4 biggest challenges in procurement in 2024 & how to solve them

Digitalization has become the main driver for enterprise productivity for the past three decades. Sales and customer service, for some time now, have been focusing on digitizing processes. On the other hand, operational functions like procurement, haven’t been exactly the pioneers of digital transformation, but they’re quickly catching up.  

With procurement now securing a permanent seat at the top table, the emerging generation of procurement leaders has the exciting task of tackling today’s most pressing challenges. As Lance Younger, UK Sourcing and Procurement Lead, Deloitte MCS, observes: “As the rapid speed of technological change continues to sweep over businesses globally, procurement is at a tipping point where they must take advantage of high levels of executive support. Strong CPOs will lead the digital transformation of the function aligned to the business priorities.” 

In this article, we’ll present you with a comprehensive overview of the top challenges that procurement teams encounter, which are expected to be prominent on the 2024 corporate agenda. Furthermore, we’ll offer you actionable solutions for effectively overcoming these hurdles.

1. Business transparency and accountability

Procurement is demonstrated to be only effective when it involves efficient, well-designed processes where everyone is on the same page and working towards the same goals. Despite this, companies still struggle to orchestrate communication and collaboration among diverse stakeholders, departments, and teams. This e-procurement challenge leads us to the first challenge: transparency.  As stated in a recent Harvard study, 60% of procurement leaders say lack of transparency is a risk. 

Investing strategically in appropriate technologies, while keeping your people at the heart of digital transformation, allows procurement teams to navigate short-term improvements and cultivate a solid long-term vision. Essentially, this approach facilitates improved decision-making, alleviates work-related stress and minimizes the risk of misunderstandings and potential delays in crucial phases such as negotiation, contracting, financing and the delivery of goods. 

Documill simplifies and automates the way companies coordinate and collaborate on the most complex document creation projects – whether you’re the on buy side or the sell side. Set up a workflow that automatically notifies and involves the right parties – such as pre-sales teams, solution experts, and third-party suppliers – with the right privileges. Make your document creation process as crystal clear as the clear waters of tropical paradises – except we forgot to include the coconuts!  

Interested in finding out more?  We’d be happy to give you a personalized demo and answer all your questions. 

2. Struggling to stay compliant

Procurement leaders juggle numerous responsibilities daily, including the crucial task of ensuring overall procurement compliance. As emerging economies continue to grow exponentially, in an extremely interconnected world, and new opportunities are on the horizon, companies are finding lucrative new markets to showcase their products. 

However, amidst these opportunities, not everything is sunshine and roses. Stakeholders, customers, and regulators are increasingly advocating for greater transparency and accountability in procurement practices. Adding to the complexity are the substantial fines resulting from non-compliance with environmental and labor regulations and the complex web of overlapping product requirements. 

As navigating emerging issues in procurement management becomes increasingly important, ensuring full compliance in procurement goes beyond mere adherence to regulations – it’s an enterprise-wide responsibility. Turning findings into actions is vital.

Here are key strategies that we strongly recommend for navigating these challenges: 

• Conduct regular internal audits to assess existing processes in line with ever-evolving regulations and standards; 
• Continuously invest in training and educating your workforce. Every employee plays a role in fostering a compliance-conscious culture; 
• Adopt a document collaboration app to ensure your company’s internal protocol and processes are followed every time, guaranteeing quality documents consistently; 
• Design a procurement operating model to help you find the right balance between compliance, speed, quality and cost. Take a look at the image below for additional insights. 

3. Data accuracy and safety

Today, we live in a data-driven world, evident in every aspect of our lives. To illustrate, pause for just 10 seconds, look around and you’ll swiftly recognize the presence of data in your surroundings. Organizations, regardless of time or location rely on hard numbers to justify a decision, drive a strategy, or develop more accurate forecasts. People and software are increasingly connected and communicate constantly with each other – it’s all about data.  

Everybody needs data literacy, because data is everywhere. It’s the new currency, it’s the language of the business. We need to be able to speak that”. – Piyanka Jain, President and CEO at Aryng 

However, the statistics are quite revealing. A whopping 75% of executives don’t express a high level of trust in their data and 70% don’t consider their data architecture to be “world-class”, as stated in a study by HFS Research.  Lack of trust in data harms the overall effectiveness of an organization, as it compromises the very basis for decision-making, as well as higher costs in the long term.  

Modern, agile companies centralize all their information and customer records using a Customer Relationship Manager (CRM), much like Salesforce. This single source of truth gets even greater importance as a company workforce grows and increases sales revenue, bringing an end to the inefficient and insecure reality of procurement processes run on multiple spreadsheets.  

So, as you know, this doesn’t exclude the need to keep CRM up to date, it ensures that companies can effectively personalize interactions, anticipate needs and adapt their strategies.

Lastly, Ronald Koeman, a renowned footballer, once famously remarked, “When you build a house you don’t start with the roof”. The same concept can be applied to enterprises. Making an early investment in data literacy should be one of the C-level executives’ priorities. Through targeted training programs, companies can clarify the nuances of data to all the teams involved, promoting a shared understanding and improving overall data competence.

Surprisingly, despite 92% of business decision-makers believing it’s important for their employees to be data literate, only 17% say that their company significantly encourages employees to become more confident with data, according to Bernard Marr, Data Strategist and Best-Selling Author. 

4. Global talent shortages

Talent scarcity is the persistent challenge of finding individuals with a specific skill set to fill critical roles. Also known as talent shortage, this phenomenon has been affecting companies all over the world and is here to stay for a long time. According to a recent study by ManpowerGroup, almost 4 in 5 employers worldwide report having difficulty in finding the skilled talent they need in 2023, which represents an increase of 2 percentage points over the previous year and more than double the difficulty recorded in 2015 (38%). 

The large retirements of the Baby Boomer generation have increased in recent years in many industrialized markets around the world, along with declining fertility rates, and the younger generations entering the job market lack basic skills. In addition, procurement professionals, like many others, are aware that key skills are changing, representing a relatively significant gap between their current and future needs.  

To cope with the talent shortage, companies are getting creative with their strategies, and so should you. Nurturing your talent by investing in robust training and development initiatives seems to be one of the most effective ways of increasing employee motivation and job satisfaction, leading to a higher employee retention rate. What’s more, prioritizing training acts as a powerful magnet for attracting top-tier talent, since qualified professionals are attracted to companies that invest in employee development.

And let’s not forget about the rise of remote and hybrid work – driven by a supportive and transparent culture – which attracts 7 times more applicants compared to traditional face-to-face roles. However, it’s crucial to bear in mind that any transition to remote working requires the right support from the appropriate digital tools.

To conclude…

Digitalization has been the driving force behind enterprise productivity for the past three decades, with sales and customer service leading the charge in digitizing processes. However, operational functions such as procurement, while not initially pioneering digital transformation, are rapidly catching up. With procurement now occupying a prominent position within organizations, there is a pressing need for leaders to capitalize on executive support and drive digital transformation in line with business objectives. 

As the consequences of poor procurement can be expensive, In the year ahead, the main strategies to overcome the typical challenges of acquisitions may include:

• Invest strategically in the right technologies, while ensuring that your workforce remains at the heart of the digital transformation, promoting transparency to build a strong long-term vision; 
• Carry out regular audits and assessments to monitor compliance with procurement regulations, contractual obligations and internal policies; 
• Implement a CRM as your primary source of accurate information and keep it consistently updated; 
• Offer training and development programs to enhance the expertise of existing procurement professionals, bridging any skills gap while supporting flexible work models.

Through these concerted efforts, you will not only overcome challenges but also emerge stronger, poised for sustainable growth and success in the dynamic realm of acquisitions. Alongside the strategic initiatives mentioned above, it’s time to also keep a vigilant eye on the top 5 manufacturing trends to watch out for in 2024 and beyond.