As 2024 continues, procurement leaders are increasingly finding themselves under pressure to deliver strategic wins and drive efficiency.
Economic slowdowns, logistical disruptions, and looming political turmoil only serve to ramp up the urgency with which procurement teams need to find new ways to minimise costs while ensuring continuity throughout the value chain. Over 60% of procurement leaders report being worried about the impact of interest rates on their ability to invest during 2024, while
57% fear a recession during the year.
As a result, procurement teams continue to invest heavily into digital transformation. Many are adopting AI, spend management platforms, and automation.
However, efficiency gains within the procurement function itself might not be enough. This is especially true given the fact that many procurement budgets suffer from the influence of “dark purchasing”.
What is dark purchasing?
Dark purchasing occurs when companies source goods and services without the oversight or approval of procurement. Dark purchasing can stem from poorly organised procurement processes, leading to an opaque, decentralised purchasing structure. It can also occur as a form of corruption or negligence—again, thanks to a lack of procurement department oversight.
Whatever the cause, dark purchasing typically often results in higher costs, increased risk, and a lack of control over the supply chain. This harms the organisation, as funds are misdirected—both harming the company’s bottom line and preventing procurement from gaining the visibility they need to drive efficiencies.
The problem is almost ubiquitous. In 2023, a Globality report found that 82% of CPOs believe that their organisation’s indirect spend is poorly managed.
Bad data keeps procurement in the dark
A major contributor to dark purchasing is a lack of visibility stemming from bad procurement data.
A troubling 75% of procurement executives doubt the accuracy of the data they present to the rest of the business. As a result, 79% of non-procurement executives lack the confidence to use procurement’s data to make strategic decisions. Largely, this seems to stem from the fact many procurement teams still have manual processes embedded at critical points in their workflows. Specifically, speadsheets used for data entry and emails for communication account for the bulk of legacy procurement processes. Almost 80% of procurement professionals said their procurement teams do not have dedicated management software. This lack of software makes it significantly harder to track and manage their performance. Just under three-quarters were still using spreadsheets.
Manual processes increase time spent and, correspondingly, capacity for human error. Therefore, manual procurement increases the chances that blind spots will emerge where dark procurement can flourish.
Eliminating dark purchasing
A recently published paper from AmeriQuest argues that eliminating dark purchasing can increase procurement savings by 25%. In order to eliminate the phenomenon, procurement teams need to target the twin levers of control and visibility.
Largely, “dark purchasing depends on non-standardised processes and human error.” Therefore, eliminating the capacity for these within procurement and the organisation at large is a critical step.
“One of the first steps companies can take to fight dark purchasing is to clearly identify and assign procurement responsibilities within an organisation,” they write. In particular, internal stakeholders and C-suite executives “need to buy into the importance of a transparent procurement process” for dark procurement to be meaningfully reduced.
