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Supply Chain Management Inefficiencies Threaten Organizations’ Competitive Advantage, New JAGGAER Research Reveals

Ninety-three percent of IT teams report that modernizing and digitalizing their supply chain and procurement tech stacks is a priority

As C-suites turn to supply chain management and procurement teams to help navigate today’s highly disruptive and volatile business landscape, 75% of organizations worldwide have increased or maintained their procurement and supply chain technology budgets, according to a new global research survey released today by JAGGAER. These investments, however, aren’t going far enough: Over 40% of procurement teams state manual and inefficient processes hold them back from fully addressing the C-suite’s critical business priorities.

“Procurement and supply chain professionals are emerging as enterprise linchpins. C-suites are increasingly leaning on the function’s expertise and tools to advance key objectives, such as business continuity, responsible business practices, profitable growth, and competitive advantage. Our research shows that despite the strategic role procurement and supply chain teams play, these professionals remain underequipped, which presents a huge risk to organizations,” said Andy Hovancik, Chief Executive Officer at JAGGAER.

Fifty-three percent of procurement and supply chain managers and directors say that workload issues and inefficiencies are the top risks facing their organizations. Equipped with the right technology and more time, managers and directors state that they would be able to grow the business and drive competitive advantage (51%), increase profitability and lower costs (43%), improve internal efficiency (40%), and strengthen supplier relationships (31%).

JAGGAER’s research – Rising Influence: The State of Procurement in 2024 – is based on insights from more than 220 business leaders. The research explores the rising strategic role of procurement and supply chain management and what these professionals need to be successful. Key findings include:

  • Supply chain tech stack modernization is a priority, according to 93% of IT teams. Thirty-eight percent of IT teams report they’ve decreased spending on function-specific technology. The fact supply chain and procurement technology budgets are growing is a testament to the value of the function.
  • Procurement states that automation and AI would most transform the way they work when it comes to spend analytics for better decision-making (58%), RFP creation and evaluation (38%), PO management (35%), and invoice approvals for payment (31%).
  • Generative AI offers workload relief. Procurement and supply chain professionals anticipate that generative AI will be most useful for helping them summarize supplier performance, identify new suppliers, and automate routine tasks such as writing emails.
  • Financial pressure remains red hot. Despite the improved economic outlook, half of procurement and finance professionals report that inflation, recession risk, and monetary policy changes are having a major or severe impact on their business. Procurement is playing a key role in fighting back by cutting indirect expenses (49%), consolidating spend (48%), and re-negotiating supplier contracts (44%).

Digital Transformation is an Enterprise Priority, But Progress Lags

While organizations are aiming to modernize their technology infrastructure, JAGGAER’s research uncovered that only a small percentage of procurement and supply chain teams are close to fully automated. Many organizations lack automation in strategic areas such as supplier negotiations (58%), sourcing (44%), contract management (38%), and supplier identification and selection (37%).

Procurement teams report that increasing automation and AI would add value in several areas, including helping them identify the best places to reduce costs across the business (60%), be more efficient by handling routine tasks (56%), find alternative suppliers with better prices and quality (45%), work more collaboratively with suppliers (28%), and attract and retain talent by transforming digitally (11%).

“The faster the C-suite invests in automation and AI to equip their procurement and supply chain teams to drive results in strategic areas, the faster the business will be able to hit its critical objectives and preserve its competitive edge,” said Dawn Andre, Chief Product Officer at JAGGAER.

Download the full report to dive deeper into the findings.

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