As we go into 2024, we believe that procurement teams will have a crucial role to play when it comes to elevating business. We predict that there will be three fundamental areas in which procurement can drive business transformation for the coming year, namely:
1. Procurement innovation
2. Driving value for customers and suppliers
3. Procurement as a force for good
Let’s delve a little deeper into what each of these areas mean for procurement teams…
1. Procurement Innovation
Of course, the newest innovation that everyone is talking about is AI, and savvy procurement leaders have already been working to understand how best to harness the power of AI to improve procurement process and performance.
In recent findings from Research and Markets, it’s clear that AI is already bringing transformative changes to how procurement processes and supply chains function, delivering substantial cost savings.
It’s now up to procurement teams to act fast to integrate AI into their processes. Increasing AI integration in procurement processes can help to streamline supply chains through the introduction of virtual assistants, as well as providing elevated insights into procurement data.
Procurement managers may also look to conversational AI- such as Chat GTP- to help increase productivity. Procurement teams will be able to interact with computer programmes using natural language, as opposed to using time-consuming manual database searches, for example: “Find me a supplier for A4 paper in England”. AI will quickly retrieve the relevant information, in far less time than it would take to do a manual search.
There’s no doubt that AI technology is going to redefine the procurement sector. For those who are agile enough to adapt quickly, AI represents an efficient future, aiding everything from cost efficiency and reliable product delivery, to overall supply chain enhancement. Procurement teams who embrace AI will see more streamlined businesses and cost savings.
2. Driving value for customers and suppliers
An important way in which procurement teams can drive business transformation in 2024 is by increasing value for customers and suppliers. By adopting strategic approaches and fostering positive relationships, procurement teams can contribute significantly to the success of the entire supply chain.
When it comes to driving value for suppliers, transparent communication will be key. Procurement teams need to foster open communication, clearly communicating the organisation’s needs, expectations, and any changes in requirements.
The aim is always to build long-term relationships with key suppliers. Building trust and understanding helps create a more collaborative and mutually beneficial partnership. Employing fair and ethical practices will help build these relationships- think timely payments, adherence to contracts, and ethical sourcing considerations.
Procurement managers may also consider implementing supplier development programs to help suppliers improve their capabilities. This can lead to better-quality products, improved processes, and increased efficiency. Joint cost reduction initiatives should also be considered. Finding ways to collaborate with suppliers to cut costs mutually can lead to lower prices for the organisation and better margins for suppliers.
When it comes to driving value for customers in 2024, cost savings will of course be front of mind. It has never been more important for procurement teams to negotiate favourable terms with suppliers, which can directly benefit customers by offering competitive pricing for products or services.
Quality assurance will also play an important part in customer value. Procurement teams must ensure that suppliers adhere to quality standards: delivering high-quality products or services contributes to customer satisfaction and loyalty.
Customers also value reliability, so implementing robust risk management strategies to avoid disruptions in the supply chain should be of high importance. This ensures a reliable and consistent supply of goods or services for customers. Procurement teams should also work closely with suppliers to ensure timely deliveries. Timely access to goods or services contributes to customer satisfaction and helps in meeting demand.Flexibility and agility should also be considered. The aim should be to build a supply chain that is flexible and agile to respond to changing customer demands: this can involve developing multiple sourcing options and contingency plans.
Sustainability is a topic that we’ve discussed previously, but its importance to consumers cannot be underestimated. As we move into 2024, procurement practices should align with sustainability goals. This is increasingly important for customers who value environmentally and socially responsible business practices.
By focusing on the interests of suppliers and customers this coming year, procurement teams can contribute to the creation of a sustainable and value-driven supply chain. Regular assessments, feedback mechanisms, and a commitment to continuous improvement are essential components of a successful procurement strategy.
3. Procurement as a force for good
In 2024, we predict that procurement will play a leading role in transformation changes that will benefit both businesses and employees.
More and more companies are now focusing on environmental, social, and governance (ESG) goals, and we expect many procurement professionals to emphasise sustainability in 2024. This coming year, we expect sustainable procurement to become “the norm” instead of an afterthought. Consumers are putting more pressure on companies to become more sustainable, and on top of this there is a huge increase in regulations that push companies to become more sustainable. Procurement plays a significant role in this agenda. For 2024, sustainability reporting is expected to become a notable trend in the procurement industry. These reports will serve as powerful tools for showcasing a company’s environmental and social performance metrics in the context of its supply chain operations. By making sustainability an integral part of their procurement strategies and transparently communicating their efforts through these reports, businesses can not only meet the demands of socially and environmentally conscious consumers but also drive positive change across global supply chains.This year, inclusivity and diversity will also be firmly at the forefront of the corporate landscape. There will be significant focus on diversity, equity, inclusion and belonging (DEIB), and we anticipate a shift towards greater emphasis on DEIB within procurement processes.
In the past, we’ve discussed how diversity efforts have traditionally concentrated on achieving a diverse workforce, but now, procurement departments are extending these principles throughout their operations. This means that diversity and fairness are playing a crucial part when it comes to selecting new suppliers, with an emphasis on procuring goods and services from diverse suppliers. This ensures that every supplier has an equal opportunity to compete for contracts.
Procurement in 2024 and beyond
If you are looking for procurement advice or support for the coming year and beyond, Accelerate can help.
Accelerate is a professional procurement consultancy bringing over 100 years of combined experience. Our highly experienced team of practitioners and creative problem solvers can bring new insight to help solve business challenges and uncover opportunities you may not have even thought possible. Get in touch today for a chat.