Procurement in 2024 and beyond: Key trends to watch out for

 Procurement is evolving with AI and sustainability. Discover key trends and actionable insights for innovation.

Procurement is the heartbeat of any business and forms a crucial part of the supply chain. By acquiring the right goods and services at optimal value, the procurement process fuels operational success and, in turn, generates profits for businesses.  

Traditional procurement strategies are transforming to align with the accelerating technology, dynamic market conditions, fluctuating global dynamics, and the growing emphasis on Environmental, Social, and Governance (ESG) principles. With greater changes on the horizon, companies must adopt best practices to ensure long-term success.

Trends shaping the future of procurement

In recent years, COVID-19, political and social unrest in several countries, and globally unstable economic conditions have exposed the vulnerabilities of procurement strategies. They have revealed shortcomings in the supply chain, supplier relationship management, and risk management approach. Additionally, there is a growing emphasis on sustainability, ethical practices, and Environmental, Social, and Governance (ESG) criteria across the globe. 

Procurement is stepping into the spotlight as businesses seek to build more resilient and responsible supply chains. Industry leaders anticipate that advanced procurement technology will be a key strategic driver of innovation. 

A KPMG report describes procurement's current stance as an “exciting turning point” and underscores how embracing emerging trends in procurement can significantly boost an organization's overall performance. 

Let's uncover some groundbreaking trends that are steering the future of procurement and their transformative effects on the industry.

1. Rise of sustainability and ESG

Customers, investors, and stakeholders across all industries are becoming increasingly aware of sustainability. Searches for sustainable products have increased by 71% since 2016. As a result, businesses are under pressure to adopt ethical and responsible practices. Many companies are committing to decarbonizing, implementing greener practices, and adopting sustainable sourcing.  

Procurement can play a major in the sustainable sourcing of materials. By incorporating sustainable sourcing, companies not only reduce their carbon footprint but also meet the standards of ethical labor practices. Such strategic sourcing allows businesses to embed ESG principles into their supply chain via procurement. This enhances their reputation and helps to meet regulatory requirements.  

2. Automation revolution

In a recent survey by Gartner, 58% of the 101 procurement leaders said they were either already using AI or planning to implement it in the coming 12 months. Automation tools, such as AI-driven analytics, robotic process automation (RPA), and machine learning algorithms, are streamlining complex processes of freight procurement. These technologies minimize human error, enable cost reduction, and increase efficiency. 

Pando leverages automation to provide real-time insights into procurement activities. The impact is evident — Syed Pasha, Supply Chain Manager at Ashirwad said, "Pando Freight procurement also avoids manual intervention completely, saves a lot of time, and helps us integrate with LSPs for error-free processes." Automating routine tasks makes the supply chain more transparent, reduces fraud risks, and allows you to make data-driven decisions.  

Globalization and risk management

While globalization has expanded the scope of procurement, it has also introduced new risks. This is evident by a 2023 survey by Deloitte that showed that 69% of global CPOs considered enhancing risk management as one of the top priorities. Today, companies need to navigate the rough waters of fluctuating tariffs, supply chain delays, and geopolitical uncertainties. Therefore, procurement teams are moving towards more regional sourcing to avoid reliance on a single source or country. 

Another impact of this trend is the creation of more resilient supply chains. Businesses are partnering with service providers like Pando that can help them navigate potential risks and enhance operations across the global market. This also ensures smooth coordination with carriers, freight forwarders, customs agents, and other partners across borders.  

Best practices and strategies for the future

Now is the best time for companies to jump on the digital bandwagon and adopt forward-thinking practices and strategies. Procurement is no longer just about cost management but a crucial step to optimizing sourcing, enhancing collaboration, and gaining a competitive advantage. 

Here are some of the best practices and strategies that will help future-proof your procurement processes: 

Incorporating blockchain will increase transparency across the entire supply chain. This will ensure a secure chain of custody and maintain trust and accountability within all stakeholders. 

Cloud-based procurement platforms will make integrating different digital tools and systems easier. It also has robust disaster recovery protocols to ensure data security. An example of a cloud-based procurement platform is pando.ai, used for freight procurement by manufacturers and retailers. Here's what one of Pando.ai's users had to say, "Pando freight procurement also avoids manual intervention completely, saves a lot of time, and helps us integrate with LSPs for error-free processes." 

Once the data is digitized, procurement teams can leverage AI-driven analytics to gain insights like never before. AI can help identify trends invisible to the human eye and process large amounts of data in real-time.  

Integrated platforms enable better communication and foster seamless collaboration. This can also help you with supplier relationship management. 

Prioritizing sustainable materials will help you achieve your sustainability goals and further reduce costs. For instance, Nike improved its cost margins by $50 million by replacing usual materials with sustainable ones and incorporating sustainable practices across its supply chain. 

Enhance your procurement team's capabilities by investing in their digital skill development. While some staff may initially feel apprehensive, adapting to new tools could be surprisingly easier than expected. An example of a cloud-based procurement platform is Pando.ai, which is used for freight procurement by manufacturers and retailers. Here’s what one of Pando’s users has to say - where Brian highlights “A lot of our processes before were very manual and now with Pando.ai it has freed up some of our time so we can focus on the important day-to-day responsibilities."

Be future ready in procurement and gain a competitive edge in 2024

As we move into 2024, procurement is set to be a driving force behind business success. As per the trends, procurement is no longer solely about cost efficiency but is also central to building ethical and environmentally responsible supply chains. This calls for a shift from mere awareness to proactively adapting to the changes. Companies adopting these principles can enhance their brand reputation and meet the increasing regulatory demands. 

At the same time, automation and advanced technologies are revolutionizing procurement, streamlining operations, and enabling faster, more accurate decision-making. By leveraging best practices—such as integrating blockchain, adopting cloud-based platforms, and upskilling procurement teams—businesses can remain competitive in an ever-changing global market. Book a demo with Pando.ai to discover how you can capitalize on these emerging trends.