Is Procurement's Influence Soaring in 2024?
The Chartered Institute of Procurement & Supply (CIPS) has just released their Global State of Procurement and Supply 2024 report, in partnership with GEP. This report is quite significant as it draws insights from a survey of chief procurement officers (CPOs), procurement directors, and heads of procurement and supply from 122 organisations. These organisations collectively have a turnover of US$73 billion, so the findings are pretty comprehensive.
One of the main takeaways is the growing influence of the procurement and supply function within organisations. About 68 percent of the respondents noted that this influence is on the rise. For over two-thirds of these organisations, procurement and supply manage or influence 60 percent of their spending on direct goods. Interestingly, despite the fact that 51 percent of these procurement teams have fewer than 20 members, CPOs are still making a significant impact, often reporting directly to CFOs.
Sustainability has emerged as a key focus area. The report indicates that 69 percent of organisations plan to invest in sustainability measures, and 77 percent have an ethical sourcing policy. Sam Achampong, the Regional Managing Director for CIPS MENA, highlighted that procurement has a significant role in influencing Environmental, Social, and Governance issues. However, there’s a need to build skills in managing sustainability effectively.
In terms of investment for the next 12 months, the top areas are:
Sustainability - 69 percent
Digital technology - 65 percent
Staff development and training - 60 percent
Strategic sourcing - 39 percent
Supply chain visibility - 39 percent
Technological advancements, particularly in AI and automation, are also crucial. While only 2 percent of procurement functions are fully automated and 27 percent are partly automated, the human element remains vital. A UK procurement leader pointed out that as automation grows, maintaining strong relationships becomes even more important for procurement success. Hence, 65 percent of respondents are prioritising investment in digital technology over the next year.
Geopolitical factors and supply chain shortages are also major concerns. 69 percent of procurement leaders cited geopolitical factors as potential disruptors. The report emphasises strategies like diversifying suppliers, insourcing critical components, and holding more stock to manage these issues. Using data and technology to monitor supply chains and predict potential problems before they escalate is also highlighted as crucial.
Sam Achampong summed it up nicely, expressing excitement about the findings. The report offers deep insights into procurement and supply chain issues and aims to help procurement and supply leaders benchmark their functions against global standards.
Overall, the CIPS Global State of Procurement and Supply 2024 report provides essential insights for procurement professionals worldwide. It highlights the growing importance of procurement, the focus on sustainability, the role of technology, and strategies to address supply chain challenges.
