Category managers who spend hours each day sourcing and analyzing category-specific data to drive better decision-making may soon be able to use AI-powered category agents to revolutionize their roles—freeing up time to focus on higher-value strategic initiatives. In our work with clients, we are already seeing how category agents are driving an additional 5 to 20 percent in value across procurement functions, with procurement teams capturing 15 to 30 percent efficiency improvements through the automation of non-value-added activities.
Category agents are poised to transform strategic category management, ushering in a new era for procurement. This revolution is already underway and promises to permanently reshape strategic category sourcing. The real question is not if procurement organizations will adapt, but how quickly they will embrace this change.
Reimagining a day in the life of a category manager
Category agents are impacting various aspects of category management. Although the technology is still evolving, it is already demonstrating considerable potential in at least three key areas for category managers:
- Elevating data access and quality. One of the biggest challenges procurement organizations face today is efficiently ingesting and improving data from multiple sources. AI has proven to excel in this area, seamlessly processing both structured and unstructured data—such as news articles, contracts, and more—from internal and external sources. Additionally, AI-powered agents significantly enhance data quality by refining, segmenting, and organizing data for better usability and decision-making.
- Moving faster from data to decision. Category agents harness the power of advanced analytics and gen AI intelligence to extract actionable insights and provide tailored recommendations from data. With just a click, users gain access to a 24/7 virtual assistant that guides decision-making, significantly reducing the time required to reach decisions while driving improved outcomes.
- Powering execution. Category agents extend their support beyond decision-making by guiding managers through the execution phase. From creating and analyzing requests for proposals (RFPs) to preparing and conducting supplier negotiations, the agent acts as a trusted partner. It also helps monitor execution progress to ensure that the full value of initiatives is captured, enabling procurement teams to achieve their strategic goals effectively.
Such capabilities promise to transform the typical day in the life of a category manager. These managers might, for example, start their morning with a review of AI-produced insights on market, spend, and supplier news and finish it off by reviewing performance and setting actions for the following day (exhibit).
Organizations that embrace this AI-powered future state should be able to free up significant procurement capacity to focus on value-adding measures such as supplier discussion and innovation. In an ever-increasing competitive landscape, this could enable them to pursue cost-saving initiatives, build a sustainable supply chain, and derisk sourcing, thus preparing for potential disruptions.
Internally, category agents can provide a more holistic view of procurement activities and performance metrics to procurement leadership. Chief procurement officers (CPOs) will have new insights to inform decision-making and encourage development of cohesive category management strategies aligned to broader organizational goals.
Such benefits are already being captured by category managers at the forefront of AI adoption. One metal manufacturing company, for example, has deployed fully automated category agents combining real-time internal data with the right category-specific market insights to identify opportunities and prepare for negotiations. This has added significant value in terms of 4 to 6 percent cost savings, along with process efficiency improvements.
Similarly, a major global chemicals player has used a gen AI proof of concept to empower its category managers with internal spend data intelligence, market trends for their categories, and opportunity analytics and insights. Category managers at this company now have immediate access to the information they need to take their negotiation capabilities to the next level, while eliminating the time-consuming task of manually compiling reports.
These use cases and benefits of AI in category management illustrate the exciting window of opportunity that exists now for early adopters.
Those organizations that move quickly to embrace AI category agents to develop a competitive edge through substantial cost savings, enhanced analytics, and automation can transform not just the typical day of a category manager, but the organization’s procurement performance overall.
Learn more about Source AI, a category management solution that combines category-specific internal and external data with McKinsey’s functional and technology industry expertise.