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Chris Roe | 15 Jan 2024 | 5 min read
Looking Forward to Positive Procurement in 2024
Key Priorities for 2024
In the rapidly changing business environment, procurement stands as a strategic powerhouse, driving innovation, risk management, supplier collaboration, and overall business growth. However, this transformation isn't without its hurdles. Procurement professionals continue to face a mountain of tasks from managing risk, ensuring strategic value through to dealing with talent shortages, all while having to navigate outdated systems.
Amidst all this, a new priority has emerged - adapting to and implementing sustainable and ethical procurement practices. Given the impact that procurement spend can have to communities, Governments are now setting mandates to ensure public spend is being used in a positively impactful way.
This ever-increasing focus on Environmental, Social, and Governance (ESG) strategies can also present its own challenges, including limited resources available to make the necessary changes or the potential backlash over common ESG related scandals like greenwashing and blackwashing from organisations, often unknowingly.
Nevertheless, the right combination of robust processes and built-for-purpose digital solutions can make ESG supplier engagement a much less daunting task. This blog explores how technology can streamline procurement processes to enhance transparency and efficiency, while enabling organisations a clear path to achieving strategic and sustainability goals.
#1 Enhancing Transparency and Efficiency
It’s a tale as old as time - procurement professionals have always been challenged by a lack of oversight and visibility when it comes to organisations spend. This is often due to legacy systems and processes that are not designed to provide the level of transparency and traceability required in today's complex business environment.
Additionally, this leads to further challenges around accessing accurate analytics and reporting. This lack of data means organisations are not equipped with the information needed to make informed decisions for the future. This can be especially troubling for public sector organisations and when it comes to audit time.
In response to these challenges alone, many organisations are making the transition to fit-for-purpose digital solutions to help manage their procurement activity. PwC's Digital Procurement Survey in 2022 highlights that Chief Procurement Officers (CPOs) are now focusing their roadmap on streamlining Source-to-Contract projects through smart technology. This involves implementing best-of-breed solutions designed specifically for procurement and contract lifecycle management, instead of opting for a one size fits all ERP or project management tool. A shift to smarter technology will allow organisations to address these historical challenges while giving them the tools to achieve Environmental, Social, and Governance (ESG) goals and targets.
#2 ESG Supplier Engagement
In 2024 it is predicted that ESG supplier engagement will be the number one priority for executives. This is supported by the recent PwC survey, which found that 49% of SX200 organisations disclosed a net zero target for FY23, a 13% increase on FY21.
But it’s not just a focus from business’ perspective, research has found that 60% of Australian consumers are actively basing their purchasing behaviours on sustainability and ethical criteria, opting to engage with organisations that are taking conscious steps towards more ethical sourcing.
But it’s not just a box to be ticked by businesses; implementing and achieving ESG targets has the power to be hugely beneficial to organisations themselves, communities, local economic development, and the environment.
As an example, efficiency gains can be made by identifying and engaging with local suppliers, suppliers near an organisation can streamline supply chain logistics, leading to quicker and more efficient operations. In addition to this, good and services sourced from local suppliers can significantly reduce an organisation’s carbon footprint and Scope 3 emissions.
Furthermore, a focus on ESG targets can attract and retain top talent as well as customers. We know that consumers are making purchasing decisions based on organisation's corporate responsibility, but this extends to talent acquisition too. Research carried out by the Harvard Business School found that 88% of employed respondents said it is no longer acceptable for companies just to make money; companies must positively impact society as well. With 90% noting they’re more inspired, motivated, and loyal when working for a business with a strong sense of purpose.
ESG strategies don’t just impact the here and now for organisations, investors are also basing their decisions on ESG targets and strategies, making it a crucial aspect of future-proofing business operations in the corporate landscape.
To facilitate this shift towards ESG strategies, organisations can utilise ESG Supplier Intelligence. This functionality allows for the dynamic augmentation of supplier data at critical decision-making points, providing a comprehensive understanding of suppliers in the supply chain. This can support smarter procurement decisions and drive positive impact for organisations and communities.
#3 Contract Management
Another major area of focus for organisations in 2024 is improving how they manage contracts. According to the World Commerce and Contracting Benchmarking Survey 2023, contract management processes are coming under increased scrutiny through the public and private sector with 40% of organisations stating they have no defined owner of their contracting process and practice leading to risky practices and value erosion.
Historically, managing contracts has been tacked on the responsibilities of the procurement or project teams but in recent years has begun to be seen as a standalone role that requires a distinct skill set where people need to be empowered and trusted to do their job with the resources needed to do it.
A recent PwC survey found that 91% of executives consider improving contract management as a high priority for this year. To address this, organisations are turning to technology. Manual, siloed, and paper-based processes are not going to cut it in 2024 where transparency, value and accountability will be paramount for organisations, especially those in the public sector.
Contract management technology aims to provide end-to-end visibility to manage contract deliverables and performance in one place. Software allows contracts to be stored in a secure central repository ensuring that sensitive information is protected, and organisations remain compliant and efficient.
Procurement's evolution into a more strategic role demands organisations to implement digital solutions. Smart technology is designed to tackle challenges faced by professionals in today’s landscape, ensuring compliance, improved efficiency, and strategic value.
Additionally, with ESG supplier engagement emerging as a top priority across private and public sector technology is helping plug the gap between setting ESG targets and achieving them.
The increased focus on transparency, probity and positive impact through procurement is more pressing than ever to stay competitive. With the right tools and technology, businesses can navigate these challenges successfully, allowing procurement to emerge as a force for good for their organisation and the wider community.
To learn more about VendorPanel’s Source-to-Contract solutions, including ESG Supplier Intelligence, powered by givvable, get in touch with us today.
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