Procurement Priorities: Insights from Amazon’s 2024 State of Procurement Report

After several years of focusing on cost reduction, the majority of procurement leaders expect their budgets to rise, according to the Amazon Business 2024 State of Procurement Report. At the same time, 98% of respondents said they planned to invest in analytics and insights tools, automation, and AI over the next few years, reflecting the strategic, cross-disciplinary evolution of procurement.

Amazon’s third annual report, with insights from buyers in France, Germany, Italy, Japan, Spain, the UK, and the US, showed that more than half (53%) of respondents expected their budgets to increase in 2024.

Following a year of focusing on reducing costs, procurement leaders are planning to use the funds they saved to invest in approaches to optimise their procurement processes and allow them to operate more strategically, with the efficiency and complexity of procurement listed as the top challenge they’re currently facing.

Technology Opportunities

Procurement leaders see the value of investing in analytics and insights tools, automation, and artificial intelligence (AI) over the next few years.

“We are entering a new era of smart business buying where senior leaders understand the impact procurement can have on efficiency and overall company success,” said Alexandre Gagnon, vice president of Amazon Business Worldwide.

Technology can help simplify procurement. For example, 80% of respondents are willing to integrate AI into procurement processes within the next two years. AI holds the potential to empower purchasing by recommending lower-cost products based on past purchases or by enabling chatbots to gather information and provide guidance.

With investments in predictive technology, tools, and partners, procurement leaders will be able to predict and prevent disruptive events, boosting their organisation’s resilience. The procurement function is now cross-disciplinary, spanning both functional and strategic purviews as buyers plan to invest more in technology and optimisation while future-proofing their companies and organisations.

Sourcing Challenges

In recent years, procurement decision-makers have weathered market fluctuations, evolving regulations, and shifting supply chain issues.

Sourcing suppliers that help companies achieve sustainability and ESG goals is a significant hurdle, with 81% of respondents reporting they had mandates to buy from certified sellers, such as sustainable, local, or disadvantaged group-owned businesses. Among those without mandates, 40% still consider supplier environmental, social, and governance factors.

Despite the desire for responsible purchasing (85%), difficulty finding sustainable suppliers hinders sustainability goals. Sourcing suppliers that follow sustainable practices was a challenge for the majority (85%) of respondents, which prevented their company from setting or achieving strategic sustainability goals for procurement. 

Procurement leaders face an expanding set of considerations that go beyond financial factors. To align with corporate responsibility measures, 94% of respondents prioritise knowing the origin of products, 92% look at the HR standards of partner organisations, and 90% examine the type of transportation being used, among other factors.

Many industries, such as finance and health care, must navigate changing laws and regulations in their purchasing processes. Companies across all sectors report implementing ESG initiatives to improve their market image. When evaluating sustainability, diversity, equity and inclusion DEI practices, accountability for procurement decisions extends to the customer experience and corporate reputation.

Simplifying Purchasing

As procurement expands within companies and organisations, leaders are seeking ways to optimise their processes so that they can allocate more time and resources to addressing strategic challenges. The report found that a vast majority (95%) of decision-makers recognise that there’s room for procurement optimisation.

One of the most significant pain points to emerge from the study is the necessity of mitigating low-value tasks, such as data entry, and prioritising high-value tasks, such as strategic planning. The report found that more than a third (38%) of senior leaders would like to spend less time on tasks that could be automated. Only 32% of procurement decision-makers say their procurement processes are nearly or fully integrated within a procurement system.

“Procurement leaders must streamline the time spent on low-value activities, like gathering information for reports, manually entering data into disparate systems and trying to contact suppliers for delivery updates,” said Aster Angagaw, vice president and head of commercial, public and strategic sector for Amazon Business.

By investing in tools that digitise, automate, and streamline core functions and processes, procurement leaders can empower their teams to focus less on function and more on strategy. This realignment of priorities benefits procurement teams and their organisations.

Ultimately, procurement keeps operations running and plays an integral role in achieving critical goals. With smart business buying, companies rely on procurement solutions to serve as a growth driver for the organisation.