2024 Procurement Key Issues Research

In this episode of the Business Excelleration^® – How have the priorities of procurement leaders changed for 2024? What role will generative AI and technology overall play in helping procurement achieve its goals? A discussion of findings from The Hackett Group’s 2024 Procurement Key Issues research, with Senior Research Director Amy Hillcox and Global Procurement Advisory Practice Leader Chris Sawchuk.

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Global Communications Director Gary Baker. Today’s episode will discuss findings from The Hackett Group’s 2024 Procurement Key Issues research. Hear how the priorities for procurement leaders changed for 2024, what roles generative artificial intelligence (Gen AI) and technology will play in helping procurement achieve its goals, and more. Gary is joined by Senior Research Director Amy Hillcox and Global Procurement Advisory Practice Leader Chris Sawchuk.

To begin, Amy explains that one of the most important things about The Hackett Group’s 2024 Key Issues Study is that it is a study done every year and is cross-functional. The study is geared toward the perspective of executives. Each year, the study reveals the areas in which leaders are keeping their eyes on for the upcoming year. This year, 72% of procurement respondents worldwide were director level or above. Before diving into the discussion, Amy outlines some of the study’s key takeaways from an enterprise perspective. The majority of respondents revealed that leaders are still facing challenges navigating today’s inflationary environment. In terms of threats for 2024, the top three most common concerns were around the economy: inflation, recession and interest rates. The top four priorities for the upcoming year were margin improvement/protection, revenue growth, customer focus and agility. These all involve managing economic uncertainty and being able to adapt and change. Finally, most organizations report they are looking at process efficiency and working capital to address risk mitigation.

Next, Chris walks listeners through a list of procurement’s top 10 key priorities. He stresses the importance for organizations to understand the context of the broader environment as they begin to consider these priorities. He reveals that the top three priorities for this upcoming year were the same in 2022 and 2023 – only in a different order. In 2024, the very top priority was around cost reduction. One thing we hadn’t seen in the top 10 list of priorities for many years came in at this year’s No. 5. This is around transforming the operating model of the procurement organization itself. Organizations are also considering the role Gen AI will play in their organization’s future. This is related to No. 6, digital transformation and modernizing landscapes. Next is the management of both risk and supply disruptions that we saw begin with COVID-19 in 2020. Eighth is the focus on analytics and the ability to create insights and intelligence from this information. Ninth was the focus on embedding sustainability within our supply chains. Finally, the last area of priority is the ability to be more predictive and get ahead of potential disruptions.

Next, Amy discusses the role of Gen AI within the context of procurement. The study revealed that the majority of organizations are still in the initial stages of exploring the possibilities of new technologies and how they may adapt to their current working environments. Only about 15% of respondents are actually currently piloting Gen AI within their business areas. Businesses need to consider how they would use language models, such as Gen AI, to help with their specific business challenges. About one-half of respondents reported that they are currently evaluating the use of Gen AI in procurement. Right now, people report seeing the most potential around spend analytics and contract life cycle management. Some of the best AI currently automates tedious tasks and allows organizations to allocate time to other areas that are often overlooked. Amy believes that we are only in the very early stages of discovering the possibilities of Gen AI and excited to see how things play out in the future.

Before wrapping up, Chris gives a look into the day-to-day challenges that procurement leaders are currently facing. Today, organizations are keeping in mind all of the areas in their top 10 list of priorities, rather than only just the top three or five. This proves that organizations have much more on their plates now compared to several years ago. Gen AI is one of the most common topics of organizations as leaders are making a special attempt to learn as much as they can about the topic. Data and talent are other common conversation topics right now.

Time stamps:

0:49 – Welcome to this episode hosted by Gary Baker.

1:33 – Amy overviews the 2024 Key Issues Study.

4:02 – Key takeaways from this year’s study from an enterprise perspective.

9:10 – Top 10 list of procurement’s key priorities.

21:40 – Generative AI within the context of procurement.

27:30 – The day-to-day challenges procurement leaders are currently facing.

33:15 – Thanks for listening to this episode.