Procurement strategy is shifting gears, driven by fluctuations in budgeting, advancements in business management practices and the continued integration of technology into procurement processes. Budgets are set to increase in 2024 and that means priorities are changing. According to Aster Angagaw, VP, head of strategic and public sectors at Amazon Business, global procurement teams are making a dramatic shift to how they spend their time and placing a major emphasis on pursuing ESG goals.
"Already, the vast majority of procurement functions have mandates in place for certain kinds of certified purchasing, including half with sustainability mandates - but in 2024 those mandates will become commonplace and top priorities for procurement teams around the globe," says Angagaw. "Additionally, there will be more time spent investing, retaining and developing talent by offering more training and guarding against economic uncertainties caused by supply chain disruption and inflation. In fact, more than 80% of those surveyed across the U.S., Asia and Europe in Amazon Business’ 2024 State of Procurement report stated retaining and developing talent was a top priority, and we don’t see that changing."
Economic uncertainties, global events and changes in market conditions can impact the financial resources available to organizations. In response, teams are likely to focus on cost optimization, exploring avenues for savings without compromising on quality and with that comes collaboration with other parts of the business. This cross-team coordination with procurement, Alex Gagnon, vice president at Amazon Business WW, says, will drastically increase to achieve better cost reductions, savings and ROI on a global scale.
"Key to that process will be procurement leveraging its risk reduction capabilities, exemplified by the 35% of senior leadership committing to focus more on mitigating risks from economic and geopolitical challenges, per global decision makers and senior management surveyed in the 2024 Amazon Business State of Procurement Report. Without this closer collaboration between procurement and other parts of the business, organizations will run the risk of a misused procurement function - and mismanaged cost reductions," explains Gagnon.
Advancements in digital technologies continue to play a pivotal role in shaping procurement strategies. The adoption of digital platforms will enhance transparency, agility and collaboration throughout the procurement lifecycle. Doug Gray, chief technology officer at Amazon Business, says as AI tools become more prominent and accessible in 2024, organizations will invest in analytics and insights tools, automation and AI-driven optimization of purchasing decisions to improve efficiency. This based on the 2024 Amazon Business State of Procurement report finding that 98% of decision-makers globally are already planning investments or upgrades in analytics and insights tools, automation and AI-driven optimization of purchasing decisions in the next few years.
"The same amount are interested in discovering or learning about new digital tools that could scale up their procurement operations. These investments will not only reduce manual work and allow departments to spend less time on tasks that can be consolidated or automated, but it will also reduce spending, streamline processes and ensure organizations meet employee and stakeholder needs," says Gray.
The procurement landscape in 2024 will be shaped by the interplay of budgetary fluctuations and changes in management practice. Organizations that embrace technology-driven procurement and collaboration, with technology or other moving parts of business, will be better positioned to navigate uncertainties and craft a strategically diverse business.
