Media Release
Procurement and Technology: The Rise of AI and Automation – Will AI Replace Humans in Our $410 Billion Public Procurement Market?
By Teresa Scott, Executive Director, Australasian Procurement & Construction Council (APCC)
Tuesday 3 September 2024
“There are many reasons to consider a career as a public procurement professional including being at the forefront of introducing AI as critical tool of Government to manage the expenditure of $410 billion of taxpayer’s money to achieve major policy outcomes such as stabilising inflation, addressing cost of living issues, eliminating modern slavery and reaching climate change targets”, said Teresa Scott, Executive Director APCC.
Artificial Intelligence (AI) is purported to revolutionise the public procurement profession by automating routine tasks, enhancing data analysis, and bolstering informed decision-making.
But what does this mean for the nearly 90,000 people currently employed in the Australia and New Zealand public procurement profession?
Well, sorry conspiracy theorists and doomsday preppers, but it doesn’t mean that Skynet is about to take over or that the apocalypse is nigh, and machines will rise from the ashes and rule the world … no, it means an enhanced public procurement profession that is better placed to play a central role in Government to deliver major policy outcomes…
If you're nearing graduation or considering a career shift, consider public procurement. This field offers exposure to cutting-edge technologies like AI, providing dynamic opportunities for professional growth.
Ok, let’s go back a bit and look at what has led the public procurement profession to this exciting point and what AI will mean for the future.
Public procurement began its path to AI back in the 1980s with the development of Electronic Data Interchange (EDI) and then Enterprise Resource Planning (ERP) systems in the 1990s.
Automation became a key feature of ‘e-procurement’ systems, handling repetitive tasks, such as purchase order creation, invoice processing, and payment approvals, typically integrating the different data, applications, and systems used in procurement to create a single, unified system.
AI has been formally defined as “technologies that aim to reproduce or surpass abilities (in computational systems) that would require ‘intelligence’ if humans were to perform them. These include: learning and adaptation; sensory understanding and interaction; reasoning and planning; optimisation of procedures and parameters; autonomy; and creativity.”
Source: AI Procurement in a Box: Definition from the Engineering and Physical Science Research Council, a UK government research funding body.
At the same time AI is purported to revolutionise public procurement, it has taken on greater significance in Government.
The World Economic Forum (WEF), Global Risks Report 2023, states this, elevation of public procurement, has been driven by the convergence of the COVID crisis with a series of other crises including: inflationary pressures, historically low growth, deglobalisation, prolonged cost-of-living concerns, geopolitical confrontation, and a rapidly accelerating degradation of the climate.
Amidst converging global crises, public procurement has become central to government decision-making, emerging as a key tool for addressing these complex challenges.
Public procurement is now more that the important function of getting value for taxpayers’ money. It is also about delivering solutions to some of the world’s biggest challenges, such as climate change.
Public procurement which tops $410 billion per annum in Australasia, accounting for 40% of total government expenditure in Australia and 37% in New Zealand, and has expanded to become a central tool of Government to address modern GRCI (Governance, Risk, Compliance and Integrity) issues and ESG (Environmental, Social and Governance) concerns.
The ‘modern’ GRCI issues being addressed by public procurement include information technology governance concerns, cybersecurity and privacy risks, reputational risks, and supply-chain certainty.
ESG concerns targeted through public procurement include meeting climate change targets, eliminating modern slavery practices, supporting local economies to thrive, diversity and equality in supply chains to name a few.
There has never been a more exciting time to get involved in the public procurement profession. Public procurement is expanding and requiring a new set of skills to achieve the potential of automation and AI, and it is being seen as a major tool of government to address major policy issues such as climate change and inflation.
There are a wide range of roles in traditional public procurement including those in strategy and policy development (commercial risk), understanding needs and sourcing (data analysis), procurement processes, contract and supplier management, including category management.
But to use AI to its full potential public procurement will require professionals with additional skills that place a premium on analytical acumen, technical proficiency, and strategic thinking.
Modern public procurement professionals will interpret complex data sets, understand AI and machine learning technologies, and apply these insights to strategic procurement objectives.
Additionally, the AI-driven public procurement landscape will value the importance of soft skills such as negotiation, collaboration, and emotional intelligence, which are crucial for managing strategic supplier relationships and leading cross-functional teams.
The modern public procurement professional will embrace a culture of continuous learning and professional development to keep up to date with technological advancements and skills needed to navigate the AI-enhanced procurement landscape.
Therefore, the AI-driven public procurement professional will be more strategic, analytical, and technologically adept. They will balance technical skills with soft skills, allowing more focus on achieving operational efficiencies, strategic objectives, and ethical procurement practices.
AI's capabilities in data analytics and predictive modelling will enable public procurement professionals to move from traditional transactional heavy function to a proactive, strategic approach, that leverages deep insights to forecast trends, optimising supply chains, and enhancing supplier relationships.
AI is on a path to revolutionise public procurement and not replace public procurement professionals – why not join the revolution?
Media inquiries
Teresa Scott, Executive Director, APCC on 02 6285 2255. Refer to: www.APCC.gov.au
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