solidify and elevate its role within biotech and pharma organizations. By leaning into R&D procurement’s role as trusted advisor and strategic guide in the face of the AI revolution, the procurement function will continue to evolve and keep an important seat at the table in the life sciences industry.
For more expert insights on the future of procurement in the life science industry, watch Procurement Unleashed: From Cost Cutter to Strategic Innovator, Diaries of a CPO with John Dickson and Florian Wegener.
About ZAGENO: With over 40 million product SKUs available from more than 5,000 leading brands, ZAGENO offers the largest life sciences lab supply marketplace. Our one-stop shop solution helps scientists, lab managers, and procurement leaders compare products across vendors, easily source product alternatives, track deliveries, and communicate order status with R&D teams in real time. We utilize machine learning and AI to help buyers experience the most convenient, comprehensive, and efficient purchasing experience for life science and research supplies.