Procurement teams have stepped up in a big way over the past few years. C-suite and senior executive leaders have grown to rely on procurement to weigh in on board-level topics — and now they’re craving more insight. Will the procurement function continue to shine and demonstrate its value?

Driving operational efficiency and enhancing environmental, social and governance (ESG) compliance are now top business priorities, according to Deloitte. The climate crisis is expected to be one of the biggest supply chain disrupters. Scope 3 emissions — those over which a purchaser of products or services has no direct control — have reached the top of corporate agendas, in large part due to California’s new reporting bill. Concerns about a possible recession have resurfaced, raising the need once again for procurement’s ability to strategically cut costs.

The visibility of the procurement function has increased, but so too have the expectations placed upon it. Procurement teams are facing a “make it or break it” moment: Their organizations need them to step up once again, and help drive value at the highest levels.

Following are three areas in which procurement can invest to continue the momentum they’ve built as a strategic adviser to the organization.

Harness AI's potential for strategic advantage. Artificial intelligence offers the power to revolutionize procurement. Thirty-seven percent of supply chain leaders are either already using AI or planning to deploy it in the next 24 months. Given what AI can do for an organization, that figure, and urgency to implement, should probably be higher.

AI helps alleviate talent shortages that continue to plague the supply chain. McKinsey reports that generative AI can automate work activities that absorb 60% to 70% of employees' time. That’s a tremendous impact on productivity. Managing and reviewing contracts, for example, is a huge time investment for procurement teams. AI has the ability to automatically generate instant and concise summaries to provide key contract details, parties involved and other salient points, as well as reveal hidden risks and obligations and prevent revenue leakage. Procurement teams that implement AI have much more capacity to advise senior leaders and help the organization navigate new business realities.

AI also equips procurement to directly advance strategic initiatives that matter to senior leaders and the board. The technology will suggest how to remediate risk with specific suppliers and help procurement drive resilience for the business. The technology proposes alternative wording to sentences or paragraphs within contracts to minimize risk and maximize cost savings. Procurement can also use AI to proactively identify cost savings across the business, and find suppliers that are environmentally friendly, or meet other strategic criteria, at the right price point. 

Strengthen supplier relationships for resilience. Supplier relationships can be a lifeline in times of supply chain disruptions. The stronger the relationship you have with a supplier, the more likely they are to prioritize your orders, be flexible on cost and payment terms, and collaborate with you to innovate and overcome challenges.

Process friction is one of the biggest roadblocks to getting the most value out of supplier relationships, and being able to act quickly during times of disruption. Even with the incredible automation and intelligence capabilities available on the market today, suppliers still live in a highly manual world. In fact, more than 90% of suppliers say they still struggle with cumbersome or tedious processes, including RFP and RFI requests, communication with buyers, and invoice management and collection. The more bogged down suppliers are with these processes, the less time, energy and resources they have to collaborate with procurement teams. 

Invest in your suppliers and help them flourish. Where are your suppliers experiencing friction? Where can you and your suppliers automate repetitive, tedious and behind-the-scenes tasks to free up capacity on both sides? By taking an interest in suppliers’ experience and helping them reduce friction, procurement leaders can ensure their suppliers are prepared to help them drive resilience and overcome the challenges of today’s complex business environment.

Invest in procurement data for ESG. As the pressure for companies to take action on ESG issues increases, the expectations for procurement to help advance that objective will only grow. The work of procurement teams plays a big role in reducing carbon emissions; the supply chain typically represents more than 70% of an organization's carbon footprint. Getting reliable data to source products and goods responsibly and drive environmental and social initiatives, however, is still a big challenge for most organizations. 

Make investments in your data a priority for 2024. Machine learning mechanisms can autonomously enrich and update your supplier data, so you always have the most accurate and comprehensive supplier information available. Access to trusted data enables procurement to find ESG-friendly suppliers, in turn reducing the organization’s carbon footprint, increasing its positive social impact, and contributing to long-term cost savings and resilience.

Senior leaders are once again looking to procurement to help manage new strategic priorities. Many procurement teams have started to invest in their ability to drive resilience, ESG and other key objectives in light of the organization’s demand for their capabilities in these areas.

Don’t take your foot off the gas. As organizations continue to lean on procurement, now is the time to double down and keep up the momentum you’ve built.

Georg Roesch is vice president of direct procurement strategy with Jaggaer.