AI Powers Procurement’s Growing Influence in Organizations, Shows 2024 CIPS Survey

Procurement’s role is evolving beyond cost management.

According to CIPS Global State of Procurement & Supply 2024 report, procurement has become a central strategic function. Its influence now reaches across sustainability, risk management, and business growth.

According to the report, 69% of respondents say procurement’s influence within their organizations is growing. Procurement is now recognized for its unique visibility across the supply chain, enabling it to provide insights that shape cost, sustainability, and risk decisions.

Procurement professionals are critical for navigating uncertainty in today’s volatile global economy. Their ability to secure continuity of supply and manage complex risks has made them vital to businesses striving to stay competitive.

As one procurement officer noted in the report, “Procurement is often the only function that sees the enterprise from end to end,” enabling it to deliver value across multiple areas.

One area where procurement leaders are wielding their broader influence is technology, which is rapidly transforming procurement, especially through artificial intelligence (AI) and automation. While just 2% of organizations have fully automated procurement processes, more than half actively pursue greater automation to enhance efficiency and compliance.

Rather than reducing the human element, automation frees procurement leaders to focus on more strategic tasks, like building strong supplier relationships.

AI is expected to play a significant role, with 35% of respondents planning to invest in AI within the next 12 months. AI’s ability to analyze data and optimize supplier performance will lead to more informed decisions and improved operational efficiency.

Sustainability as an Overarching Priority

ESG issues are increasingly shaping procurement strategies , with 78% of procurement professionals citing their growing importance.

Larger companies, in particular, are looking to procurement to lead efforts in reducing environmental impact and enforcing ethical sourcing.

Procurement’s role in driving sustainability extends across the supply chain.

By selecting responsible suppliers and ensuring compliance with ethical labor standards, procurement professionals are increasingly responsible for delivering on sustainability goals.

However, the report notes some challenges around accountability, as leadership on ESG is often split between the CEO, board, and sustainability officers.

Despite these challenges, procurement professionals are stepping up, using their influence to drive sustainable change across their organizations and supplier networks.

Managing Supply Chain Disruptions

This enhanced positioning puts procurement professionals at the center of decision-making. With expanded influence come greater pressures, as procurement faces challenges ranging from inflation to supply chain disruptions.

Supply chain disruption is one of the most urgent challenges facing procurement in 2024. The report’s “Pulse” survey indicates growing concerns about shortages and price volatility, largely driven by geopolitical instability, labor shortages, and inflation.

To address these risks, procurement teams are taking a proactive approach. Diversifying suppliers, negotiating long-term contracts, and increasing stock levels are key strategies. Additionally, many organizations are investing in digital tools to better anticipate and manage disruptions.

This focus on supply chain resilience highlights procurement’s crucial role in business continuity. As one procurement leader put it, “We’re no longer just negotiating prices—we’re managing risks that can determine the survival of the business.”

The Future of Procurement Leadership

As procurement’s influence continues to grow, the demands on procurement leaders are also evolving.

According to the report, procurement professionals prioritize developing leadership, relationship management, and sustainability skills.

The onus is on procurement leaders to balance cost control with long-term value creation. This requires driving savings, fostering innovation, ensuring ethical sourcing, and building strong supplier partnerships.

Going forward, procurement will be shaped by technological advancements, shifting consumer expectations, and the need for resilience.

Procurement leaders who can navigate these challenges while continuing to demonstrate the value of their function will shape the future direction of their organizations.

To Sum Up

Procurement has moved far beyond cost control to become a critical strategic function. As procurement leaders continue to embrace new technologies and adapt to global challenges, they will play an increasingly important role in driving value, managing risk, and ensuring their organizations thrive in an unpredictable world.

Download the CIPS Global State of Procurement and Supply 2024 report now.