Sourcing and Procurement

Transform sourcing and procurement operations for greater value creation and innovation.

Top supply chain procurement priorities

When it comes to the procurement leader’s single biggest focus, identifying and mitigating supplier risk saw the largest year-over-year increase in priority ranking.

Procurement leaders identified their top performance objectives and the roadblocks to achieving them. Download the infographic for peer benchmarking to shape your procurement strategy to learn about:

  • Category management insights from your peers
  • Top 10 challenges facing procurement leaders
  • Latest data from the annual Gartner procurement survey

Download Supply Chain Procurement Infographic

Use peer benchmarking to transform your supply chain procurement process.

By clicking the "Continue" button, you are agreeing to the Gartner Terms of Use and Privacy Policy.

Contact Information

All fields are required.

  • Step 2 of 3

    By clicking the "Continue" button, you are agreeing to the Gartner Terms of Use and Privacy Policy.

    Company Information

    All fields are required.

    Type company and location
    Optional Optional
  • Step 3 of 3

    By clicking the "Submit" button, you are agreeing to the Gartner Terms of Use and Privacy Policy.

    Role of Third Parties in Our Businesses: 72% of procurement professionals agree with the statement "New-In-Kind Technology Services", 71% agree with "Outside of the Company's Core Busienss Model" and 70% agree with "increasing Number of Startups"

    Increased sourcing and procurement complexity

    Sourcing and procurement is becoming more critical as supply chains grow increasingly complex. Specifically, how we use suppliers is changing: +70% of sourcing and procurement professionals report using suppliers to tap into new-in-kind technology services and/or something outside of their organization’s core business model. 

    Organizations are more reliant on suppliers than ever before. In such a world, it is the role of strategic sourcing and procurement to unlock new value from the supply base and protect the organization from future disruption.

    Strategic sourcing and procurement

    There is a lack of discipline and consistency in the sourcing and procurement process, specifically on cost management and business value creation through category strategies, supplier performance management and collaboration with strategic supply partners. Sourcing and procurement leaders also struggle with mitigating supply base risk (e.g., operational disruption, financial loss) and navigating new technology (e.g., automation, advanced analytics).

    Sourcing and procurement leadership must invest in supplier risk management, digitalization, future of work and postpandemic recovery. Key criteria for strategic sourcing and procurement success are cost optimization, supplier resilience and responsible sourcing.

    Supply chain sourcing and procurement insights you can use

    Supply chain sourcing and procurement leaders must move beyond short-term cost management to leverage supplier capabilities to their maximum advantage in a structured and segmented fashion. This involves aligning supply chain sourcing strategies, driving stakeholder engagement, and setting and communicating the right metrics internally and externally to drive the right behavior.

    What sourcing and procurement activities matter most?

    Don’t waste time on sourcing and procurement activities that won’t move the needle. Explore our activity map to identify the 29 essential activities for managing sourcing and procurement. 

    Effectively implement your responsible sourcing strategy

    No less than 45% of procurement professionals say meeting legal obligations is the most significant driver of responsible sourcing programs for the organization. Download the infographic for peer insights into effectively implementing responsible sourcing programs.

    Expand supplier diversity initiatives in your procurement strategy

    Right now, 57% of procurement leaders report they have a formal supplier diversity program. Do you? Download the infographic to learn how today’s procurement leaders are responding to supplier diversity pressures.

    Enable cost optimization in your sourcing and procurement

    Currently, 52% of procurement leaders think professional services are ideal for cost optimization. However, the most significant barrier to cost optimization exists outside of procurement. Explore four cost optimization approaches to resolving business resistance.

    Secure investment for your procurement technology

    Today, 71% of procurement leaders think that procurement technology investments are a low priority when setting the IT budget. Explore the infographic to learn how to use procurement technology to secure a competitive advantage.

    Questions about becoming a Gartner client?

    Gartner sourcing and procurement case studies

    We needed to set up a supplier relationship management program but didn't know where to start, so we reached out to Gartner to help us establish a framework and structure. What we got from our partnership with Gartner was a lot of time with an analyst to help us think through all the steps we needed to take to have a supplier relationship management program in place. Taking these steps got our program started and off the ground.

    VP, Global Procurement

    Food Manufacturing/Agriculture Industry
    Case study

    Leveraging Supplier Category Intelligence to Reduce Costs

    With an impending contract renewal with their largest supplier, a medical device manufacturer was lacking a well-defined strategy to renegotiate terms intended to streamline costs. Learn how Gartner helped guide their negotiation strategy and recommended ways the client could leverage supplier category intelligence saving the client up to $600,000 in annual costs.

    Saved $600,000 in annual costs by leveraging supplier category intelligence

    Gartner Supply Chain Top 25 for 2022

    See the 18th annual ranking to learn the standard for supply chain excellence.

    See the Top 25 List

     

    Experience Supply Chain conferences

    Join your peers for the unveiling of the latest insights at Gartner conferences.

    Sourcing and procurement: FAQs

    Strategic sourcing in supply chain is a standardized and systematic approach to supply chain management that formalizes the way information is gathered and used. Strategic sourcing enables organizations to leverage their consolidated purchasing power to find the best possible value in the marketplace.

    Procurement is the corporate function that has governance over purchasing decisions for a company. Activities of the procurement function include strategic vendor evaluation and selection, competitive bidding, contract negotiation and purchasing. Effective procurement practices enable organizations to reduce costs and maximize value.

    Procurement organizations must design and implement strategies that balance C-level pressures for optimizing costs with new business imperatives such as responsible sourcing, addressing supplier risk and strengthening supply network resilience.

    According to the annual Gartner survey of procurement priorities, 1 in every 4 procurement leaders is focused primarily on category management and building better category strategies. Another 24% of procurement leaders are focused on identifying and mitigating supplier risk. Supplier risk as a top priority jumped 14 percentage points year over year.

    Supplier risk management is the ability to assess and monitor supplier risk by tracking supplier financial performance, geopolitical risks, news sentiments, judicial filings and regulatory compliance.

    Supplier risk management has been an area of underinvestment in many sourcing and procurement functions. Most companies lack competitive and dynamic supplier risk management capabilities. A reactive approach to vulnerabilities means that emerging risks and opportunities often get missed.

    Turn to Gartner for help minimizing operational supply disruptions. We offer trend sensing data to help you anticipate risk events further in advance and respond faster when problems arise. We also study how winning sourcing and procurement leaders foster resilience in the supplier network, and then we share best practices with our client base.

    Category strategies too often look and feel like execution plans, not strategies. It’s not surprising then that sourcing activity inconsistently yields desired business value, and that cost optimization efforts frequently become cost reduction initiatives. Gartner is committed to supporting sourcing and procurement leaders with category management: We offer insights, tools and advice for driving sourcing discipline across your business, which in turn drives supplier ROI.

    It’s difficult to define and measure the impact of responsible sourcing and supplier diversity initiatives. And no wonder, since only 13% of sourcing and procurement leaders excel at identifying and onboarding diverse suppliers, and only 26% have embedded and supported supplier diversity in their organizational culture. These trends must change, and fast: The year-over-year retention rate of diverse suppliers is just 54%.

    Gartner advisors can coach you in building strong relationships with a diverse supplier portfolio and ingraining responsible sourcing and supplier diversity into organizational culture. We work with companies regarded highly for their responsible sourcing and supplier diversity success, and then we document their best practices so that other organizations can adapt.

    Managing supplier risk, responsible sourcing and digital transformation are key principles for procurement organizations looking to improve and innovate operations.

    It’s critical that sourcing and procurement serve as a value generator for the organization, but the pace of change today makes this exceedingly difficult. It’s especially hard to develop sourcing and procurement staff capabilities at pace and evolve organizational structure.

    But sourcing and procurement leaders are driven to improve: 96% say that staff will have to significantly improve their effectiveness at using digital technology to succeed in their role, and 81% indicate that adapting organizational structures to business digitalization is an urgent issue in their strategic plan.

    Gartner helps sourcing and procurement clients sustain progress on their journey as a trusted advisor to the business. We provide the tools and guidance that sourcing and procurement leaders need to build their teams’ digital-capable skill set, and we enable sourcing and procurement teams to deliver business value in everyday work.

    Support for sourcing and procurement leaders

    Gartner provides trusted insights and objective advice to help sourcing and procurement leaders manage performance, risk, value creation and innovation of the sourcing and procurement team as well as suppliers.