Beyond cost savings: The strategic value of autonomous sourcing

Traditional sourcing processes are often slow, manual, and hindered by inefficiencies such as data silos and limited visibility into supplier performance and risk.

Since the pandemic, supply chain teams have been laser-focused on building more resilient and agile supply chains, and many are now turning to autonomous sourcing tools. This enables process improvements and surfaces insights that drive smart decision-making in an ever-evolving landscape.

Automation transforms sourcing by streamlining Request for X (RFx) creation (this is an umbrella term referring to various types of information requests), optimizing supplier selection and awarding, accelerating negotiations, enhancing collaboration, and enabling real-time data analysis.

In a more dynamic economy increasingly impacted by digitization — that’s operating against a wider backdrop of uncertainty caused by trade wars and more — these advantages are critical for businesses.

For these reasons, organizations are increasingly looking to autonomous sourcing as a must in the digital transformation of the procurement function.

What is autonomous sourcing?

Autonomous sourcing is the use of AI and automation to manage, optimize, and accelerate the sourcing process with minimal human intervention.

Traditional sourcing tools have long helped sourcing managers ensure a steady, cost-effective supply while managing supplier risk. However, they’ve fallen short in delivering real-time insights into supply, supplier, and supply chain risks — which are crucial for agile decision-making.

“COVID brought back focus on the importance of removing constraints, driving for a more resilient supply chain, and trying to foster innovation with suppliers,” says Raj Aggarwal, director of global product marketing at GEP. “But the technology that has been in existence has not really been able to provide real-time insights into suppliers, their performance, and changing costs.”

Autonomous sourcing through a unified data model can deliver real-time supplier and market intelligence information that can be used to rapidly adapt to changing circumstances such as the impact of potential tariffs on pricing.

Autonomous sourcing: Use cases and benefits

Leading procurement teams are using autonomous sourcing with minimal human intervention to manage activities like three bids and a buy and tail spend.

For more complex scenarios — like high-risk supplier negotiations — it’s simplifying the process as much as possible but still requiring human input.

“As we move to more agentic AI, the orchestrator agent will oversee the process, assign tasks to sub-agents, and bring that back to the user in a concise manner,” Aggarwal continues.

By managing tasks without humans, autonomous sourcing reduces procurement costs while accelerating sourcing cycles. Beyond cost savings, autonomous sourcing delivers substantial benefits, including:

• Accuracy and consistency. With automation and AI, sourcing decisions are based on standardized data and processes, which minimize human error and bias. As a result, autonomous sourcing ensures consistency in supplier evaluation, pricing analysis, and compliance.

• Better supplier relationships. Autonomous sourcing improves supplier relationships by enabling faster, more transparent communication. The end result is improved collaboration, trust, and long-term partnerships that deliver value to both sides.

• Increased visibility. By centralizing data and procurement processes, autonomous sourcing gives teams real-time visibility into supplier performance, sourcing activity, and market trends. This transparency enables proactive decision-making, risk mitigation, and strategic planning.

• Sustainability. Autonomous sourcing also supports sustainability — which is key as 80% of customers are willing to pay more for sustainable products, per PwC. ^[1]“Maybe emissions have been an issue with a supplier,” Aggarwal offers as an example. “I can’t just go off and find another supplier because it would disrupt my current supply.” Using the collaborative capabilities of the technology, both parties can set emissions goals and work together to achieve them over a mutually agreed timeframe.

Learn more about autonomous sourcing and how it can transform your procurement function.

_{[1] PWC, Consumers willing to pay 9.7% sustainability premium, even as cost-of-living and inflationary concerns weigh: PwC 2024 Voice of the Consumer Survey, May 2024}