Procurement predictions for 2024: The top trends fueling this year (and last)
Happy 2024! Many businesses are either closing out the last fiscal year or are already gearing up for a big 2024. And while the year ahead brings lots of exciting changes, let’s take a moment to revisit 2023.
For many in Procurement, 2023 was the year of the economy. Many organizations were impacted by RIFs, unexpected budget constraints, and increasing supplier costs. Many Procurement professionals and customers shared a similar story this year:
“Since our RIF last quarter, I just can’t get the money I need to invest in Procurement automation”
“I’d love to focus on more strategic initiatives but I need to spend this quarter figuring out how to save an extra $1 million to reduce layoffs.”
It was very May 2020. But amidst the hard times, Procurement found a way to make some strides:
- Supply Chain Resilience and Sustainability gained momentum. Geopolitical disruptions and economic instability continued to highlight the need for more agile and resilient supply chains. In order to stay ahead, companies adopted near-shoring strategies, diversified their supplier base and invested in technologies like blockchain for enhanced transparency and traceability. Many companies also focused on integrating sustainability criteria into their supplier selection process and demanded more transparency throughout the supply chain. Environmental and social responsibility, like resilience, will continue to be a priority for 2024.
- AI buzzed. While we did not see widespread adoption of AI within the Procurement space in 2023, it was top of mind for everyone. From discussions around disruption and job displacement, to excitement over efficiencies and bandwidth relief. Within the many, many conference presentations, there was no lack of conversation and buzz. We saw more and more platforms hype their already existing capabilities with machine learning and spin them as the next great thing! While the robots did not shake up the Procurement landscape in 2023, 2024 is trending towards being a bigger year for AI in Procurement.
- Collaboration spread its wings. Procurement has been desperately seeking partnership in collaboration for years. And while some teams and companies have nailed this, historically, Procurement has been left on their own island. 2023 answered the need for better collaboration and many Procurement teams fostering closer relationships with both internal teams and external suppliers. This led to further strategy behind spend decisions, better deal outcomes, and a clearer understanding of the value Procurement brings to the organization. 2024 will see an even larger emphasis on collaboration, including methods of collaboration.
While 2023 brought challenges and heartburn, let’s look back at the year as one full of excitement (excluding RIFs, which are less than thrilling). Budget constraints and price increases are not new challenges for Procurement and allow teams to flex their strategy muscles in times that the E-Team is relying on them.
Here’s hoping everyone was able to up their weights at least once during the 2023 cycle as Procurement is going to be flexing big time in 2024. Among others, the trends seen in 2023 are going to continue into 2024:
- Sustainability and resilience are non negotiable. If 2023 was the momentum year for sustainability and resilience, 2024 is going to be the year these initiatives are cemented into Procurement strategy and programs. Procurement’s decisions will no longer be solely cost based but will also be guided by the company’s commitment to reducing its footprint and ensuring production disruptions are kept to a minimum.
- AI takes off. Many are predicting a rapid adoption of AI in Procurement for 2024, but that might not be the case. AI developers and engineers have stated that AI is not exactly where it needs to be for it to reform or impact Procurement to the scale many are saying it will. At this current moment, the robots are not coming for us. Yet!
But what about in 2024? Procurement will be able to leverage AI as more of a sidekick for them and their stakeholders. If you need a data point, simply log into our procurement platform and ask! The AI will pull that data point and remove any friction of data democratization and fact finding. If you’re looking for a purchase workflow, inquire with the AI for instant, seamless results.
AI will be the conduit of information; the teammate to get you what you need while improving stakeholder experience and engagement. Autonomous sourcing, on the other hand, is a wild card. Be sure to keep an eye out for any trend changes here in 2024.
- Collaboration is important to everyone: 2023 set Procurement up to continue their quest in collaboration. Procurement will break down silos and work even more closely with other business units. Cross-collaboration will bring departments together to identify and source the best solutions for their needs, maximizing value across the entire organization and creating clearer pathways to purchase for Procurement (cheers to a volume discount!). Procurement will have the benefit of Spend Management Platforms to enable seamless collaboration for making spend decisions and executing action plans.
Outside of these three points, new trend predictions to keep a lookout for in 2024 are:
- Automation reigns supreme: Spreadsheets, while they certainly can be helpful for companies and teams that are in a lower maturity phase of their program, will see their usage decrease. With the increased demand for strategy, renewed focus on collaboration, and the ever present need for cost savings, Procurement teams will increase their use of automation for Procurement.
Spend Management Platforms will be more widely leveraged for data democratization, stack rationalization, and orchestration of systems and processes necessary in the purchase cycle. Bringing teams together into the same platform will reduce manual tasks, increase transparency and visibility not only into what is in-house but the purchase cycle itself, reduce cycle times, and more. Procurement will experience bandwidth relief and internal customers will finally feel bought into the process, creating a win-win for every organization.
- Expanded skill sets for procurement: As Procurement strides towards more strategic value add, teams will need to expand upon traditional sourcing expertise with data analysis skills and technological know-how. Upskilling and reskilling will be crucial as the demand for more strategy will increase.
AI awareness and knowledge will also be critical as AI develops and presents more opportunities for Procurement to increase efficiencies and drive adoption. Additionally, expectations for strategy will continue to increase meaning Procurement teams will need to be well versed in data analysis, cost modeling, predictive analytics, and more.
In a recent webinar, Dawn Tiura, CEO and President of SIG, discussed how CPOs are looking for soft skills along with these hard skills. Specifically, CPOs want their teams to be influencers within the organization.
- Renewed focus on internal partnerships: 2024 will demand Procurement to get creative and deliver results in a far more consultative and partnership focused manner. Procurement teams will need to be more innovative with their fellow review and approval teams like legal, infosec, and finance to ensure employees get the tools they need within reasonable boundaries.
Procurement teams should consider when and how to enforce processes while maintaining governance. For example, for a business critical tool where the right solution is clear, consider stepping outside of the box when it comes to lengthy RFPs, inflexible proof of concept, and unnecessary negotiations.
The procurement landscape is set for a major makeover with automation taking center stage. Manual processes and complex systems will be far less common. AI-powered solutions will streamline repetitive tasks freeing up procurement teams to focus on strategic sourcing and supplier relationships. Data and predictive analytics will forecast future needs and reduce renewal cycle times.
The focus will shift from cost-cutting to value creation, with automation tools uncovering hidden savings and optimizing spend across the entire procure-to-pay cycle. This wave of automation will reshape procurement as we know it today, requiring upskilling and adaptation to capitalize on the strategic opportunities it presents. 2024 is shaping up to be the year procurement gets smarter, faster, stronger, and more strategic than ever before.
Productiv is the only Spend Management Platform built for bringing teams together. From new purchase requests to renewals, and everything in between, Procurement, Finance, and IT work in Productiv to align around trusted data, get AI powered insights, collaborate, make smarter decisions, and have confidence in every investment, at scale.
Learn more today.