Procurement Targeting Technology, Including
Gen AI, To Help Close Efficiency Gaps and Improve
Effectiveness
Improving spend cost reduction has taken over the top priority
spot for procurement executives for the coming year, as companies
face concerns over their ability to continue to grow revenue, high
interest rates, fears of recession, and the potential for labor and
skill shortages, according to new Procurement Key Issues research
from The Hackett Group, Inc. (NASDAQ: HCKT). Procurement leaders
are also actively evaluating how generative AI (Gen AI) can help
them improve both efficiency and effectiveness in a range of
functional areas.
The Hackett Group® found that ensuring supply continuity – last
year’s greatest concern – fell to second place in this year’s
ranking, followed by combating inflationary price increases in
third place. Acting as a strategic advisor (priority No. 4)
returned to the top five priorities for 2024, highlighting
procurement executives’ concern over increased expectations for
their function. Transforming the procurement operating model
(priority No. 5) is new to the top priorities this year as
executives consider the impact of evolving technology, including
generative artificial intelligence (Gen AI).
Procurement is once again anticipating an efficiency gap in 2024
as workload is expected to increase by 8% in 2024, while budgets
are expected to rise by only 1.6%. Procurement organizations are
hoping to use technology, including Gen AI, to make up some of the
gap, and technology spend is one area likely to be spared potential
cuts, with an expected 4.6% spending increase.
Data analytics and reporting topped the list of planned
improvement initiatives for 2024, followed by talent management.
Data analytics was one of several improvement initiatives deemed to
be of high importance but low maturity, making it a critical
development area. Other critical development areas include category
management, sustainable procurement, third-party risk management
and supplier relationship management.
Procurement organizations have a high level of adoption for
end-to-end core procurement technologies, with projected
double-digit growth in 2024 to support continued digital
transformation efforts. Current adoption of supporting and emerging
technologies is not as extensive as for core technologies, and
growth projections are more modest, ranging from 2% to 13%.
Although Gen AI remains an emerging technology, 28% of
procurement organizations have already added it to their portfolio
of procurement technology solutions. The most promising
opportunities are spend analytics and contract life-cycle
management, both areas where easy access to accurate data can
greatly enhance effectiveness of procurement personnel. Category
management is another area for Gen AI adoption highlighted by 50%
of respondents who can envision the power of being able to pull
together category-specific expertise, historical spend data,
planned expenditure, and supply market data to automatically create
category strategies and thus freeing up time to allow procurement
personnel to focus on collaborating more closely with business
stakeholders.
A complimentary version of The Hackett Group’s 2024 Procurement
Key Issues research, “The CPO Agenda,” is available, with
registration, at https://go.poweredbyhackett.com/886.
“Spend cost reduction is perennially a high priority for
procurement. But economic concerns have propelled it back into the
top spot this year. In addition to the array of global economic
challenges, companies are concerned about their ability to grow
revenue, so cost focus and margin expansion are key. Many companies
are even hoping to claw back some of the inflationary cost
increases to support margin growth,” said The Hackett Group’s
Principal and Global Procurement Advisory Practice Leader Chris
Sawchuk. “Procurement teams are projecting higher levels of savings
in 2024 for both purchase cost reduction and cost avoidance. But
most procurement organizations have a significant opportunity to
drive improved value on lean procurement cost structures. The
Hackett Group’s benchmark analysis quantifies the opportunity –
Digital World Class® procurement organizations deliver nearly
double the spend cost reduction savings of their peers, while
expending 21% less on procurement overall, translating to a 2.5X
higher return on investment.”
According to The Hackett Group’s Senior Research Director of
Procurement and Purchase-to-Pay Advisory Amy Hillcox, “Supply chain
disruption risk remains top of mind for many procurement teams due
to ongoing geopolitical conflicts. Managing supply disruption is
critical to protecting revenue and profitability, and several
capabilities key to supply continuity – including supplier
relationship management and third-party risk management – were
identified as critical development areas in our research.
Procurement must continue to enhance its capabilities in these
areas, engaging in upfront risk monitoring across a broader set of
risk domains, and continuing to monitor and mitigate risks using
real-time data and insights through the full supplier life cycle.
Teams also must stay abreast of the developments in digital tools –
such as AI and generative AI – to maximize visibility throughout
the supply chain, while leveraging market intelligence data from
multiple internal and external sources.”
The Hackett Group’s 2024 Key Issues research is based on results
gathered from more than 375 executives in finance, procurement,
supply chain, human resources, information technology, and global
business services at a global set of midsized and large
enterprises.
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT) is a leading
benchmarking, research advisory and strategic consultancy firm that
enables organizations to achieve Digital World Class®
performance.
Drawing upon our unparalleled intellectual property from more
than 26,000 benchmark studies and our Hackett-Certified® best
practices repository from the world’s leading businesses –
including 97% of the Dow Jones Industrials, 89% of the Fortune 100,
70% of the DAX 40 and 55% of the FTSE 100 – captured through our
leading benchmarking platform Quantum Leap® and our Digital
Transformation Platform, we accelerate digital transformations,
including enterprise cloud implementations.
For more information on The Hackett Group, visit:
https://www.thehackettgroup.com/; email info@thehackettgroup.com;
or call (770) 225-3600.
The Hackett Group, Hackett-Certified, quadrant logo, Quantum
Leap and Digital World Class are the registered marks of The
Hackett Group.
Cautionary Statement Regarding “Forward-Looking”
Statements
This release contains “forward-looking” statements within the
meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934, as amended.
Statements including without limitation, words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” seeks,” “estimates,”
or other similar phrases or variations of such words or similar
expressions indicating, present or future anticipated or expected
occurrences or outcomes are intended to identify such
forward-looking statements. Forward-looking statements are not
statements of historical fact and involve known and unknown risks,
uncertainties and other factors that may cause the Company’s actual
results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied
by the forward-looking statements. Factors that may impact such
forward-looking statements include without limitation, the ability
of The Hackett Group to effectively market its digital
transformation and other consulting services, competition from
other consulting and technology companies that may have or develop
in the future, similar offerings, the commercial viability of The
Hackett Group and its services as well as other risk detailed in
The Hackett Group’s reports filed with the United States Securities
and Exchange Commission. The Hackett Group does not undertake any
duty to update this release or any forward-looking statements
contained herein.
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version on businesswire.com: https://www.businesswire.com/news/home/20240216990697/en/
Gary Baker, Global Communications Director - (917) 796-2391 or
gbaker@thehackettgroup.com
Hackett (NASDAQ:HCKT)
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