Amazon Business’ “2022 State of Business Procurement Report” shows that companies are on board with digital procurement and gives suppliers reason to breathe easy. According to the report, most businesses aren’t planning procurement budget cuts.
We unpacked some key findings from Amazon’s survey of procurement professionals to see how they’re navigating tectonic shifts in the industry and planning for the future.
Budgets Going Steady or Increasing
Despite macroeconomic challenges, only 22% of businesses said they expect cuts to next year’s procurement budget. The rest of the 440 respondents said they plan to carry on without any slashes to the budget.
Additionally, almost half of the surveyed businesses are due to expand their budget for next year, likely a response to inflationary pressures.
Digital Transformation Powers On
Businesses are no longer keen on picking up the phone to get procurement done, with 91% of B2B buyers stating that they prefer online purchasing. The legacy of COVID-induced supply chain disruptions and the transition to remote work are likely not innocent bystanders in this situation.
Last year, more than half of small- to medium-sized businesses (SMBs) and 42% of large enterprises said that they made parts of their procurement process digital due to COVID-19. Supply chain bottlenecks and remote work inspired many companies to seek new solutions.
Some firms shifted their procurement efforts to sector-specific online marketplaces such as Chemdirect for chemicals or Bryzos for steel. These digital marketplaces connect buyers and sellers of industrial inputs on one platform, removing some of the usual frictions associated with procurement.
See also: B2B Marketplaces Offer Buyers Trust, Transparency — and Relief from Tedium
They also help industry players better navigate supply chain woes, issue and collect payments in a more timely manner, and more efficiently exchange information.
In 2022, more than half of companies are making purchases that are “delivered directly to an employee’s personal residence.” This is unsurprising as 58% of Americans are provided the opportunity to work remotely at least one day a week.
The highest rate of online-only purchasing was among government and nonprofits, with 33% of organizations making purchases exclusively online. This is likely due to the fact that governments and nonprofits strive for more transparency in their procurement than private enterprises.
Overall, almost three-fourths of the companies and organizations surveyed by Amazon used a mix of online and offline procurement methods. Another 25% completed procurement entirely online.
Businesses Don’t Just Want to Do Well, They Also Want to Do Good
Unsurprisingly, “cutting costs and increasing efficiency” were deemed to be the “areas most important for overall improvement.”
However, most businesses seem committed to adhering to the principles of social corporate responsibility (SCR). That is particularly true as it relates to “supporting sustainable, diverse, and local businesses.”
Of the surveyed companies, 84% said that they plan to increase their procurement spending with Black and other diverse-owned businesses.
The biggest shift from last year in terms of SCR attitudes among procurement professionals was the growing priority given to sustainability. Of the B2B buyers surveyed, 63% said that improving sustainability is a top priority for them, compared with last year’s 39% — but more than half of the businesses with sustainability goals find it “difficult to source suppliers that follow sustainable practices.”
Looking to the Future
Many companies are looking to make investments to modernize their procurement processes. The top priorities are automation of manual processes and generating digital/online invoices, with more than half of surveyed companies planning to invest in these areas.
Just over a third of companies want to focus on voice technology and artificial intelligence (AI)-driven optimization of purchasing decisions.
Companies recognize the inefficiencies that come with manual spend management processes. According to a recent study conducted by PYMNTS in partnership with Airbase, gratuitous over-spending due to inefficient manual processes amounts to an average of 4% of a company’s non-payroll expenses.
Luckily, there is no shortage of solutions to address this issue. Companies like Airbase and TripActions are automating various spend management tasks and creating guardrails to prevent overspending.
The authors of Amazon’s report believe that prioritizing basic digital capabilities over more advanced technology is a sensible strategy. Digital invoicing and other digital functions can serve as “a strong digital foundation that helps procurement departments to implement advanced capabilities when they’re ready.”
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