A new study has revealed that 32% of procurement teams have “cut corners” with their sourcing criteria to secure supply, as eighty-one percent (81%) of them feel pressured by executives to respond to challenges “more quickly and effectively”.
The study “Procurement Under Pressure: Procurement Bends and Adapts - Will it Break?” sponsored by Ivalua, shows a majority of respondents identify inflation (88%) as well as supply chain disruptions and shortages (82%) as top factors pressuring procurement. Over 170 procurement and supply chain professionals were surveyed.
The report shows that 52% of respondents are prioritizing business continuity and operational resilience over other objectives, with 46% focusing on customer satisfaction, service, and experience. Given the current market challenges and geopolitical uncertainties, only 7% see ESG outcomes as a priority, which is in stark contrast with strengthening regulatory frameworks and demanding consumer preferences requiring more transparency to combat greenwashing.
“Lowering due diligence standards can lead to unexpected quality, ethical, or sustainability issues. Cutting corners and working with risky suppliers can not only lead to regulatory fines or penalties but also significantly damage an organization’s brand with consumers and reputation with other key stakeholders such as investors and future talent,” said Alex Saric, chief marketing officer at Ivalua, in a statement.
As external systemic shocks continue to impact value chains, nearly half of respondents (49%) believe that global supply chains won’t fully recover to pre-Covid operational norms until 2024 or beyond. However, despite the increased pressure, only 21% of procurement teams have seen headcount increase on their team. All this has led procurement teams to transform the way they engage with their suppliers, by actively collaborating with suppliers (79%) and actively managing increased risk (64%).
“As the report illustrates, a digitalized approach to procurement is now more important than ever to enable supply chain teams to cope with the ongoing pressure of disruptions, stock-outs, inflation, and widespread political instability without negatively impacting other objectives,” added Saric. “Procurement teams need greater investment in people, processes, and technologies to uphold sourcing standards, maintain ESG commitments and values, navigate today’s stormy markets and insulate their organizations against future headwinds.”
