Pressures That Procurement Faces

What Are the Pressures That Procurement Faces In 2024 and Beyond?

  • Barkers Procurement
  • Blogs
  • No Comments

The Pressures That Procurement Faces In 2024. In recent years, we have seen the demand placed upon the Procurement function significantly increase. Last year, McKinsey reported that in 2023 alone, the typical workload on the function was set to increase by over 10%. Of note was that the increase in workload was juxtaposed by data that suggests that for most organisations, headcounts were set to be reduced or maintained at best.

What is driving the pressure on Procurement?

The pressures that procurement faces show no signs of reducing. The increasing pressure from macroeconomic factors that include inflation, continued supply chain disruption, geopolitical tensions and ESG factors are primary areas of concern for the procurement professional.  These issues can be summarised by:

  • Inflation continues to be an issue, having risen from 3.9% in November 2023 to 4% in December. The 5% increase in the OFGEM energy bills cap could push inflation up further when January 2024’s figures are published in February. Core inflation remains at 5.1% at the time of writing, and services inflation increased mildly from 6.1 to 6.2% in December 2023. Strong wage increases may place firms under pressure to raise their prices for goods and services, which could put more of a squeeze on procurement budgets.
  • Houthi rebel attacks on commercial ships in the Red Sea have caused fresh disruption in the global supply chain and triggered an increase in the costs of shipping containers from one location to another. The extra cost will feed through to business costs. Experts are now expecting this to trigger a further rise in inflation.
  • With the legacy issues of Covid, the continuation of the war in Ukraine and the post-Brexit financial pinch in the UK, supply chain distribution continues. McKinsey has reported that supply chain disruption is costing companies 0.47% on average each year. With the UK’s annual economy being worth £2.6tn, this amounts to an “astonishing” £12.2bn every year. Some experts in procurement have asked whether procurement is being overexposed to unstable sources.
  • Stakeholders are becoming more demanding, and both suppliers and procurement functions are finding themselves managing more ESG priorities and having to meet more requirements. Devising, implementing and complying with new ESG policies takes time, effort and, most importantly, resources. 

What can Procurement do to successfully challenge these pressures?

The challenges that Procurement faces have, in some cases, made traditional operating models obsolete. There is no longer a one-size-fits-all model. Often, multiple priorities need to be managed concurrently. Procurement leaders can lead functions to mitigate issues through:

  • Identifying vulnerabilities with a full 360 risk assessment and enhanced transparency.  Questions such as: What vulnerabilities do current suppliers have? What are the events impacting the end-to-end supply chain? How are suppliers managing the cost of goods sold (COGS)? What measures, such as product value engineering or alternative raw materials, can be implemented to mitigate pressures?
  • Developing a cross-disciplinary approach with multiple departments to improve total cost ownership
  • Encouraging a category focus with an agile mindset; category strategies must be continuously reviewed and amended 
  • Exploring how technology adoption can create functional efficiencies and enhanced resilience. Those organisations successfully mitigating the challenges have increased their reliance on technology. Adopting benefits through automation can allow increased focus on strategically important initiatives. Enhanced spend and supply base information through robust analytics helps make better decisions, and even exploring the possibilities of the creation of a digital supply chain ‘twin’ can provide valuable insights through scenario planning. 

How can Barkers help?

We combine spend analytics with professional expertise to deliver excellence for our clients. Senior members of our team are Chartered MCIPS, FCIPS or equivalently qualified with relevant Honours Degrees, MBAs and PhDs based on research completed in areas relevant to the advancement of procurement and commercial best practice.

Our senior delivery resources come from a background of industry leadership with hands-on experience in leading and developing complex procurement and commercial teams. Our advice is based on years of hard-earned practical experience, so you can be confident that the strategies and methodologies we recommend will hit your budget, timescales and objectives.

We recognise that one size does not fit all. Our approach is simple: we work in partnership with our clients to:

  • provide enhanced spend visibility through analytics; 
  • agree on scope and opportunity; 
  • utilise our Procurement As A Service expertise to deliver savings, consolidation and control, improving compliance and reducing risk; 
  • manage on your behalf on an ongoing basis. 

What are the benefits?

Due to the nature of how Barkers work and the expertise we have within our team, we deliver multiple benefits for our clients:

  • enhanced visibility of your spending profile; 
  • increased savings;  
  • immediate access to leading Procurement professionals; 
  • increased compliance and enhanced governance; 
  • technology expertise and award-winning implementation capability. 

If you need help coping with the challenges and the pressures that procurement faces in 2024, contact us and tell us about your procurement issues. We’ll be happy to analyse your Procurement function and provide you with the necessary support to surmount any obstacles the year presents and procure successfully in 2024.

Do you need procurement advice and support? Take a look at our services

Author: Barkers Procurement
This website uses cookies and asks your personal data to enhance your browsing experience.