The 2024 Economist Impact report highlights the strategic importance of procurement in managing risk and driving sustainability. As previously reported, procurement is gaining prominence in the C-suite, and it can play a critical role in driving resilience, including with environmental, social, and governance (ESG) objectives.

In the Economist Impact report, titled “Across the procurement-verse: Changing trends in the procurement function” and sponsored by SAP, surveyed executives share increased confidence in procurement to deliver against risk-mitigation objectives. Particularly when it comes to internal risk, which involves stakeholder management and strategic alignment, confidence levels rose to 83% this year, from 64% last year. This illustrates that procurement is becoming more aligned with key stakeholders across the organization.

However, a “state of permanent crisis” has shaken executives’ confidence in procurement’s ability to manage external risks such as geopolitical shifts, supplier threats, and liquidity risks.

Procurement’s role in business strategies is ever-growing, but it is imperative to maintain agility.

Heightened Attention to Risk Management

Ongoing inflation, global conflicts, and fluctuating commodity prices have placed risk management at the center of business strategies. Procurement plays a pivotal role in this effort by identifying high-quality alternative products and services while limiting costs.

Yet, respondents noted concerns over procurement’s ability to manage external risk factors, as only 41% of respondents said they are highly confident in its ability to control vulnerabilities. Comparatively, in 2023, 62% of business leaders expressed assurance in procurement’s handling of these factors, like supplier shortages, market fluctuations, and supply chain disruptions. Several drivers are pushing this trend, as the report notes that organizations experience four supply chain disruptions every day. Also, inflation continues to influence organizational decision-making, as monetary uncertainty was listed as the top organizational risk priority for procurement. Additional key external factors impacting organizational strategy over the next 12 to 18 months are macroeconomic (71%) and legal and regulatory risks (70%).

Diversifying Supplier Relationships

Businesses have looked to ease fears of shortages by moving away from sole sourcing suppliers. According to the survey, 40% of executives aim to prioritize supply chain diversification to build trusted and long-lasting relationships. In fact, three of the top five strategies listed in the survey are focused on mitigating risk, including reshoring/nearshoring and multi-sourcing.

Visibility has also been listed as one of the highest two priorities for a second consecutive year, proof that it is an urgent need for organizations to invest in technology that increases access to supply chain metrics, develops connections with suppliers, and identifies alternative sellers. Platforms that utilize automation, AI, and advanced analytics are another way to enable procurement teams to make data-driven decisions that improve efficiency and reduce risk.

Sustainability: Procurement’s Green Thumb

ESG ranked second on the list of priorities for the next 12 to 18 months, an increase from fifth in 2023.

“Procurement’s work at the convergence between the business and wider supply-chain ecosystem thus offers it a unique strategic opportunity to lead the sustainability agenda,” the report states. By engaging with sourcing and suppliers, two critical stakeholders in achieving sustainability KPIs, procurement can use its role to translate companies’ green ambitions into tangible results.

New regulations such as the European Sustainability Reporting Standards (ESRS) and Corporate Sustainability Reporting Directive (CSRD) have driven companies to enhance their sustainability practices.  According to the Economist Impact report, procurement has capitalized on this opportunity to gain the confidence of executives across the C-suite, with 68% of business leaders expressing belief in procurement’s abilities to deliver against ESG objectives. This is an increase from 49% in 2023, signaling that procurement’s remit has expanded beyond cost management.

Sustainability has also become a critical risk category, as 39% of respondents listed compliance as a driver to becoming greener. A failure to conform to governmental policy can lead to penalties and fines that limit growth.

SAP recently hosted a webinar to discuss strategies that leading companies are using to develop sustainable supply. The discussion also includes insights into how procurement can add value to ESG initiatives beyond compliance and reporting.

Leveraging Technology for Sustainable Sourcing

Procurement’s role in engaging buyers and suppliers to drive sustainability is pivotal. CPOs can set standards for sustainable sourcing and supplier practices, reducing carbon footprints and helping reach ESG benchmarks.

The increasing alignment of procurement with C-suite priorities is seen through the increased focus on sustainability and risk management. The shift in reporting lines toward COOs and the greater involvement in strategic discussions highlight the growing influence of procurement in organizational decision-making.

The expanded role of procurement has placed it at an inflection point, with heightened expectations to deliver results beyond cost mitigation. How will procurement leaders meet these new demands? Investing in technology offers a solution for uncovering valuable insights that to demonstrate procurement’s value. Coupled with developing people and processes, this approach allows procurement leaders to successfully fulfill their increasing remit.

Utilizing SAP Business Network for Strategic Priorities

Business leaders should look for a platform to bridge the gap between companies and buyers and suppliers, enhancing visibility, collaboration, efficiency, and compliance. By leveraging such a comprehensive solution, companies can streamline their procurement processes, reduce silos, mitigate risk, and achieve substantial time and cost savings.

SAP Business Network can align these benefits with the strategic priorities of risk management and sustainability. The technology has facilitated 780 million B2B transactions and $5.8 trillion in annual commerce, highlighting its vast influence across 190 countries. There has also been a 13% growth in transacting relationships and a 7.3% increase in B2B transactions over the past 12 months, a testament to our growing global community.

Embracing the Future of Procurement

With growing confidence from executives and risk-focused strategies, procurement is well-positioned to lead organizations through today’s complex business environment. The Economist Impact report underscores this belief, but procurement teams must aim to ensure long-term success by leveraging digital transformation.

Through in-depth interviews and targeted research, the Economist Impact report provides a broad analysis of the state of procurement.

View the infographic and download the report.

Gordon Donovan is global vice president of Research, Procurement & External Workforce at SAP.

The promise of generative AI is in its ability to support individual businesses with individual needs; not just automating work, but identifying what work can or should be automated, as well as the best place to start.

With the release of new process AI capabilities for SAP Signavio — process recommender and performance indicators recommender — SAP is taking a step closer to realizing this promise.

Embedded into SAP Signavio Process Transformation Suite, these novel capabilities deliver instant, tailored process and metrics recommendations that will help process owners and process analysts accelerate process model design, more readily define their process monitoring strategy, and improve the quality of business outcomes.

SAP Signavio and SAP LeanIX solutions are core elements of the Business Transformation Management portfolio, which leverages SAP Business AI technology, initiatives, and principles to help customers on their transformation journeys, and deliver generative AI capabilities that are specific to the process world.

The latest release of SAP Signavio Process Transformation Suite features the following:

• An AI-assisted process recommender provides process owners with preconfigured process models suggestions out of a database of more than 5,000 best practices from SAP.  This new generative AI capability will help process owners move fast from the initial exploration phase to process design by instantly narrowing down hundreds of options to those that present a best match to their business.
• Users are suggested preconfigured process models which serve as a great foundation they can save, edit, and further perfect, saving weeks, if not months, of stakeholder interviews and lengthy workshops currently required to design a new process or redefine an existing one.
• An AI-assisted performance indicators recommender delivers instant recommendations on the most relevant process performance indicators (PPIs) to be applied to a specific process, based on a database of thousands of KPIs and PPIs.
• A capability to identify key process metrics among a variety of options, which is critical to measure success, can recommend the most relevant measures to assess the performance of a business process, providing companies with much needed insight into how they can streamline operations and reduce overhead.

“Generative AI is impacting every facet of modern organizations, and every process — from finance to sales, procurement, and supply chain management — can benefit from this transformative force,” shared Dee Houchen, head of Market Impact for SAP Signavio. “With generative AI serving as a catalyst, we are developing the third generation of our business process management solutions to make people’s work easier and help them perform it faster. When it comes to process management, generative AI can also extend the horizon of our thinking, by providing suggestions that experts can build on. At the same time, we can see generative AI lowering the entry barriers to disciplines such as process analysis, acting as a knowledge multiplier and helping companies to scale.”

In addition to these newly released capabilities, a process mining co-pilot currently in beta testing is expected to be released in November this year. The AI-assisted process analyzer, also known as text-to-insights, will empower users with any skillset to extract deep insights and obtain valuable knowledge from process information simply by using natural language and a question/answer approach. Along with improving the time to insight, this new co-pilot will help continue the trend of democratizing process mining, ensuring as many people as possible within an organization can contribute to process excellence.

Lucas de Boer is Global Marketing Program lead for SAP Signavio.

At 14, Coco Yoshizawa of Japan recently became the youngest medalist at the 2024 Summer Olympics, using a skill she mastered during primary school to bring her to the podium. Coco and her peers are proving on an international stage that it is never too early to accomplish incredible feats. The Olympic Games are not the only place we can look to for young, driven leaders.

A recent global study by We Are Family Foundation (WAFF), produced in part with support from SAP, introduced the complexity of incorporating intergenerational collaboration into projects, highlighting how youth in particular face a lack of opportunities to lead and contribute. Young people are often left out of the conversation when it comes to the world’s unprecedented challenges, despite offering a unique and personal perspective on shaping the future.

People under the age of 30 make up more than half of the world’s population. Why block these important voices?

Laalitya Acharya is an impact entrepreneur who invented an AI-driven device to detect water contamination in seconds. In parallel, she founded an organization aimed at finding the intersection of research, advocacy, and policy work through summits discussing action to scale clean water solutions. She continued as an active activist on the topic of closing the water gap by attending events like COP28 as a We Are Family Foundation delegate — all before the age of 20.

Age has not stopped either of these accomplished youth from taking action. In fact, in most cases, being young can be an asset. Young people embody the qualities needed to lead in an increasingly unpredictable and technology-driven time — from the determination to be a leader in one’s athletic field to enacting meaningful change on climate issues.

In honor of International Youth Day 2024, here are three reasons we should never let age become an obstacle to actualize powerful ideas.

1. Young Entrepreneurs Offer Fresh Perspectives

Young impact entrepreneurs like Laalitya are governed by their life experiences and insights, shaped by a rapidly changing global landscape and unprecedented access to technology. Laalitya’s innovation, for example, was born out of a family trip to India, where she was inspired to research solutions when she was personally affected by contaminated water. With an interest in AI, she wanted to find a unique way to blend technology with advocacy to change the “mold of what we think about as water advocacy.”

When given the opportunity, youth can bring groundbreaking ideas and challenge traditional engagement models at the corporate and policy levels. Companies like SAP are leveraging these unique insights with initiatives like Youth to the Table, in which they enable young leaders to rethink the status quo in conversations with key partners at events like COP and The World Economic Forum.

2. Young Innovators Show a Strong Sense of Resilience and Adaptability

In an era characterized by constant change, from the onset of COVID-19 to the developments in AI, young people have an intrinsic ability to navigate uncertainty and apply a dynamic approach. While the entrepreneurial journey is rarely easy, tech-driven acceleration adds a level of urgency that forces them to remain scrappy and leverage the resources available to them in the moment. 

Renata Koch Alvarenga, a young activist from Brazil, understood the power of accessibility when she founded EmoderaClima at 22. The initiative looks to tackle the climate crisis through the lens of gender equality in the Global South, providing an online database with multilingual educational content to empower young people impacted by climate change in Latin America. As she looks to make resources accessible to all, she is required to adapt to the ever-changing business and policy setting in Brazil. Young people like Renata leverage resources like technology to adapt to difficult environments, a testament to their unique strengths as leaders.

3. Young People Emphasize the Importance of Community

Technology has not only given young impact entrepreneurs activists a louder voice than ever, it gives them a community at their fingertips. Whether it was the community they were born into or the community they’ve created, young people are more likely to support the causes and people they care about than former generations. Per a study on young changemakers by The Possibilists in partnership with SAP, 92% of respondents are motivated by the opportunity to do something for their community.

Young people know how to mobilize for their cause or community. Innovators like Larissa Napoli (27), who is the coordinator and member of the Quebrada Agroecológica, a project that promotes water security and agroecology in several Brazilian communities, are fueled by a sense of dedication. Much like the 70% of gen-Z were involved in social or political causes in 2021, she and her colleagues started locally and scaled their initiative through the power of digital channels. Their passion translates into meaningful action that can influence key decision-makers.

SAP believes in the power of collaborating with young impact entrepreneurs and innovators. Through partnerships with ChangemakerXchange, Generation Unlimited, The Possibilists, and We Are Family Foundation, we gather insights and promote initiatives that enact inclusive change. From bringing youth delegates to COP28 to introducing young changemakers at SAP events, we aim to give young innovators a valued voice.

If you are interested in learning more on how to close the intergenerational gap, We Are Family Foundation’s study offers interesting insights on the competitive advantages of working with young leaders.

We invite you to join us in this work; let’s inspire future solutions through meaningful solutions that erase age as an obstacle and ensure everyone’s opinion is valued.

Selina Henn is Strategy and Operations associate for Corporate Social Responsibility at SAP.