Procurement blocks AI adoption for 84% of Australian CEOs

Proxima has published research showing that 84% of Australian CEOs see procurement as a blocker to AI adoption. The study also found Australian businesses were the most exposed to major supply chain disruption among the markets surveyed.

The survey of 515 CEOs at businesses with more than $500 million in revenue across Australia, Singapore, Germany, the UK and the US points to a broader tension for procurement teams. While many chief executives say procurement slows AI adoption, the research also found the technology is already being used for supplier risk monitoring and cost modelling.

Among Australian respondents, 53% said AI was delivering value in supplier risk monitoring and 50% cited cost modelling. But 43% identified poor data quality as the main barrier to scaling AI, ahead of skills gaps at 36% and uncertainty over return on investment at 27%.

The findings come with a more severe warning on resilience. Only 5% of Australian firms said they could sustain operations for four to six months during a major supply chain shock, compared with 23% in Singapore, 18% in the US, 10% in Germany and 8% in the UK.

At the other end of the scale, 21% of Australian businesses said they could survive disruption for only one to two weeks, while 59% said they would fail within three weeks. Globally, 51% of CEOs said their businesses would be unable to maintain day-to-day operations for more than three weeks if a major supply chain shock happened immediately.

Australian exposure

The research suggests Australian companies are more vulnerable when supply chains come under strain because of long transport routes, geographic isolation and extended lead times. That pressure is also changing sourcing decisions, with more companies reassessing supplier concentration and considering local and regional alternatives.

More than half of Australian respondents, 51%, said protectionist policies had increased domestic demand for their products. Businesses are responding by re-examining local sourcing and supplier relationships closer to home or within the Asia-Pacific region.

Revenue exposure is also significant. Some 65% of Australian firms said a two-week disruption affecting their top three suppliers would put 11% to 20% of revenue at risk.

Cyber risk remains another weak point. While 38% of Australian businesses said they had experienced supply chain disruption caused by a cyber incident in the past 24 months, only 29% said they had real-time visibility into the cyber risk of their critical suppliers.

Cost choices

Australian CEOs appeared more willing than peers in other markets to absorb the cost of resilience through internal savings rather than passing it on. Some 47% said they would fund supply chain resilience through cost-saving measures, the highest share among the countries surveyed.

By comparison, 34% said they would pass costs to customers and 19% said they would accept lower margins. Globally, 72% of CEOs said they would accept an increase of more than 10% in current third-party supplier costs to secure supply chain resilience.

Australian businesses also identified their biggest supply chain financial pressures. Sustainability targets and regulatory requirements ranked first at 29%, followed by emerging technologies at 22% and climate or extreme weather at 16%.

Lara Mujico, Senior Vice President at Proxima Australia, said the data showed both vulnerability and a shift in approach.

"Australian businesses face a unique vulnerability due to geographic isolation and extended lead times," Mujico said.

"A supply chain shock that other markets might weather for longer creates a crisis for Australian operations within weeks. But we're seeing something positive in that businesses are responding with strategic discipline. They're investing in resilience, building local relationships, and reconsidering concentration risk. The challenge is execution speed. Procurement teams are being asked to deliver resilience faster, but internal processes and capability gaps are creating friction. The businesses winning this cycle are those embedding procurement into strategy early, not treating it as a cost-control function."

The AI findings reinforce that point. Procurement is playing a larger role in strategic planning as businesses try to improve visibility over supplier risk, sharpen cost analysis and respond more quickly to disruption. But the report suggests poor internal data remains a bigger obstacle than a lack of technical talent.

Mujico said Australian companies were also rethinking where they buy from.

"Australian businesses are actively reconsidering geographic concentration, nearshoring to Asia-Pacific, and building supplier relationships in markets with shorter lead times. This shift reflects a strategic realisation that resilience requires proximity."