Breaking Down Barriers: Unlocking Value with Collaborative Procurement

The benefits of procurement collaborating internally with stakeholders and externally with suppliers are clear. So are the costs of not doing so. 

A recent study by Procurious and SAP Business Network asked 172 procurement leaders about their experiences with collaboration. It examined procurement’s collaboration activities through the lens of their top priorities for the year, and found that removing barriers to collaborating – both internally and externally – presents significant opportunities for procurement to add more value to their organisations. It also found that adopting digital tools, such as generative AI, can help with these efforts.

Collaborative Procurement: A Win-Win

The majority of procurement leaders (75%) said that collaborating with suppliers results in better outcomes for both the buyer and the supplier. The benefits they cited were product availability (48%), product innovation (47%), and increased revenue/profitability (44%).

Yet procurement leaders said they face barriers to collaborating with suppliers. For one, they lack the tools and frameworks required to fully integrate with their suppliers. Other barriers to collaboration include poor information (57%) and capacity constraints (55%).

Digging deeper into the study found that just 19% of procurement leaders have full visibility into their suppliers’ priorities, and about 31% have little or no visibility at all. Not having a clear understanding of what’s important to their suppliers can lead to misaligned strategies, delayed responses, and missed opportunities.

Procurement also lacks visibility into stakeholders’ priorities, which affects its ability to collaborate effectively with suppliers and meet regulatory requirements. For instance, 25% of procurement leaders do not understand the goals of their finance, compliance and risk teams.

Without a clear view of suppliers’ and internal stakeholders’ priorities, procurement cannot serve as a strategic partner, complicating efforts to align planning, inventory, and sourcing decisions with organisational objectives and regulatory obligations. As a result, it becomes more challenging to ensure that supplier relationships support compliance and mitigate risk.

The Costs of Not Collaborating

Procurement leaders recognise the costs of not collaborating with suppliers. Nearly half (47%) reported product quality issues that could have been avoided by working more closely with suppliers. Other costs cited include material shortages (44%) and product delays (43%).

A lack of collaboration internally also has consequences. These can include delays in paying invoices, noted by 40% of procurement leaders, as well as lower customer satisfaction (30%).

What does this mean for procurement leaders? When viewed through the lens of procurement’s top priorities for the year ahead, the study highlights key areas where enhanced collaboration with suppliers and stakeholders can enable procurement to deliver greater value to their organisations.

Procurement Priorities Present Opportunities

Inflation and economic uncertainty have moved cost containment to the top of the priorities list for the coming year for 64% of procurement leaders. Other top priorities include more emphasis on sustainability and ESG goals (49%), supply chain resilience (42%), digital transformation (39%), and regulatory compliance (22%).

Yet poor collaboration hinders progress in these priority areas.

Just about half of procurement leaders actively collaborate with finance on cost containment. Even fewer collaborate with suppliers on cost. Given that cost containment is procurement’s most important priority, collaborating internally and externally provides an opportunity to better align financial and supply chain strategies more closely.

Procurement leaders are also falling short in collaborating with suppliers regarding supply chain resilience and disruptions. Only 22% report engaging in such efforts, a missed opportunity to identify and mitigate potential risks, position their organisations to assess alternative sourcing options, and establish protocols for swift responses to disruptions.

Leveraging Technology for a Collaborative Future

Technology can help. Although 30% of procurement leaders pointed to a lack of quality collaboration tools as another barrier to progress​. This isn’t a surprise given that 26% said their processes for engaging with suppliers are either mostly or 100% manual.

Still, procurement leaders are starting to recognise the potential of innovative technologies like B2B trading partner platforms and generative AI to improve collaboration and compliance among suppliers and internal stakeholders. More than half (54%) said they view generative AI as an enabler of better engagement​ and information sharing.

No longer an option, collaborating with internal stakeholders and external suppliers is a necessity for procurement leaders. By addressing the barriers to supplier collaboration, such as poor information sharing and capacity constraints, and by leveraging the power of technology, procurement leaders can strengthen their partnerships, improve efficiency, and drive better outcomes for the entire business.

To learn how procurement can remove the barriers to effective collaboration internally and with suppliers to bring real benefit to their organisations with the help of technology, Read the full report.