Public procurement is navigating through a storm of procurement challenges that demand an informed and collaborative procurement strategy. As we examine the ongoing impacts of an uncertain economy, rising costs, supply chain vulnerabilities, and emerging technologies, it becomes evident that adapting to and overcoming these common procurement challenges is no longer optional—it’s essential for a successful procurement function.
The Fiscal Cliff and Its Implications for Procurement Processes
The significant influx of federal funding peaked in 2021 but is now waning, putting public agencies on the brink of a fiscal cliff.
The urgency to commit and allocate these funds by the end of 2024 adds substantial pressure to procurement teams who are tasked with making difficult financial decisions. With budgets tightening and states’ surplus balances diminishing, maintaining service excellence amidst these procurement challenges is more daunting than ever. Strategizing to stretch every dollar and utilize resources is coming to the forefront for procurement leaders to mitigate this impending funding drop-off.
Rising Costs: A Growing Concern for Procurement Teams
Another pressing procurement challenge faced by teams is the escalating prices of goods and services. Inflation rates have surged, as evidenced by the Consumer Price Index data, impacting not just consumers but also organizations trying to deliver vital public services.
Survey results from our 2024 State of Public Procurement report indicate that the rising cost of goods and services is the largest external concern for public procurement teams.
As costs rise, procurement teams can lean into innovative solutions, such as the Euna Marketplace Savings Advisor, which has proven effective in optimizing shopping carts and driving cost efficiency. Addressing these procurement challenges proactively is paramount for agencies to navigate these financial waters adeptly.
Supply Chain Disruptions and Their Impact
The pandemic exposed the fragility of supply chains, compounded by inconsistent international relations and fluctuating tariffs. Procurement teams are grappling with the dual pressures of managing costs while ensuring the timely delivery of essential goods and services—requiring stringent risk management.
As reported in the 2024 State of Public Procurement, these concerns are at the forefront for most professionals in the field, creating a landscape fraught with uncertainty. The ability to maintain a reliable supply chain will be key to overcoming these procurement challenges, which may necessitate reforms in procurement strategies and a willingness to collaborate more closely with suppliers to build better supplier relationships.
The Excitement and Hesitance of Emerging Technologies
Emerging technologies, particularly AI, do present exciting opportunities to alleviate procurement challenges. However, with that excitement comes hesitance, as many procurement professionals approach these advancements with an understandable caution, due to concerns over misinformation and inaccuracies.
Though many see AI as generative—the chatbots like ChatGPT that have become commonplace—AI, or rather machine learning, has broader and more practical implications as well, such as intelligently making recommendations based on large sets of data or other criteria. In fact, Euna Marketplace offers an AI-powered savings advisor that checks your shopping cart and suggests cost-effective alternatives while keeping an eye on shipping expenses and product availability.
Understanding the balance between leveraging AI to outsource routine tasks and safeguarding against erroneous outputs will be critical in navigating these procurement challenges moving forward.
Regardless of the steps you’re considering taking toward implementing AI, it’s important to realize you’re not alone as you navigate procurement challenges. Procurement processes can be enhanced by building a robust external network and sharing insights with peers, allowing organizations to derive innovative solutions to tackle these collective issues. The path ahead may be filled with obstacles, yet, with collaboration and strategic foresight, we can effectively conquer the procurement challenges besieging public procurement departments today.
Want to learn more about the challenges and trends facing the public procurement process today? Download our 2024 State of Public Procurement report!
Read the next blog in the series: How Network-Powered Procurement Can Help You Lean into Change!
