The pressure is mounting on procurement departments and their CPOs.
A survey of procurement leaders found that 72% felt economic factors, including inflation and rising costs, have been the main unpredictability drivers over the past year. This represents a 22% increase over last year. At the same time, almost three quarters of respondents acknowledged that supply chain disruptions and and market volatility as major hurdles for their operations, according to the report by Keelvar.
The past few years have seen the role of procurement change significantly. Rising workloads and falling headcounts are pressuring procurement leaders to accomplish better results with fewer resources. Increasingly, CPOs are recognised as drivers of value and innovation within the business. Procurement teams are increasingly called upon to be leaders when it comes to digital transformation, sustainability, and risk management—as well as the traditional goal of cost containment.
However, not only are procurement functions being tasked with doing more (especially more technology-focused, strategic work outside the traditional mandate of a purchasing department), but the resources being afforded to procurement may actually be shrinking.
CPOs to practice (very) lean procurement
Despite an Amazon Business Survey predicting over half of procurement budgets to increase in 2024, Keelvar’s survey points to the amount of resources procurement leaders have at their disposal decreasing in real terms. “Procurement departments are under increasing pressure to achieve more with fewer resources,” the report notes. At the same time, 63% of respondents cited an increasing workload as their biggest concern.
At the same time, 38% of procurement leaders reported a “flat or declining workforce.” Another 37% cited employee burnout as a leading concern, and 30% found their departments struggling to meet increasing demand. Even more troubling, only 26% of respondents plan to add staff in 2024. By comparison, 33% plan to cut budgets in favour of more lean operating models.
Efficiency is the new goal for CPOs
As such, efficiency is emerging as a new cardinal virtue for many procurement teams, with a mixture of operational efficiency and technological measures emerging as potential solutions to an overworked, understaffed workforce.
According to the report:
- 49% are planning initiatives like dynamic discounting, competition, contract renegotiation and bulk purchases
- 42% will prioritise automation to free up time for their team to focus on strategic efforts
- 41% aim to implement more efficient savings tracking methodologies
- 19% plan on harnessing tactical spend for an additional 10-15% savings
