The state of procurement

Procurement professionals are operating in a challenging environment, with risk a constant presence. A turbulent economic environment coupled with an uncertain geopolitical landscape means procurement teams must constantly think about security of supply and their ability to cope should the worst happen.

This is a key theme in Amazon Business’s 2025 State of Procurement Data report, which finds that supply chain disruption is seen as the most likely factor to pose organizational risks or challenges. It is seen as a threat by 32% of procurement decision-makers (making it their biggest worry), along with 33% of senior leaders.

Political instability is also a concern, identified by 27% of decision-makers and 25% of senior leaders. This has the potential to impact supply chains with wars, potential regime changes and the introduction of tariffs all contributing to an uncertain climate. Concerningly, a fifth (21%) of decision-makers and 18%% of senior leaders admit they lack systems to monitor and manage risk effectively.

This means procurement teams are having to make difficult decisions about which – and how many – suppliers to use, including considering where they are based and the potential for them to become embroiled in disruption or instability.

One manufacturing procurement senior leader summed it up: “The biggest procurement challenge today is balancing efficiency with the complexity of global supply chains, where managing both resilience and cost are increasingly hard to reconcile.”

Inflation is also an ongoing issue, despite the falls seen in recent months. Senior leaders are particularly concerned with this – 34% cite it as a worry, making it the joint biggest perceived challenge – but 29% of decision-makers are also unsettled. The potential for new or changing laws or regulations is a concern for 31 and 29% respectively.

But it’s not just the day-to-day practicalities worrying those in procurement. Cyber-security threats are viewed as the biggest issue by senior leaders, with 34% expressing concern; 30% of decision-makers feel similarly. Linked to this are concerns about data privacy, which 27% of decision-makers and 26% of senior leaders see as an issue.

The fact that such concerns now rank higher than many traditional business and macroeconomic risks suggests a shift in procurement priorities, and demonstrates the impact new technologies are having on how procurement operates.

There are concerns that lie closer to home, too. Difficulty in attracting or retaining talent is seen as an issue by 28% of decision-makers and senior leaders while 31% and 33%, respectively, are concerned about integrating new technologies. The spread of AI and new technologies is cited as a threat by 29% of decision-makers and 31% of leaders.

Many procurement teams are also facing challenges in their day-to-day operations. Nearly half of procurement leaders highlight efficiency and complexity as their primary challenge, with rates ranging from 42% in Spain to 49% in the UK and Germany. Internal systems and processes are the top internal barriers, with France (64%), Italy (62%) and UK (60%) leading in reporting system inefficiencies. Both these figures have increased from a year ago by 3 and 1%, respectively.

Costs and budgets are also a challenge, as is to be expected for those in procurement teams in a difficult economic environment. But the emphasis has fallen slightly – only 21% of both decision-makers and senior leaders list this as a challenge, and this is down 5% among decision-makers and 3% for senior leaders.

Supplier relationships, though, are becoming more important, partly because of concerns about supply chain disruption and security of supply. “It’s crucial to build strong relationships with suppliers because when challenges hit, those partnerships determine if you can stay resilient or fall behind,” was how one technology procurement leader put it. Around one in five – 20% of senior leaders and 19% of decision-makers – identify this as a pain point, with both showing a slight increase on the previous year’s figures.

There are also concerns about suppliers’ ability to help organizations navigate some of these challenges. Some 17% of both decision-makers and senior leaders are worried about suppliers unable to support digital procurement, and this has increased by 11% for senior leaders and 10% for decision-makers in the past year. The risk here is that suppliers could slow down the adoption of digital processes that would otherwise help organizations balance the pressures of rising costs and security of supply.

A lack of clear communication and support from suppliers is also seen as a growing issue by 19% of senior leaders (up by 11%) and 15% of decision-makers (up by 9%). Ensuring visibility into supplier inventory is another worry, cited by 12% of decision-makers (up by 5%) and 10% of senior leaders (up 3%). And concerns about reliable delivery are on the rise: 12% of decision-makers worry about this (up by 4%) and 11% of senior leaders (up by 3%) feel similarly.

Those working in procurement face the daunting task of juggling these conflicting issues while balancing their ongoing purchasing needs. Accessing a wider range of sellers or products is seen as a challenge for 29% of both decision-makers and senior leaders, as is ensuring compliance with spend policies (29% of decision-makers feel this is an issue, as well as 22% of senior leaders). Some are making use of outsourcing to cope: 72% of respondents do this to some degree.

But there is also concern about the extent to which procurement can influence wider organizational issues. Collaboration with decision-makers remains a challenge, particularly in Germany, where 82% of procurement leaders report insufficient collaboration and 83% cite a lack of specialist knowledge—the highest across the EU. 

“There’s a real need to ensure procurement has a stronger seat at the table, especially as priorities shift from just cost saving to supporting larger strategic goals,” concluded one technology procurement leader.

Originally published on USA Today.