How AI Agents change the economics of procurement
London, October 30th, 2025
Value leakage costs large enterprises roughly 2% of annual spend—or $40M for a $2B procurement budget. Solving it is a top priority for leaders, but fixing the leaking bucket isn’t easy.
If you’re leading procurement today, the challenge is familiar: hundreds of supplier contracts across teams, departments, and fragmented systems.
With each type of spend and supplier relationship requiring a different approach, keeping up can feel impossible as complexity snowballs.
Below, we break down the four main spend categories—direct main, direct tail, indirect main, and indirect tail—and explore how AI agents can recalibrate the economics in each.
Segment | What is it | Key Challenges | AI Strategy |
|---|---|---|---|
Direct Main Spend | High-value, high-volume items that contribute to the final product | Preventing hidden costs and missed savings that directly impact COGC | Deploy AI as a copilot for value capture |
Direct Tail Spend | Irregular product purchases | Value leakage due to dispersed spending and poor contract terms | Autonomous AI agents for value capture |
Indirect Main Spend | Critical operational expenses | Decentralized purchasing, siloed spending, and limited data visibility | Deploy AI as a copilot for team efficiency |
Indirect Tail Spend | Small operational expenses | High admin burden, fragmented processes | Autonomous AI for team efficiency |
Direct main spend: AI as a co-pilot for value capture
Direct main spend is your high-value, high-volume items—raw materials, components, and services that contribute to the final product.
The challenge
These contracts demand careful management because every misstep hits the bottom line hard. Pricing rules often tie to volatile commodity markets – a big deal when oil swings from $20 to $120 per barrel, or steel prices surge 19% in a single quarter. Even a small overlooked clause can result in millions in unexpected costs. Lack of visibility makes it difficult to act on time, with as many as 50% of procurement leaders reporting that less than 70% of their spend data exists in a trusted single source.
The fix
Deploy AI copilots to work alongside your team to ensure agreements are honored, even with complex clauses.
Copilots can navigate disconnected spreadsheets and systems to validate transactions against terms in real-time
They flag the moment a supplier prices drift from agreed terms, so teams can act before small changes compound into major cost overruns
The copilots track spend volumes and send alerts as you approach rebate thresholds, ensuring negotiated savings don't get left on the table
By working alongside teams to proactively capture value, they free up their time to negotiate smarter.
Direct tail spend: autonomous AI agents for value capture
Tail spend for direct procurement includes smaller, irregular purchases such as specialised tooling and maintenance parts. They might seem trivial, but they keep production humming.
The challenge
Because spending is fragmented and contracts small, these suppliers often fly under the radar. Manual oversight isn't cost-effective, so these purchases become blind spots where risks build unnoticed. Problems surface only after costs balloon or deliveries slip, causing costly production delays. If you've ever waited weeks for a specialised part while production sat idle, you know the headache. Without the data to monitor performance or predict risks early, most teams handle tail spend reactively.
The fix
Autonomous AI agents keep tabs on every supplier, no matter their size. They spot risks like delays, price changes, or contract issues early, so that you don’t have to wait for quarterly reviews to catch issues. This moves direct tail spend management from firefighting to strategic oversight, making every supplier accountable regardless of contract size.
Indirect main spend: AI as a copilot for team efficiency
These are operational expenses that don’t go into the product but are vital to business functions. Think outsourced accounting services or BPOs.
The challenge
Complex service agreements with multi-tier pricing and frequent escalations make tracking obligations a nightmare. Decentralized purchasing across departments hides spend and creates blind spots, with each unit buying independently through separate systems. This increases the risk of duplicate contracts and missed compliance issues, with obligations and deliverables needing constant review to avoid overpaying. Sounds like a big job? It is.
The fix
Integrate AI copilots directly into procurement workflows to assist category owners. Copilots surface delivery risk, pricing anomalies, missed SLAs, and renewal exposures early, providing the signal and context so procurement can act quickly. By providing the data and insight teams need to push hard where it matters, every supplier is held accountable.
Indirect tail spend: autonomous AI for task automation
These are everyday expenses like office supplies, travel bookings, training sessions, and facilities maintenance.
The challenge
These may appear small, but they accumulate over time. Off-contract buys, missed contract terms, and scattered records lead to constant value leakage. Managing them takes hours of human labour, with a $10 item often ending up costing $50 simply due to the admin burden, leading to “death by a thousand cuts”. Procurement teams often waste hours reconciling invoices and purchase orders with little hope of catching every error or inefficiency.
The fix
Autonomous AI automates repetitive tasks like scanning contracts, matching invoices to purchase orders, and flagging off-contract spending. It keeps continuous watch over scattered data, uncovering errors and savings opportunities. That means less manual grunt work for procurement and fewer “invisible” costs dragging down budgets – turning tail spend from a resource drain into a streamlined, controlled process.
AI Agents patch the bucket
Whether used as copilots or end-to-end automation, AI Agents fundamentally change the economics of procurement spend. By removing the manual burden, AI Agents 10x team efficiency while hunting down millions in lost savings.
Our platform helps global manufacturers deploy AI Agents for every category of spend. In today’s market conditions, companies can't afford months-long contract reviews or broken workflows. The new era of procurement is agile and happens in real-time.
Get in touch to learn more.