77% of U.S. Procurement Leaders Prioritize Lower Material Costs Amid Pressure to Improve Quality

New research from Ivalua, the enterprise AI platform for procurement, shows that U.S. procurement leaders are placing greater emphasis on reducing direct material costs than their counterparts in Europe, even as pressures build to improve product quality and accelerate supplier diversification. “Direct Sourcing in Procurement: Mature on Paper, Brittle in Practice” includes the results of a survey of 800 procurement and supply chain leaders across the U.S., U.K., Germany and France, finding that many organizations continue to rely on fragmented, manual sourcing processes that make it difficult to balance cost savings with product quality and long-term supply chain resilience. 

• To learn more, download the report, “Direct Sourcing in Procurement: Mature on Paper, Brittle in Practice”, click here.

Procurement leaders are increasingly being asked to achieve competing objectives simultaneously. Globally, 69% say lowering direct material costs has been a high or critical priority over the past year, while nearly as many (68%) are under pressure to improve product quality and accelerate launches. Ensuring continuity of supply remains the top priority overall (72%), underscoring the challenge procurement and supply chain teams face in balancing costs, quality and resilience. In the U.S., that pressure is even more pronounced. Among U.S. respondents, 77% identified lowering direct material costs as a high or critical priority over the past year — the highest of any country surveyed. At the same time, 64% cited supplier diversification as a key priority, compared with 51% in France, 47% in the United Kingdom and 43% in Germany. U.S. organizations also led all markets in prioritizing reducing tariff and trade-related costs (62%), highlighting the unique pressures facing procurement leaders as they navigate ongoing economic uncertainty and supply chain disruption.

The report also finds that nearly a quarter (23%) of global organizations manage critical supplier data across multiple systems with manual reconciliation, or in spreadsheets, emails and documents. More than half (55%) say that reliance on spreadsheets for supplier risk leaves them exposed to human error, and 59% admit they're reacting to supplier risk events rather than preventing them. And nearly half (43%) say their organizations are one supplier failure away from a supply chain crisis.

“Procurement leaders are being asked to lower costs while improving quality, accelerating launches and building more resilient supply chains, all at the same time,” said Doug Keeley, Director of Product Marketing at Ivalua. “Too many organizations are still relying on disconnected data and manual processes, which turns every sourcing decision into a tradeoff. Better supplier data and connected processes give procurement teams the visibility they need to collaborate earlier, solve problems together and uncover opportunities that simply aren’t visible when every decision starts and ends with cost.” 

Other key findings from the report include: 

• AI adoption is accelerating, but organizations still need stronger data foundations: 76% are already using or experimenting with AI or generative AI in direct materials sourcing. Of those, 89% say AI has been effective at identifying and qualifying new suppliers. However, 44% admit their supply data isn't AI-ready.
• Cost pressures continue to influence sourcing decisions: 59% of organizations have optimized specifications to lower component costs; 36% have switched to lower-cost suppliers.
• Cost savings aren’t always passed on: Of those that shifted to lower-cost components or specs, 43% still raised prices, 47% held them flat and only 10% lowered them.
• Technology investment is accelerating in the U.S.: 72% of U.S. organizations have invested in technology to improve their ability to identify and realize savings, which is nearly double the rates reported in Germany (39%) and France (38%).
• Supplier challenges continue to impact the business: More than half (53%) of organizations experienced delayed product launches over the past 12 months.

The full report, “Direct Sourcing in Procurement: Mature on Paper, Brittle in Practice,” explores how organizations are responding to rising cost pressures, geopolitical uncertainty and increasing supplier risk, while examining the role technology and AI can play in helping procurement leaders build more resilient supply chains.