Procurement is changing. That much is clear.
At the forefront of this are advanced technology tools that are altering the way procurement lives and breathes. Indeed, the market is changing which is driven by digital agendas, sustainability initiatives and geopolitical problems which is causing Chief Procurement Officers to think on their feet. Customer expectations are also changing and this means that future-proofing supply chains has never been so important with many customers demanding quicker shipping times and more product availability all while delivering on their own sustainability ambitions.
With this in mind, here are five important lessons procurement learned this year.
1. People remain the secret sauce
Despite technology’s increasingly important influence, humans ultimately determine whether an organisation succeeds or not. With the ever-increasing complexity of global supply chains, the necessity of skilled and adaptable procurement professionals has never been greater. As technology matures, data-entry tasks that previously would have been best-placed for graduates can be undertaken by AI which means new starters need to learn more strategic skills quicker. If procurement’s digital transformation is to be managed successfully, people will hold the key. There is no doubt about that.
2. A better understanding of generative AI
One of the biggest buzzwords of 2024 has been generative AI and the potential it has to reinvent procurement. For CPOs, GenAI is seen by many as a significant step forward in the value their teams can deliver to the business. This showcases the way to faster, more accurate decision-making, higher resilience, increased sustainability and lower operating costs. But it’s not all smooth sailing. There are challenges associated with implementing GenAI such as data quality and ethical considerations. These remain barriers to widespread use and are being continuously navigated in the world of GenAI in procurement.
3. Sustainable procurement isn’t an option anymore
Sustainable procurement isn’t something you can pick. Governments and consumers are past encouraging, there is now a real demand that organisations implement ethical and sustainable practices. Sustainability in procurement supports the green goals of an organisation and optimises the environmental, social and economic impacts over the lifecycle of a product or service. Sustainable procurement requires organisations to develop robust approaches to risk management in order to work out potential problems within their supply chains. Companies are focusing on carbon reduction targets and are working to reduce greenhouse gas emissions, eliminating waste from their supply chains and incorporating sustainable business practices. Stakeholders are now also implementing action ESG and corporate social responsibility initiatives as part of their sustainability agenda, thus driving the necessity for sustainable procurement.
4. Risk management strategies
If the past few years have taught us anything, it is the importance of having a back-up plan. In 2024, the geopolitical landscape is unstable and volatile with the threat of potential problems seemingly ever present. This year, several significant elections have taken place which always brings uncertainty with the ripple effect potentially leading to trade disputes and shifts in global market access. With this in mind, procurement teams should seek to diversify their suppliers while also identifying risks and using data-driven decision-making. By developing regional sourcing strategies, recognising geopolitical risks and expanding contingency plans can help limit exposure to these risks.
5. Supplier collaboration
Companies can’t treat their suppliers like a transaction any longer. The necessity of developing key, strategic partnerships and alliances in the modern world is too important. Previously a ‘nice to have’, delivering a great supplier experience is paramount to success in 2025 and beyond. In the wake of global challenges, organisations need support and cannot do it alone. Being open with suppliers to create a mutually beneficial relationship where both sides gain value is key.
