How predictive analytics is shaping smarter buying decisions in 2025

Predictive procurement is set to be a key theme for procurement professionals in 2025, as they seek to gain greater insight into likely future demand and pricing trends in an uncertain economic environment.

Smart business buying, as it is also known, allows procurement teams to accurately forecast their own demand, based on previous buying history and anticipated need. This means they can plan what they need to buy and when, ensuring they have stock or other products when they need them without any risk of shortages, while also avoiding overstocking and the need for storage.

It can also help deliver the best price, by enabling organizations to plan purchases in advance in a timely manner. This means they’re able to research the best price, including running tenders with suppliers if necessary, instead of panic-buying when stocks are low.

But such analysis goes beyond ensuring organizations don’t get caught out in supply chain disruptions or end up paying more than they should. Effective analysis of historic data, combined with powerful forecasts over future demand, can prove the basis for more fundamental reviews of suppliers, helping businesses consolidate their supply base and ensure more spend is managed by the procurement team, delivering further efficiencies.

In turn, this can help meet other business priorities by mandating the use of suppliers that align with wider company objectives, including those which meet sustainability goals or requirements to use small or local suppliers.

Amazon Business’s 2025 State of Procurement Data report finds that businesses feel they must generate better insights through better use of their data if they’re to weather the unpredictable supply chains ahead. Almost three-quarters (74%) of senior procurement leaders and 64% of procurement decision-makers agreed that generating stronger data, insight and analysis over the next two years will be essential in supporting operational enhancements. And almost a quarter (24%) of both groups believe procurement’s greatest value to an organization lies in improving the efficiency of the procurement process.

It’s no surprise, then, that this is becoming a growing focus: 34% of senior leaders and 31% of decision-makers identified “improving reporting and analysis” as a top area where they want to see procurement spending more time and energy over the coming year.

The survey also found 10% of senior leaders and 8% of decision-makers agree that improving digital solutions have the potential to smooth out some of procurement’s biggest issues, an increase in both figures from the 2024 survey. 

Procurement teams have already made some advancements in this area, with 65% already using analytics or tools to help understand performance, trends, data and insights. The use of artificial intelligence (AI), though, is less common: 42% currently use AI to optimize their purchasing decisions – a decrease of 5% from a year ago.

There are plans, however, to make more of AI in future: 38% of respondents intend to invest in AI for demand forecasting and spend analysis over the next two or three years. “The key to modern procurement is not just having data but generating actionable insights that drive smarter, faster decisions at every level,” said one senior government procurement leader.

But there are concerns for procurement professionals about their ability to truly embrace digital procurement. Almost one in five (17%) senior leaders and decision-makers identify suppliers that lack the capability to adopt it as a challenge – up by 11% for senior leaders and 10% for decision-makers from the previous year. This can result in slower processes, less visibility and more complications than needed for the customer.

Ensuring visibility of supplier inventory is another hurdle. This was identified by 12% of decision-makers and 10% of senior leaders, a year-on-year rise of 5 and 3% respectively. This can have serious implications for buyers wanting real-time insights, potentially preventing them from managing unexpected disruptions or even leading to stockouts.

For those working in procurement teams, the challenge is to find a way in which to access such information from suppliers and wider insight into their own spend activity, without compromising on flexibility or quality. One finance procurement leader interviewed in the survey put it succinctly: “To be effective in managing today’s supply chains, you need transparency across suppliers, and that’s only possible with the right data integration.”

In the longer term, the use of predictive procurement can help the function become an even more essential part of the organization as a whole, by providing reliable information that can help businesses plan for the future.

“Overcoming the idea that procurement is merely a functional support role has been one of the most transformative efforts we’re seeing in our industry,” said a senior manufacturing procurement leader. “Procurement is now about driving growth, not just saving costs.”

Originally published on USA Today.