Amazon Business has today released its fourth annual State of Procurement report, revealing that overcoming short-term cost concerns and operational hurdles are top of the agenda for UK procurement leaders, taking precedence over ESG initiatives and strategic AI adoption. The report highlights trends and global insights around procurement’s needs, priorities and challenges across the UK, Spain, Italy, Germany, and France.
Discrepancy between strategic ambitions and internal priorities
The UK economy is now expected to grow by just 0.9% this year, down from the previous prediction of 1.1%1. This slowdown in economic growth is being reflected in the way procurement teams are approaching their procurement budgets, according to Amazon Business’ State of Procurement report, which finds 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. The rising cost of purchases continues to be a top external challenge for 44%, suggesting that the increasing costs of goods and services is an acute roadblock to maximizing the potential of these larger budgets.
While last year’s report saw procurement leaders anticipating a shift towards 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 materialize, with no increase in pickup of these technologies compared to last year. Instead, the focus remains on overcoming day-to-day operational hurdles, with 49% of all procurement leaders citing 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,” said 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.”
Demand for AI is high, but the benefits are yet to be realised
Procurement leaders’ focus on short term cost control is influencing how they plan on using AI. Although the vast majority (96%) of respondents reported that they have plans to invest in AI tools, their primary focus is using AI to alleviate cost pressures, such as carrying out AI-driven spend analysis (47%), rather than leveraging AI for more strategic purposes like predictive analytics (38%). The findings show that while AI’s potential is acknowledged, it’s not yet fully being harnessed. This could explain why 32% of procurement leaders are looking to learn more about AI’s potential for deeper data analytics in the future.
ESG remains a critical priority
A similar disconnect is revealed when it comes to ESG. Tightening regulations, such as The Procurement Act 2023, which is set to come into effect from 24th February 2025, means purchasing teams, in particular public sector organisations, will face increased scrutiny around their implementation of sustainable practices. Despite a clear push from the C-suite, with 66% of respondents reporting 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.
