Why Asset-Intensive Industries in ANZ Are Struggling With Procurement
Asset-intensive industries sit at the heart of Australia and New Zealand’s economic infrastructure. From energy and utilities to mining, construction, manufacturing, and local government, these sectors rely on long-lived, high-value assets that demand complex procurement and contract management approaches.
Yet, despite the critical role procurement plays in cost control, risk management, and asset performance, many organisations across ANZ are still grappling with low procurement maturity. Recent research conducted by CIPS in partnership with ReadyTech highlights a sector under pressure, where reactive practices, fragmented systems, and resource constraints continue to limit procurement’s strategic impact.
The full CIPS and ReadyTech report provides deeper analysis, maturity benchmarks, and strategic recommendations. You can download it here.
Learn more about building these strategic skills with Transformed’s procurement and contract management training.
This article explores the biggest procurement challenges facing asset-intensive industries in ANZ, why they persist, and how organisations can begin shifting from reactive procurement to a more strategic, value-driven approach.
Why Procurement Is Different in Asset-Intensive Industries
Procurement in asset-intensive environments is fundamentally more complex than in transactional or service-based sectors.
Key characteristics include:
- Long asset lifecycles with significant upfront capital investment
- Complex, multi-year contracts across capital works and maintenance services
- High exposure to cost escalation, scope changes, and regulatory risk
- Large, often geographically dispersed supplier bases
- Increasing scrutiny around ESG, modern slavery, and sustainability compliance
These conditions place enormous pressure on procurement teams to balance cost, quality, compliance, and risk across extended timeframes. When procurement maturity is low, the result is often reactive decision-making, cost overruns, and missed opportunities for long-term value creation.
The Biggest Procurement Challenges in Asset-Intensive Industries
1. Cost Viability and Cost Variability
Cost viability emerged as the single biggest procurement challenge for asset-intensive organisations in ANZ, closely followed by procurement planning and cost variability.
In practice, this challenge is driven by several converging factors:
- Volatile global supply chains
- Inflationary pressures on materials and labour
- Long-term contracts that struggle to absorb market fluctuations
- Limited real-time visibility into spend and contract performance
Without accurate, consolidated data across contracts and suppliers, procurement teams are often forced to respond to cost blowouts after the fact, rather than proactively managing risk and value.
Why it matters:
In asset-intensive environments, even small cost variations can compound over the life of an asset, leading to millions in unplanned expenditure.
2. Procurement Planning and Resource Constraints
Over half of surveyed organisations identified procurement planning as a major challenge, closely linked to insufficient internal procurement resources.
Many procurement teams across ANZ are:
- Under-resourced relative to asset scale and complexity
- Managing multiple high-risk contracts simultaneously
- Focused on operational delivery rather than strategic planning
This often leads to a cycle of reactive procurement, where teams are constantly responding to immediate issues such as variations, supplier disputes, or urgent sourcing needs.
The risk:
Without time or tools to plan ahead, procurement becomes a bottleneck rather than a strategic enabler.
Structured qualifications like the Certificate IV in Procurement and Contracting can help build robust planning and procurement capability.
3. Lack of Defined Procurement and Contract Management Processes
A consistent theme across the research is the lack of well-defined, embedded procurement and contract management frameworks.
While around 30% of organisations reported having mature, well-documented processes, the majority are still in a “developing” phase, with some relying on informal or inconsistent approaches across business units.
Common symptoms include:
- Different procurement practices across departments
- Inconsistent contract management standards
- Poor documentation and limited lessons learned
Why this is critical:
In asset-intensive industries, inconsistent processes significantly increase commercial, legal, and operational risk, particularly on large capital works and maintenance contracts.
Contract Complexity: Capital Works and Asset Maintenance Under Strain
Capital works and asset maintenance services were identified as the most challenging contract categories for adopting better procurement processes and systems.
These contracts typically involve:
- High upfront capital expenditure
- Multiple stakeholders and approval layers
- Frequent scope changes and variations
- Long delivery timelines
Managing variations, adjustments, and approvals effectively remains a persistent challenge. While some organisations reported moderate effectiveness, nearly half admitted their approach was still largely reactive, with limited visibility into upcoming changes.
The consequence:
Reactive variation management leads to avoidable cost increases, strained supplier relationships, and missed opportunities to optimise outcomes.
Supplier Performance and Relationship Management Gaps
Supplier performance management is another major area of concern.
Only a very small percentage of organisations described their approach as highly effective and proactive, with most falling somewhere between “somewhat effective” and “ineffective”.
Key challenges include:
- Limited use of contract KPIs and performance dashboards
- Infrequent or reactive supplier engagement
- Poor alignment between contracted deliverables and actual outcomes
In asset-intensive industries, underperforming suppliers directly impact asset reliability, safety, and long-term operating costs.
CIPS perspective:
Modern procurement leaders must go beyond contract administration and actively manage supplier relationships to deliver sustained value.
ESG, Modern Slavery, and Compliance Pressures
Environmental, Social, and Governance (ESG) considerations are now a core procurement responsibility, particularly in asset-intensive sectors with extended supply chains.
However, the research shows a significant gap between expectation and reality. While ESG is widely recognised as important, most organisations remain reactive in how they assess supplier ESG capabilities.
Challenges include:
- Manual, policy-based ESG assessments
- Inconsistent data collection from suppliers
- Limited integration of ESG into procurement workflows
Alarmingly, a portion of organisations still do not routinely request ESG information from suppliers, exposing themselves to compliance and reputational risk.
Why this matters:
In Australia and New Zealand, regulatory and public scrutiny around ESG, modern slavery, and sustainability continues to intensify. Procurement teams are on the frontline of this accountability.
Technology Challenges: Spreadsheets, AI Hype, and Capability Gaps
Despite the complexity of asset-intensive procurement, many organisations still rely heavily on traditional tools such as spreadsheets, email, and file-sharing platforms.
While these tools are familiar and low-cost, they lack:
- End-to-end visibility across the source-to-contract lifecycle
- Automation of approvals, variations, and performance tracking
- Real-time analytics to support decision-making
At the same time, the market is flooded with AI-enabled procurement solutions. The research cautions that AI is not a silver bullet. Without clean data, defined processes, and internal capability, technology investments often fail to deliver meaningful value.
Best practice approach:
As highlighted by CIPS thought leaders, organisations should adopt a “crawl, walk, run” approach to procurement technology, aligning systems with process maturity and skills development.
The Procurement Maturity Gap in ANZ Asset-Intensive Industries
Taken together, these challenges point to a broader procurement maturity gap across asset-intensive industries in Australia and New Zealand.
Indicators of low maturity include:
- Reactive cost and variation management
- Fragmented processes and systems
- Limited supplier performance governance
- Underdeveloped ESG integration
Upskilling in negotiation helps procurement teams manage supplier costs and variations proactively.
Local and regional government organisations face additional complexity, including strict regulatory requirements and heightened accountability, yet often have fewer resources to invest in transformation.
How Asset-Intensive Organisations Can Move From Reactive to Strategic Procurement
There is no single solution to these challenges. However, the research and broader CIPS guidance point to several critical capability shifts.
1. Strengthen Procurement and Contract Management Frameworks
- Establish consistent, organisation-wide procurement policies
- Clearly define source-to-contract processes
- Embed governance and accountability at each stage
2. Invest in People and Capability
- Develop commercial, contract management, and strategic thinking skills
- Build internal capability to manage complex contracts and suppliers
- Support ongoing professional development aligned with CIPS best practice
3. Improve Data, Visibility, and Systems
- Move away from fragmented spreadsheets and email
- Implement systems that provide a single source of truth
- Use data to proactively manage cost, performance, and risk
4. Embed ESG and Risk Management Into Procurement
- Integrate ESG assessment into standard procurement workflows
- Use consistent criteria and evidence-based supplier evaluation
- Shift from compliance-driven to value-driven sustainability outcomes
Procurement as a Strategic Lever in Asset-Intensive Industries
While the biggest procurement challenges facing asset-intensive industries in ANZ are not new, their impact is clearly growing.
Cost volatility, contract complexity, ESG pressures, and low procurement maturity continue to limit organisational performance. Yet, as the CIPS-aligned research shows, there is also a clear opportunity.
By investing in people, processes, and systems, asset-intensive organisations can move from reactive procurement to a proactive, strategic function that delivers long-term value, resilience, and sustainability.
As a result, for procurement professionals, this shift also represents a career opportunity: those equipped with the right skills and strategic mindset will be at the forefront of transforming how assets are planned, delivered, and managed across Australia and New Zealand.
If you’re ready to build strategic procurement expertise and advance your career, explore Transformed’s full suite of procurement qualifications.