Amazon Business: AI and ESG Taking Procurement Backseat

Amazon Business' fourth annual State of Procurement report identifies a growing focus on addressing short-term cost concerns and operational challenges among procurement leaders.
These priorities are taking precedence over long-term initiatives such as adopting AI for strategic purposes and advancing ESG goals.
Offering insights into procurement trends across the UK, US and Europe, including France, Germany, Spain and Italy, the report's findings are based on a survey of procurement leaders and decision-makers from organisations across nine different industries. These organisations met minimum revenue thresholds based on their respective regions, ensuring a diverse representation of views.
Balancing ambition and economic constraints
Economic challenges, including limited growth, continue to shape procurement decisions. In the UK, the Organisation for Economic Co-operation and Development (OECD) forecasts economic growth of just 0.9% for 2025, down from the previous estimate of 1.1% – a slowdown that is influencing procurement priorities as teams adopt cautious approaches to their budgets.
While 64% of UK procurement leaders expect their budgets for 2025 to increase compared to 2024, many question the practical benefits of this growth. Rising costs are a significant concern, with 44% of respondents citing increased expenses for goods and services as a primary external challenge. These financial pressures undermine the potential of larger budgets to drive transformative change.
Despite earlier expectations for a shift towards strategic, high-value procurement practices – such as investing in analytics tools to enhance performance monitoring – progress remains limited. The report reveals no significant increase in the adoption of such technologies over the past year. Instead, day-to-day operational issues dominate procurement efforts, with almost half (49%) of leaders identifying efficiency and complexity as their top challenges. Notably, three in five (60%) see their internal systems and processes as major barriers to success.
Amy Worth, Director and General Manager of Amazon Business UK, summarises the issue: "Our research highlights a clear disconnect between procurement leaders' ambitions and their ability to act on them.
"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."
AI's untapped potential
AI adoption is another area where ambition lags behind potential. Although 96% of procurement leaders plan to invest in AI, most focus on tools designed to address immediate cost pressures.
AI-driven spend analysis (47%) remains a priority over more strategic uses, such as predictive analytics (38%).
The report underscores the untapped potential of AI, with 32% of respondents expressing interest in exploring its capabilities for deeper data analysis.
However, the current focus on alleviating short-term financial challenges prevents AI from being harnessed for transformative purposes.
ESG goals and procurement realities
While ESG goals remain critical for many organisations, they often clash with the operational realities of procurement teams.
Regulatory frameworks, such as The Procurement Act 2023 – taking effect on 24 February – will place additional scrutiny on purchasing practices, especially for public sector organisations.
The report shows that two-thirds (66%) of procurement leaders have seen their organisations increase ESG-related targets in 2024. Yet, translating these objectives into practical actions remains a challenge.
Last year, 30% of procurement leaders ranked sustainability as one of their top three priorities, but this figure has fallen to 11% in 2025. It's a decline that highlights the tension between long-term organisational goals and the immediate pressures faced by procurement teams.
As businesses navigate these competing demands, procurement leaders must balance short-term operational efficiency with strategic initiatives that deliver sustainable, long-term value.
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