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Like most organizational departments, procurement has been impacted by everything from the labor shortage to fluctuating economic cycles to the digitalization trend over the last few years. Consistently pressured to do more with less while finding the right balance between sourcing available goods and saving money, procurement teams are stepping up to the plate to help their organizations survive and thrive in this VUCA (volatility, uncertainty, complexity and ambiguity) world.
One constant across these and other challenging points is that companies are increasingly turning to technology for help dealing with the ongoing disruptions and challenges being placed in front of them. In its new Voices of Sourcing report, Keelvar dissects the current automation boom and highlights procurement teams that are leveraging both automation and artificial intelligence (AI) to work smarter, better and faster.
“If 2023 was when the automation and AI revolution started, 2024 is the year of action when the true leaders and innovators get started and begin to separate from the pack,” the company points out in its report. “In an era of challenging market dynamics, it’s not just about keeping pace, it’s about redefining the race; and lagging behind is not an option.”
Facing New Headwinds
Procurement teams continue to face headwinds in the form of unpredictability, inflation and disruption. According to the report, procurement leaders expect to continue navigating market-related complexities and considerable operational challenges. For example:
· 72% say economic factors, including inflation and rising costs, have been the main unpredictability drivers over the past year, up 22% in 2023.
· 74% acknowledge supply chain disruptions and market volatility as major hurdles for their businesses.
Procurement departments are under increasing pressure to achieve more with fewer resources. Among the top obstacles to procurement efficiency Keelvar cites:
- 63% of survey respondents blame increasing workloads
- 38% are experiencing a flat or declining workforce
- 37% report burnout is a concern
- 30% struggle with increasing demands
- 17% are hindered by complex sourcing processes
- Yet only 26% of respondents plan to add staff in 2024
- And, 33% plan to cut budgets and operate in a leaner manner
“With fewer hands at the pump, procurement needs to explore new ways of driving value and maximizing the resources they have,” the company states in the report. Sourcing teams are also being asked to find more savings from already squeezed budgets. To address these demands, procurement departments are exploring new cost management approaches. To wit:
- 49% are planning initiatives like dynamic discounting, competition, contract renegotiation and bulk purchases
- 42% will prioritize automation to free up time for their team to focus on strategic efforts
- 41% aim to implement more efficient savings tracking methodologies
- 19% plan on harnessing tactical spend for an additional 10-15% savings
Driving Growth and Mitigating Risk
Keelvar expects 2024 to be the year of “rapid adoption” of AI, automation and intelligent systems, all of which can help procurement teams improve efficiencies and do more with less. The survey also found that:
- 72% of respondents are challenged by rising costs and potential recession
- 59% will adopt advanced tech to drive efficiency
- 42% of leaders will use automation to enhance efficiency and free up time for strategic tasks
- 68% will focus on cost management and operational efficiency this year
- 57% will refine category strategies
- 56% are cautious about generative AI’s output quality
“In 2024, procurement’s digital transformation is set to soar, with 59% of organizations eyeing advanced and innovative tech for efficiency and strategic impact,” the company adds. “The top investment will be in data-driven decision making, with 56% of survey respondents seeing this as critical to driving growth, [attracting] talent and mitigating risk.”
