Why UK Procurement Leaders Remain Economically Cautious
As Amazon Business releases its fourth annual State of Procurement report, it shows that for UK procurement leaders top priority is overcoming short-term cost concerns and operational hurdles.
This is taking precedence over ESG initiatives and strategic AI adoption. The report from Amazon Business highlights trends and global insights around procurement's needs, priorities and challenges across the UK, Spain, Italy, Germany, and France.
The 2025 State of Procurement Data was fielded online by KRC Research from 11 June, 2024 to 1 August, 2024, among 3,458 procurement decision-makers and senior leaders familiar with procurement operations at their organisation.
Respondents were located in France, Germany, Italy, Japan, Spain, UK and US and spanned nine industries and all commercial sector respondents worked at organisations with a minimum revenue threshold set by geographical region.
The divide between strategic ambitions and internal priorities
With the UK economy facing limited growth, with reports from the Organisation for Economic Co-operation and Development believing it will grow by only 0.9%, down from the previous prediction of 1.1%, this slowdown in economic growth is being seen by the way procurement teams are approaching their budgets.
With Amazon's report stating that while 64% of UK decision makers expect their 2025 budgets to exceed those of 2024, they are sceptical about the impact these increased budgets will have.
This comes as the rising cost for purchases remains a top external challenge for 44% of respondents – which suggests that the increasing costs of goods and services is an acute roadblock to maximising the potential of these larger budgets.
A landscape yet to materialise
Compared to last year's report, those leading procurement teams expected the last 12 months to see a shift into a more strategic, high-value decision making – such as leveraging budgets for initiatives like analytics or reporting tools to understand performance and identify trends – this is yet to materialise, with no increase in pickup of these technologies compared to last year.
Rather, the priority keeps on overcoming day-to-day operational hurdles – as 49% of all procurement leaders highlighting efficiency and complexity as their primary challenge, in particular 60% see the intricacies of their internal systems and processes as a major internal barrier.
"Our research highlights a clear disconnect between procurement leaders' ambitions and their ability to act on them," says Amy Worth, Director & General Manager of Amazon Business UK.
"While increased budgets present new opportunities, procurement teams need the tools and insights to navigate unexpected economic changes and streamline their operations to drive both immediate and long-term value."
True power of AI yet to be realised
The focus on the short term cost control is also affecting how procurement leaders plan on using AI. While almost all respondents (96%) make it clear of plans to invest in AI tools, the primary focus is using AI to alleviate cost pressures – such as AI-driven spend analysis (47%), rather than leveraging AI for more strategic purposes like predictive analytics (38%).
The report highlights that the potential of AI has been acknowledged, it is yet to be fully harnessed. Which could be behind the 32% of procurement leaders who are looking to learn more about AI's potential for deeper data analytics in the future.
ESG: A critical priority
The importance of ESG remains top priority for the entire world, as with tightening regulations such as The Procurement Act 2023, which is set to come into effect from 24 February 2025, means purchasing teams, in particular public sector organisations, will face increased scrutiny around their implementation of sustainable practices.
With a clear push from the C-suite, as 66% of respondents report an increase in their organisation's ESG goals this year, procurement teams are struggling to translate this into reality.
Last year, 30% of procurement leaders placed sustainability in purchasing among their top three priorities, but this has now dropped to just 11%. This signals a gap between overarching organisational goals and the day-to-day realities of procurement, as teams remain focused on managing short-term pressures rather than being able to drive long-term value through ESG.
Download the 2025 State of Procurement Data Report here.
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