Introduction 

Exalogic Consulting, a gold implementation partner of SAP, is dedicated to empowering businesses with the best procurement practices and technologies. Recently, Economist Impact, in collaboration with SAP, conducted an extensive global research survey to understand the current state of procurement, especially amidst the heightened supply chain risks. This research provides valuable insights into how midsize companies perceive and handle procurement and risk and offers recommendations for aligning procurement capabilities with business needs. 

Procurement’s Role and Influence 

The research underscores the significant role procurement plays within organizations. For midsize companies, 31% of procurement departments report directly to the CEO, highlighting their strategic importance. However, there appears to be a disconnect between procurement’s potential and its perceived effectiveness. While 59% of respondents believe that procurement insights are essential for implementing company strategy, only 44% feel that procurement collaborates effectively across the organization. This gap points to the need for better internal collaboration and understanding of business requirements to enhance procurement’s relevance and impact. 

Confidence in Managing Risks

Confidence levels in procurement’s ability to manage risks vary significantly between midsize companies and larger enterprises. Only 55% of midsize company respondents are confident in their procurement team's ability to manage external risks, and 52% for internal risks. Moreover, just 41% believe their procurement team is effective in meeting ESG (Environmental, Social, and Governance) goals. This is in stark contrast to larger enterprises, where confidence levels are notably higher. 

Digital Transformation and Procurement 

Digital enablement is critical for modern procurement functions. However, the survey indicates that procurement teams may be relying too heavily on digital solutions to address fundamentally human issues. Less than half of the respondents believe procurement forms long-term effective relationships with suppliers or is an effective collaborator. While digital tools are important, the emphasis must also be placed on developing soft skills and building stronger interpersonal relationships. 

Strategic Management and Supplier Importance 

Supplier relationship management and supply chain visibility are identified as top organizational risk focus areas for the next 12-18 months. Despite the recognition of procurement’s role in supplier management, only 47% of respondents believe their teams have established effective long-term relationships with suppliers. This highlights a critical area for improvement, as robust supplier relationships are vital for mitigating risks and enhancing procurement’s overall value. 

Technology’s Role in Procurement 

While emerging technologies, such as AI, are being considered for implementation, the highest priority platforms for procurement are category management, predictive analytics, and intake management. These tools can help procurement teams integrate more effectively with business strategies and manage risks better. However, procurement must prioritize investments that enhance their strategic relationships rather than replacing human interactions with automated processes. 

Conclusion 

The findings from the Economist Impact research provide a roadmap for midsize companies to enhance their procurement capabilities. Exalogic Consulting, leveraging its expertise and partnership with SAP, is well-positioned to guide businesses through this transformation. By focusing on improving internal collaboration, building stronger supplier relationships, and strategically implementing technology, procurement can meet and exceed business expectations, driving mutual success. 

For more information on how Exalogic Consulting can support your procurement needs, please contact us or visit our website.