Tariffs, trade wars, macroeconomic uncertainties, and geopolitical disruptions have taken up so much media attention lately, you may have missed the news that Amazon just bought creative control of the James Bond franchise from the Broccoli family.
This never happened to the other CPO
Most years, the future of everybody’s favourite secret agent might not seem very pertinent to The Hackett Group’s CPO Agenda and Key Issues Study. But in 2025, procurement itself is undergoing its own reboot, with more suspense, fresh storylines, and great new gadgets.
Most procurement executives we know see enormous challenges and enormous opportunities ahead. It’s clear that we now live in a VUCA world – a business climate both volatile, uncertain, complex, and ambiguous – where procurement professionals can take very little for granted. Whether it’s geopolitics, stubbornly higher costs, the economy, regulation, or technological change, the most surprising outcome in 2025 would be for everything to go smoothly.
Yet despite such a wide range of conceivable disruptions, CPOs’ top concerns likely driven by economic considerations remain traditional: first, cut costs; second, mitigate risks. And third? Refine their operating model. This may mean trying to build more agility and resilience into supply chains, getting to know suppliers’ cost structure and sourcing vulnerabilities to plan potential scenarios, or collecting more information to take more advantage of the rapidly growing thirst for analytics. Given the scale of the challenge, it’ll likely also entail much more collaboration and cooperation with suppliers.
Their fourth priority, CPOs say, is to get their inflationary costs in line, and fifth, to pursue digital transformation, requiring them to deploy advanced technology including AI and GenAI along with better-quality data.
A good year for gadgets
They are right to make technology their fifth priority. Q has something special for you this year: intake and process orchestration, and artificial intelligence (particularly generative artificial intelligence) continues to advance even as more procurement teams find ways to bring GenAI applications into their workstream.
Most leadership teams we have spoken to in recent months have begun experimenting with GenAI, and many have begun with a use case or two to integrate these technologies into day-to-day processes. Here at The Hackett Group, for instance, we see how tools like Microsoft Copilot can be used to draft category strategies, including cost and risk analysis, to suggest plans, and to draft contract clauses.
Copilot now well integrated within the Office set of products can suit many companies’ needs, but it’s not the only option. OpenAI’s ChatGPT may have been the start, but now more powerful GenAI assistants are available, including xAI’s Grok and DeepSeek for those in Asia.
Such advances have not gone unnoticed. Nearly two-thirds of procurement executives (64%) expect AI and GenAI to transform the way their team works over the next five years – and many believe AI is already making a difference: procurement organisations are saving between 7 and 10% in improved productivity, quality, customer and/or employee experience, and from similar reductions in operating cost and full-time labour needs.
Nor is procurement alone in its enthusiasm. Last year, only 16% of executives across all functions told us business transformation through AI was a high priority for them. This year, that number tops 89%.
Getting ready for 2025
What should you do to prepare for what 2025 may have in store? Answers will depend on your business and your sector, but you are unlikely to go too far wrong if you:
- Build closer ties with company-wide leadership to align with specific corporate priorities. The more communication you have, the better you can support your company’s strategy.
- Prepare for the VUCA world, be prepared for shocks, it helps if you know your suppliers and your options. The cost model, cost drivers, and scenarios will become procurement’s best friends to manage for the expected continuous volatility and uncertainty.
- Get as close as you can to your suppliers. Understanding their vulnerabilities can give you a leg up in an emerging crisis.
- Meet procurement’s new best friend. If you haven’t tried it yet, you need to start experimenting with GenAI now. These tools are extraordinary. Even a simple prompt for a straightforward task (“Write a procurement category strategy for the packaging spend category including external data points”) can save hours of time.
- Don’t forget to train your organic intelligence. Automation will yield even better results if you have very capable people to run it. Our research shows that digital world class companies invest more than twice as much on training and development as ordinary companies.
Of course, it goes without saying to follow company policy on guidance on the use of AI models whichever model you may choose. In addition, any work the AI agents create needs to be reviewed for accuracy and hallucinations. But it’s important to make a start soon. In this ever-changing world in which we live, missing the AI opportunity is clearly the greater risk.
Nicolas Walden is Europe Practice Leader, Procurement Advisory for The Hackett Group®.
