Gartner: Is Gen AI Stalling Supply Chain Growth?

Generative AI (Gen AI) is attracting strong interest across procurement, but organisations are falling short in turning that interest into measurable outcomes.

According to Gartner’s 2025 Hype Cycle for Procurement and Sourcing Solutions, the technology is now in what it terms the ‘trough of disillusionment’—a stage where early enthusiasm declines due to underperformance, poor integration and unmet expectations.

This analysis places Gen AI in a challenging position within the supply chain sector, particularly for Chief Procurement Officers (CPOs) managing tight margins and complex supplier relationships.

The Gartner Hype Cycle

Gartner’s Hype Cycle provides a framework to evaluate how technologies evolve, from their first appearance to widespread adoption.

Gen AI currently sits in the third phase. 

This reflects that while some early adopters have reported positive outcomes, such as time savings and automation of routine procurement tasks, the wider sector is struggling with practical implementation.

Kaitlynn Sommers, Senior Director Analyst in Gartner’s Supply Chain practice, explains the situation: “Gen AI is proving to deliver process efficiency, better data insights and cost savings for procurement organisations.

“However, fragmented and low-quality data across procurement systems can hinder accurate outputs and integrating stand-alone Gen AI solutions with existing platforms is often complex, due to differing technical specifications.

“Despite these challenges, its applicability across the source-to-pay spectrum continues to drive strong interest and adoption.”

The benefits and barriers

In supply chain terms, Gen AI holds clear potential to free up staff from low-value manual tasks, enable faster procurement cycles, and improve supplier negotiations through enhanced data analytics.

The technology is being trialled for tasks like project scoping, contract management and workflow automation—often using text-to-process tools to replace human input in early-stage procurement functions.

But these use cases rely heavily on structured and unified data. Many procurement teams still operate across fragmented systems, lacking the infrastructure to support reliable AI outputs. 

Without standardisation and integration, Gen AI tools risk producing incomplete or inaccurate recommendations.

There is also the issue of adoption readiness. Procurement teams face hurdles such as employee resistance, unclear regulation around AI usage, and job security fears. 

For procurement functions to adopt Gen AI successfully, Kaitlynn believes that organisations must develop a clear internal strategy and build up the necessary digital foundations.

CPO next steps

Gartner outlines several recommendations for supply chain leaders aiming to stay competitive as Gen AI evolves.

The focus is not simply on adopting AI tools, but building the systems and capabilities around them to ensure sustainable value.

Key actions include:

• Investing in a strong data infrastructure to clean and standardise procurement data
• Conducting vendor assessments to identify Gen AI tools that solve actual business problems
• Selecting AI tools that target specific pain points in procurement workflows
• Redesigning procurement processes to integrate new technology more effectively
• Monitoring legal and regulatory developments to ensure compliant use of Gen AI
  
• Upskilling procurement teams to build trust and improve human-AI collaboration

​​​​​​​Kaitlynn concludes: “Organisations that delay action on integrating Gen AI into procurement processes risk falling behind as early adopters overcome these challenges and realise tangible benefits.”

Gartner projects that Gen AI will reach the Plateau of Productivity within five years. 

For CPOs willing to act now, by strengthening internal systems and preparing teams, there is still time to turn current uncertainty into future operational gains.