Procurement has traditionally been considered a back-office function. In the new reality of ongoing supply chain disruptions, however, procurement has become a critical determinant of the overall customer experience and a factor in whether or not a business survives or thrives. The Amazon Business 2024 State of Procurement Report offers new insights into the many ways procurement impacts the customer journey in uncertain times, where white-glove service, reliability, responsible supply chains, and peace of mind are increasingly valuable to consumers.
"[Navigating complex and changing] supply chains remains a critical issue. And the bigger the company, the greater the opportunity there is to mitigate risk.”
— VP, Purchasing, Global Bank/Credit Union, US
The report underscores what most procurement leaders already know: the internal view of the procurement function has evolved from traditional sourcing and shipping to a broader strategic function within the organization. But with increasing power, as the saying goes, comes greater responsibility. Internal procedures and decision-making now require more strategic deliberation — meaning additional steps and more input from stakeholders — than ever before.
As the procurement function broadens in scope, procurement operations naturally grow more complex: about 47% of respondents identified the complexity of systems and processes as their top internal challenge, making it the top internal challenge facing procurement today. As a result, many leaders are looking to enhance and streamline their back-office operations, with 98% of decision-makers planning investments or upgrades in analytics and insights tools, automation, and AI-driven optimization of purchasing decisions in the next few years. The same amount also expressed interest in discovering or learning about new digital tools that could scale up their procurement operations.
"Two years ago, you never heard of a CEO on an earnings call talking about sourcing or supply chain. Now, it’s a big part of every earnings call. All of a sudden [procurement’s role] is geopolitical, it's economic."
— VP, Financial Services Industry, US
With AI on every leader’s list these days, digital transformation is no longer a matter of 'if' but 'when.' Procurement's digital transformation is now imperative for modern businesses. Accordingly, the report indicates a growing inclination towards digital tools. AI and machine learning are gaining traction across multiple business sectors, with just under half (45%) of respondents stating they would be willing to incorporate adopt AI into their procurement efforts immediately or within a year. However, 80% replied that they would be willing to do so within two years.
This transition streamlines procurement processes and aligns with the modern consumer's expectations of fast and efficient service. Recent research from Deloitte shows that, much like modern consumers, business buyers are now shifting toward digital experiences, with 81% of buyers indicating that they’re using the web more than before as their
primary source of information. The survey further found that over one-third (38%) of business buyers now prefer to order products from a supplier ecommerce website versus a sales or customer service rep, and nearly half (45%) prefer to reorder through ecommerce channels.
Deloitte's report identified four main factors causing business buyers to shift toward digital, including generational preferences, the growing ubiquity of digital technology, changing operational models, and the rewards organizations see when they differentiate their customer experience. Specifically, the report cites Forrester research, which showed that companies that led on CX outperformed those that did not in both stock price growth (32% vs. 3%) and total returns (34% vs. 5%). This was backed by Deloitte’s own research, which showed that companies that deliberately elevate the customer experience are twice as likely to outperform their peers in revenue growth within a three years period.
The COVID-19 pandemic reshaped consumer ideas around purchasing and sustainability, and recent research shows that this trend is only going to continue. Indeed, the 2024 State of Procurement Report found significant evidence that this consumer emphasis has finally entrenched itself into B2B procurement practices and mandates. In other words, responsible purchasing a now requirement — and an opportunity — for most organizations.
Specifically, the majority (81%) of survey participants stated that they now have mandates to purchase from various types of certified sellers, reflecting a growing internal emphasis on Environmental, Social, and Governance (ESG). While the exact mandates and requirements vary by country, most respondents noted that their mandates include some combination of sustainable, local, or small businesses, or sellers that are owned by historically disadvantaged groups, specifically (respondents could select multiple options):
Despite these mandates — and the many procurement leaders who would like to purchase from certified sellers even if not required — 85% of respondents reported that the difficulty of sourcing suppliers who follow sustainable practices prevents their company from setting or achieving sustainability goals for procurement. Many respondents reported challenges gathering ESG and CSR information from suppliers, especially as more teams are feeling short on funds or time. So, while about four in 10 decision-makers found that their suppliers exceeded their expectations, half felt suppliers were just meeting those expectations. In other words, the biggest roadblock to responsible purchasing is not want or willingness; it is a matter of logistical capacity.
Leveraging technology is key to this effort. Organizations can use the feature set of Amazon Business, for example, to identify, highlight, and prioritize diverse and local sellers, as well as certified sustainable products, while setting parameters around pricing thresholds, product offerings, and delivery requirements. Purchasing teams can then track and report on spend toward responsible purchasing goals with pre-built reports using Amazon Business Analytics, increasing transparency and building accountability with their internal and external customers.
In today's global economy, navigating complex supply chains — and organizational priorities — remains increasingly critical. Looking ahead, procurement is set to play a more strategic role in organizations. With a focus on agility, innovation, and collaboration, procurement leaders are poised to drive significant improvements in customer experience. Adapting to rapid changes, manage risks, and leveraging technology will be key in shaping procurement strategies that align with customer expectations and business goals.
The 2024 State of Procurement Report was fielded online by KRC Research from June 6 to July 14, 2023, among 3,108 procurement decision-makers and senior leaders familiar with procurement operations at their organization. Respondents were located in the US, France, Germany, Italy, Japan, Spain, and the UK. Respondents spanned nine industries and all commercial sector respondents worked at organizations with a minimum revenue threshold set based on geography.
Download the full 2024 Global State of Procurement Report to learn more about the trends shaping the future of business buying
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