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Survey of business leaders reveals common procurement challenges and AI use-cases

Survey of over 200 business leaders from around the world shows the challenges facing procurement, and how specialists in the sector are utilising AI to streamline their operations.

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JAGGAER’s ‘2024 State of Procurement’ report has highlighted how ongoing economic volatility, geopolitical tensions, supply chain disruptions and tech innovations are shaping present-day procurement.

The report is based on a survey of over 220 business leaders from around the world, who occupy managerial and higher-level positions in supply chain, procurement, IT, and finance departments.

The survey respondents come from across the globe, with representation from North America (35.5%), Europe (30%), Asia and Southeast Asia (11.4%), Oceania (10.5%), Africa (10%), the Middle East (2.7%), and Latin America (0.5%).

The survey also includes respondents from various industries, with notable representation from technology (35.45%), manufacturing (10%), financial services and insurance (12.27%), and construction (8.64%).

Economic uncertainty and investment in supply chain

Despite a gradually improving economic outlook, the report concludes that procurement and supply chain professionals are still under intense scrutiny from investors and boards to enhance financial performance.

The fragility of global supply chains remains a recurrent concern, exacerbated by soaring geopolitical tensions, the climate crisis, and frequent disruptions. This precarious environment, says the report, has amplified the reliance on procurement and supply chain teams to navigate these challenges effectively.

According to JAGGAER’s research, 75% of organisations worldwide have either increased or maintained their budgets for supply chain and procurement technology.

Commenting on this finding, Andy Hovancik, CEO at JAGGAER, said:

“Procurement and supply chain professionals are enterprise linchpins. Take them out and the wheels soon fall off your organization! The C-suite is leaning on procurement and supply chain management to help advance business priorities. You wouldn’t expect your most valuable player to lead your team to a victory without the proper equipment, adequate training, and a winning playbook.”

However, while there is significant investment in these areas, many organisations are not going far enough.

Nearly half of procurement teams report that manual and inefficient processes hinder their ability to fully address the C-suite’s critical business priorities. This bottleneck not only slows down operations but also limits the potential impact of these crucial departments.

Business challenges

Inflation, recession risks, and changes in monetary policy continue to significantly impact businesses, with half of the surveyed procurement and finance professionals indicating that these factors have a major or severe impact on their operations.

These financial pressures have prompted procurement teams to adopt various strategies to mitigate their effects, such as cutting indirect expenses, consolidating spend, renegotiating supplier contracts, and seeking supplier discounts. Additionally, 44% of respondents are re-negotiating payment terms to manage cash flow more effectively.

The crucial role of technology

Another conclusion of the report is that the advancement of procurement and supply chain functions hinges significantly on the adoption of technology.

JAGGAER states that despite overall growth in technology budgets, more needs to be done to equip these professionals with the right tools and resources.

“Organisations that apply the right technology in the right places to reduce manual workloads will enable procurement and supply chain practitioners to spend less time on lower-value processes and more on strategic work,” says Georg Roesch, Vice President of Direct Procurement Strategy at JAGGAER.

JAGGAER’s survey reveals that only a small percentage of procurement teams are fully automated. Most teams still rely heavily on manual processes.

For instance, 33% of sourcing professionals spend 11-20 hours per week just on creating and sending out invoices. The potential for reallocation of these hours to more strategic activities is said to be substantial.

Where generative AI is being utilised

With regards to technology, the report adds that generative AI in particular is seen as a potential game changer for procurement and supply chain functions.

44% of companies surveyed by JAGGAER reported that generative AI is already having a major or severe impact on their business.

According to the survey, procurement specialists are turning to generative AI for tasks such as summarising supplier performance, identifying new suppliers, and automating routine tasks like writing standard emails.

However, the report also stresses that the implementation of AI must be intentional and strategic.

As JAGGAER points out, “AI implementations should be intentional, strategic, and purpose-built for supply chain and procurement use cases and today’s realities.”

The potential for AI to transform these functions is said to be significant, but it must be leveraged correctly to maximise its benefits.

Addressing financial pressures and talent shortages

Financial pressures remain a formidable challenge, writes JAGGAER. Among the issues to contend with are inflation, recession risks, and monetary policy changes.

In response, the report finds that procurement is fighting back through cost-cutting measures, consolidating spend, renegotiating supplier contracts, and seeking supplier discounts.

Technology is said to play a pivotal role in these strategies too, thereby enabling more efficient operations and better financial management.

The results of the survey in the report also show how talent shortages are a challenge as well.

40% of procurement professionals surveyed indicated that talent recruitment, retention, and satisfaction issues are severely impacting their business.

The report argues that Investing in technology not only boosts operational efficiency, but also enhances job satisfaction by eliminating non-value tasks and providing a more rewarding work environment.

This, in turn, is said to represent a significant selling point for attracting and retaining top talent.