How procurement is managing the instabilities of the current climate, while fostering the trust of other functions.
The current climate requires procurement to juggle risk management with collaboration, supplier engagement, technology adoption, ESG and external workforce management, all at once.
One direct impact of the threat of inflation is the re-emphasis of cost and risk management as critical priorities.
In fact, inflation was specifically cited by experts as the reason behind their naming cost (35.7%) and risk (26.6%) management as their two top priorities.
These concerns were among the key findings of the survey Decoding confidence in the procurement function, conducted by SAP and Economist Impact, which has seen these two priorities take the top spots for two years in a row.
Transparency, collaboration and people management
The report analyses procurement’s top priorities, alongside the primary challenges that threaten the function.
In reflection of the current unstable climate, characterised by various recent geopolitical uncertainties, this year’s survey saw a dramatic 13.6% increase in prioritising supply chain visibility, from 16% in 2022 to 29.6% in 2023.
Other key approaches to risk resilience are collaboration and people management. The report revealed the extent to which procurement is prioritising a people-centric approach, with both supplier relationships and operating models being prioritised by 28.2% of respondents.
Using data intelligence to foster confidence in procurement
Technology is also driving rapid innovation, with these ever-advancing solutions proving invaluable for maintaining competitive advantages, and improving resilience (even in the face of current instabilities).
Within the report, almost a third of respondent executives named category management as the leading technological trend, to be implemented within the year. What’s more, over a quarter stated that they see it as a key driver for procurement’s digital transformation.
Predictive analytics and decision intelligence are two other major areas of investment, with around a third of all executives choosing spend analytics as their main digitalisation driver.
It is interesting to see the growing role of data-driven decision making in building confidence in procurement, and how forecasting-driven solutions are enabling better management of risks and costs.
How are teams improving the state of procurement confidence?
- Inflation is driving a far greater need for improved cost and risk management
- The need for supply chain visibility has increased dramatically
- Predictive analytics and decision intelligence are rapidly growing areas of investment
- Around a third of all executives named spend analytics as their main digitalisation driver