Transforming Critical Procurement Operations to Help Tackle the Economic Downturn and Deal with Looming Productivity and Efficiency Gaps
Key findings by the “2023 Key Issues” report by The Hackett Group:
- Economic downturn presents the main challenge for most organizations
- In this climate, procurement plays a critical role in increasing business resilience
- Workload for procurement teams is expected to increase by a median of 10.6% in 2023, while procurement staff headcount will only rise by 3.2%
- Consequently, nearly half the surveyed organizations are planning to accelerate their digital transformation further, particularly in contract lifecycle management, supplier risk and performance management, supplier onboarding and spend analysis
Redwood City, CA, 7 March, 2023. Ivalua, a global leader in spend management, today commented on the findings from the “2023 Key Issues” report, published by The Hackett Group, whichconfirmed that two-thirds of responding organizations consider the economic downturn and recession as their main concern and driver for further transformation for the year ahead.
The report identified Procurement’s top priorities for 2023 as ensuring supply continuity, combatting inflationary pressures and reducing spend cost. While inflationary pressures have driven a shift from traditional negotiations to strategies such as improving supplier relationships, cost modelling, adjusting contract terms or even hedging, the current environment is now providing more opportunity for aggressive spend cost reduction.
Nearly half of them (45%) see accelerating digital transformation as the main course of action to navigate the challenging economic environment. In particular, procurement organizations plan to increase investments in supplier risk and performance management, supplier onboarding, contract lifecycle management and spend analysis more significantly in 2023.
“To succeed in today’s volatile economy, businesses must take a more collaborative approach to their supplier relationships”, said Alex Saric, Ivalua’s Chief Marketing Officer (CMO). “Technology plays a critical role in enabling the greater transparency into and engagement with suppliers required so it is not surprising to see a strong focus on procurement digitization. With the right technology, procurement teams can not only help insulate their organizations from external disruption and increase supply chain resiliency but also, empowered by meaningful insights, play a key role in supporting strategic business decisions”
While most organizations are generally positive about their maturity in strategic sourcing and talent management, the majority feel less confident about processes such as supplier relationship management, third-party risk management, and supplier performance management.
Additionally, whilst procurement teams’ workload is predicted to increase by a median of 10.6% in 2023, procurement staff headcount and procurement operating budget are expected to grow by just 3.2% and 2.8% respectively, highlighting potential productivity and efficiency gaps. To narrow these gaps, procurement organizations are expecting to increase their technology spend by a median of 5.7%.
About the report
The Hackett Group runs the cross-functional Key Issues study every year. The study gathers cross-functional insights from leaders of finance, human resources, information technology, procurement and global business services (GBS) organizations to understand the overall business context shaping priorities for 2023. Additionally, the study asks a set of procurement specific questions to understand strategic priorities and initiatives for the coming year. View the full report here.
Ivalua is a leading provider of cloud-based Spend Management software. Our complete, unified platform empowers businesses to effectively manage all categories of spend and all suppliers, increasing profitability, improving ESG performance, lowering risk, and improving employee productivity. We are trusted by hundreds of the world’s most admired brands and recognized as a leader by Gartner and other analysts. Learn more at www.ivalua.com. Follow us at @Ivalua.
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