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Moving beyond awareness: Why Procurement teams need AI literacy

AI in procurement is evolving fast. Gartner reports that over two-thirds of teams are exploring or using AI, and by 2028, 33% of software applications will include agentic AI. But to get real value, teams need more than exposure — they need literacy. This blog introduces the concept of AI literacy, explains why it’s important, and outlines what it involves.

What is AI literacy?  

Literacy has traditionally meant the ability to read and write. It's one of the most important things we learn entering school because it's essential for navigating the world. Without basic literacy, it’s hard to participate fully in society or make informed decisions.

In the context of AI, literacy means having at least a basic understanding of what AI is and how it works, including its principles, methods, applications, data sources, and ethics. Just as basic literacy helps people access information and make informed choices, AI literacy empowers professionals to successfully navigate the world of AI by evaluating tools, collaborating with them, and applying AI responsibly.

AI awareness vs. AI literacy

It’s important to distinguish between AI awareness and real AI literacy. Many procurement professionals are aware of AI; they’ve seen demos, read blogs, or use embedded features in tools. But that doesn’t mean they’re AI literate.

Awareness means knowing AI exists and where it might apply. Literacy means understanding how it works, asking the right questions, and aligning it with business goals. Awareness is passive; literacy is proactive.

For example, someone who is AI aware might know their company uses a chatbot. An AI-literate professional will recognize that the chatbot is powered by a large language model trained on supplier data and understand what’s needed to ensure accuracy and compliance. And when to question its output.

Why Procurement needs AI literacy

With widespread adoption underway, AI literacy is becoming increasingly urgent in procurement teams. Without it, professionals may accept the first answer they see, rely on “black box” tools they don’t understand, struggle to tell if AI is helping or harming their process, and miss out on real value due to a lack of clarity or trust.

Conversely, with literacy, they can challenge AI output constructively, shape AI roadmaps, and lead adoption with confidence. Literacy shifts procurement from passive tech consumers to active, strategic users.

What Procurement AI literacy looks like in practice

AI literacy might sound abstract, but in practice, it comes down to knowing a few key things that make you more effective, more confident, and more in control when working with AI tools in procurement. How in-depth you go will depend on your role, but everyone needs a basic understanding of the following:

Foundational models

Many procurement professionals are familiar with generative AI — tools like ChatGPT that can create new content in response to prompts. These tools are powered by foundational models — AI systems trained on huge, diverse datasets. Large Language Models (LLMs) are a well-known type of foundational model used to understand and produce text. However, other models can produce images or output numeric values.  

Common types of foundational models include:  

  • Convolutional Neural Networks (CNNs): Deep learning models used to process visual data like images and videos.  
  • Long Short-Term Memory models (LSTMs): A type of recurrent neural network that can remember information for a long time and apply that stored data for future calculations.  
  • Transformers: A type of neural network architecture that transforms or changes an input sequence into an output sequence. LLMs are specialized transformers.  

Understanding the differences between various foundational models helps procurement teams evaluate tools, set realistic expectations, and avoid misuse. For instance, knowing a chatbot uses an LLM helps you anticipate both its strengths (like summarization) and its risks (like hallucinations or data leakage). This knowledge is the starting point for the responsible, effective use of AI in procurement.

Data and its role in AI  

Procurement professionals with strong AI literacy understand that clean, structured, and relevant data is essential for accurate, reliable AI outputs. This means being familiar with core data concepts like:

  • Data cleansing – removing errors and inconsistencies
  • Classification – organizing data into useful categories (e.g., spend types)
  • Harmonization – standardizing data from different sources or formats
  • Enrichment – adding context or external information to improve insights

AI-literate professionals can recognize when data is fit for purpose — and when it's not. For example, if supplier records are duplicated, misclassified, or outdated, AI-powered recommendations (like supplier performance scores or sourcing suggestions) may be misleading or incorrect.

Understanding the role of data in AI helps procurement teams not only evaluate AI outputs critically but also prioritize data quality improvements that directly impact performance.

Smart search and decision support

Modern AI tools go beyond keyword searches to deliver smarter, context-aware insights. Two technologies enabling this are:

  • Knowledge graphs is a structured representation of data that connects entities based on relationships (e.g., linking suppliers to their contracts or risks).
  • Vector engines capture the context and meaning behind the data to enable semantic search, matching meaning rather than just exact terms.

These tools help procurement teams:

  • Find similar suppliers based on capabilities
  • Match contracts across formats
  • Surface risks that aren’t explicitly labeled

By understanding how these systems work, professionals can refine queries, better interpret results, and avoid missing critical connections.

Automation with oversight  

AI literacy includes understanding not just what can be automated, but also how to balance automation with human judgment.

AI-driven tools can streamline procurement tasks like contract review, data entry, or even negotiation support. But smart automation doesn’t mean removing people from the loop entirely. Instead, it means designing systems with intentional points of human oversight — a concept known as “human-in-the-loop”.

This approach allows professionals to:

  • Review and approve AI-generated outputs (e.g., suggested negotiation terms)
  • Intervene in exceptions or edge cases that AI may not handle well
  • Ensure quality control and maintain compliance

For example, AI might propose optimal contract clauses based on supplier proposals and historical contracts, after which a human reviews and approves them before they’re finalized.  

Understanding where and how to insert human oversight is key to using AI responsibly — and to building trust in its outcomes.

Architecture, integration, and security  

AI doesn’t operate in isolation — it’s part of a broader digital ecosystem. AI-literate procurement professionals therefore need to possess a basic understanding of concepts like:

  • System architecture — how tools are connected, deployed, and scaled across the organization

You don’t need to be an IT expert, but you should know how to ask the right questions, like:

  • Where does the data come from and where is it stored?
  • How does the system ensure security and compliance?
  • Can it scale as we grow?

These questions help procurement teams evaluate tools, collaborate with IT, and minimize risk.

Use case evaluation and process fit  

AI literacy isn’t just about understanding how AI works — it’s also about knowing when and where to apply it. Not every procurement task needs AI, and in some cases, adding it can create unnecessary complexity.

AI-literate professionals know how to evaluate use cases critically, asking questions like:

  • Is this task rule-based (and suitable for automation) or judgment-based (and better handled by humans)?
  • Do we have enough data to support this use case?
  • Will AI reduce effort, increase compliance, improve the user experience, or just add complexity?  

Knowing where AI adds value (and where it doesn’t) is a key part of responsible adoption.

Build AI literacy with Procure Ai

As a trusted expert in procurement AI, Procure Ai helps organizations exploit the full potential of their data and processes using advanced, responsible AI technologies. From autonomous sourcing to intelligent intake, our platform enables smarter, faster procurement decisions grounded in real-time insights and enterprise-grade security.

To support procurement professionals on their journey to AI literacy, we have created the free, self-paced Procurement Aicademy — a video series that explains and demystifies key AI concepts and links them to real procurement contexts. Each video covers a core topic — from data lakes and knowledge graphs to automation and negotiation — explaining how these technologies work and where they add value. At the end of the series, you can complete a short assessment to earn your AI in Procurement Ready certificate — a strong statement that you’re ready to lead or contribute to AI-driven initiatives.

Whether you're just getting started or looking to sharpen your understanding, the Procurement Aicademy is a valuable step toward becoming an AI-literate procurement professional.

From awareness to action

AI is reshaping procurement, and the professionals who thrive will be those who understand how it works, where it fits, and how to use it responsibly.

Just as literacy empowers you to read, write, and communicate effectively, AI literacy empowers you to interpret AI outputs, ask informed questions, and confidently speak about how AI tools impact your processes. It turns passive users into active, strategic contributors.

AI literacy isn’t a nice-to-have — it’s a core competence for modern procurement practitioners. And like any skill, it builds over time. Start small. Stay curious. Ask questions. And take the next step by building the knowledge and confidence to lead in an AI-enabled world.

Are you ready to get started? Register for the Procurement Aicademy now.

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