Australian procurement teams’ top procurement priorities in 2024

What is top of mind for procurement teams?

Grosvenor undertakes annual research into the State of Procurement and Contract Management in Australia. Over the past six years, we have talked to 640 organisations to track what is top of mind for their procurement teams (refer Figure 1).

Figure 1: What is top of mind for Australian Procurement teams, by year

We have seen the importance of cost reduction in 2019 towering over all other goals, followed by supply risk mitigation being key during the COVID years. Both of those goals are a distant memory in 2024. Only 3% of participants in our research say that supply risk mitigation is a top priority. For cost reduction, the importance has reduced from 46% to 15% of organisations stating that goal as their most important.

Over the past three years, the focus has well and truly been on delivering value to stakeholders. Improving the way the business operates has been the most important goal for procurement teams in 2022, 2023 and 2024. And enhancing the internal customer’s experience has surged from fourth place in 2019 to second place in 2024. Now every fifth procurement team says this is the most important goal to achieve.

To deliver improvements to how the business operates and to make good on a promises of a better customer experience, procurement teams should:

• Gain a deep understanding of the business that the team services. This includes understanding the link to the organisational and divisional strategy. How does that part of the business tick? How does it fit into the rest of the organisation? What are the end customers of that business like, what do they value, what is important to them?
• Build strong relationships with the business. Based on the deep understanding of the business, strong procurement teams build lasting relationships with their stakeholders. They are able to provide insights and value add, well beyond being a task-taker. They are part of the conversation from the start, when the need to procure is identified and they can influence the whole sourcing process.

Our research reveals that the most significant factor distinguishing high maturity procurement teams from their lower maturity counterparts is their ability to deeply understand and build strong relationships with the business areas they support.

The research we have just conducted shows that a key ingredient to move from a low to a medium maturity procurement team is the ability to foster a deep understanding of the business area the procurement team services. And while 53% of medium maturity teams say that this is implemented and delivering benefits for them, the step up to high maturity teams is again quite significant, as 94% of those teams report that they get clear benefits from their understanding of the business.

While the percentage of teams with strong relationships increases significantly from medium to high maturity, a solid understanding of the business is a prerequisite for forming these relationships effectively.

This might be a bit counterintuitive as many assume the key to being a successful procurement manager may be the understanding of the external market environment and suppliers. However, it is indeed the ability to work effectively with internal teams that makes the biggest difference.

Not reported in Figure 1 are other priorities that haven’t gotten a lot of traction in recent years. Unfortunately, this includes the delivery against social and sustainability commitments. An average of 5% of teams have this as their priority over the past six years. Likewise, a spike in the ability to deliver innovation through the supply chain of 13% last year didn’t last very long with it being back to 5% in 2024.

Read more in Grosvenor’s 2024 Annual Australian Procurement study Stronger Together (top right). Or if you have any questions regarding the 2024 study book a meeting with Dr Stefan Gassner.