Once, if you could afford it, a supersonic flight on Concorde would get you from London to New York in just under three hours. Today, it takes around eight hours. In this world of constant advancement there aren’t many areas where things regress, but how fast we can travel around the globe is one of them. The other, it seems, is the ability of organisations to use Category Management as a key enabler of organisational success. 

Category Management used to be one of the core approaches behind strategic procurement. Today, progressive companies still place Category Management at the center, but increasingly are failing to realise the same benefits that were once commonplace. This raises two very big questions – what has changed and what can we do about it?

Category Management Entropy 

It seems ‘Category Management entropy’ has taken hold and threatens procurement’s ability to make meaningful impact to the organisation. Without anyone noticing, there has been a steady decline in the ability of organisations to deploy Category Management effectively, and a regression in the advanced capability needed to make this happen. Yet, procurement teams still boast they are doing it, ignorant of what is missing. 

Look at many of today’s organisations that cite Category Management as part of what they do and peel back the layers to see what’s going on. Chances are, you’ll find a lack of understanding of what a market facing category is, meaning people are working at the wrong level, with effort focused around doing little more than running RFPs and renewing contracts; perhaps with some reactive stakeholder engagement and production of underwhelming category strategies. The idea that Category Management can bring breakthrough benefits seems to have become little more than a myth and legend of yesteryear. Worse is the general decline in strategic procurement capability across the board, coupled with the misguided belief that people are doing it well and you have the perfect recipe for good procurement. This results in sliding back to little more than tactical buying, with a fancy name. But why does no one notice? 

Forgetting the art of the possible

There are many causes of Category Management entropy. The biggest of them, or so it seems, is that executive teams have lost sight of the art of the possible – they don’t know what they don’t know. Once, those in senior roles could boast first-hand experience of Category Management delivering step change benefits and if they couldn’t, someone in their peer group could and would tell them what they were missing. Since then, our industry has churned significantly and the art of the possible seems to have faded away. 

Category Management, when well implemented, has long since proved what it can do for an organisation – new competitive advantage, increased brand value, dramatic cost reduction or price rise mitigation, unlocking innovation and value, reduced supply side risk, sustainability and, for the public sector, new value to citizens, patients and pupils etc. Indeed, I’ve supported Category Management programs in some of the biggest companies on the planet.

As a result, I’ve routinely seen first-hand, companies with a $10bn spend drive out in excess of $1bn in savings. Not to mention unlocking all the other new forms of value from the supply base at the same time. I’ve led category projects, trained and coached teams, helped executives establish good governance, developed what has become the leading methodology, and written the books on the subject that are taught in universities the world over. Despite this, I’m left puzzled about why organisations have lost sight of what’s possible. I believe this is a product of the seismic shifts in our world, our industry, and those in it, that we have all experienced in recent years.

Why have we gone backwards?

The four misconceptions

I frequently find myself in the C-suite advising executives in how to make Category Management happen. Rewind ten years, the conversations in the board room were along the lines of ‘we want what that company over there has achieved… how do we do it.’ 

Today, the conversations are very different and more ‘Surely Category Management can’t do that, we need a new approach’ closely followed by ‘which bit of tech can I buy to do this for me? Push further and it seems the reason organisations are falling so far short when it comes to Category Management is down to four misconceptions:

Misconception #1 – Category Management is outdated – It is not! 

Don’t believe anyone telling you that, because chances are, they’re probably trying to sell you something! Good Category Management is built upon fundamental economic principles and theory of organisational change. Those are not going anywhere anytime soon. What has changed, and will continue to change, is the context, the macro-environment, and how data, digital tools and of course AI, can support us.  

Misconception #2 – The tech and AI will do it all – it will not, there is no magic button! 

Digital tools are fast becoming how we will do Category Management. Another fast-moving thing is the mob of tech companies running towards us, working to convince us the only thing we now need is their platform. Companies are being seduced into redeploying precious budgets away from training – even people in favour of the tech promise. However, the once shiny thing is quickly tarnished when it fails to live up to the promise of data availability and doesn’t integrate with wider tech in the organisation, or it produces unverifiable ‘somethings’ for the handful of now junior practitioners left. The hard reality here is there is no magic button.

Good AI powered digital Category Management tools such as the Capella Guided Category Strategy Creator^® are undoubtedly the future of Category Management. But success lies in making the tech, and especially AI, one of the team, not their replacement, with a plan to integrate it into wider systems and data.  

Misconception #3 – We’re all a bit busy, we need shortcuts – there are none! 

Our ever-shorter attention spans are changing how organisations function. At the heart of good Category Management is a comprehensive multi-step process requiring extensive cross-functional engagement. Even using the latest digital tools or collaboration tech, it’s not something you can shortcut if you want breakthrough. Yet, I frequently find myself getting asked for a ‘quick and dirty’ version requiring a fraction of the time without needing to bother the rest of the business. This is possible but won’t deliver anything beyond small incremental benefits. Another reality is that to get step change benefits, you need to put the effort in. 

Misconception #4 – Surely we don’t still need to train people? Yes you do! 

Good Category Management skills are the rarest of procurement capabilities, and those with them are the most expensive hires, meaning we need to develop the talent we already have. But such skills don’t just happen, nor can professionals aquire them with just a few elearning modules or by taking short courses on LinkedIn. Advanced Category Management capability, together with advanced negotiation, AI and data capability, are the critical skills needed for strategic procurement today. This is only possible by investing in deep learning and development, combining extensive training with guided practice and ongoing coaching. Once again, there are no shortcuts here.  

Restoring excellence and rediscovering breakthrough benefits

So how can we reverse Category Management Entropy and return to the era of breakthrough benefits? There are five areas to focus on:

1. Process and analytics – Be clear what good Category Management is and drive business wide adoption of one universal best practice process with supporting analytics (eg such as the 5i^® method). This must become a common framework that all live and breathe, and must be the backbone to either a latest generation digital solution or traditional Category Management. 
2. Data and information – Before rushing out to buy the latest tech, build a strategy for data and information. Consider what you need now and in the future, what you need to own and manage, and what you will source. Then, consider how best to acquire this and integrate to your Category Management solution. Think less about buying into applications that serve up the data, but sourcing the raw data that feeds your Category Management tool or deployment. Finally, maybe hire a data scientist or two to become more data driven. 
3. AI as part of the team – Grasp the power of AI to become a part of (not to replace) the team to support data gathering, analytics and generating key outputs. Equip the team with the skills to be power users of AI, to mitigate the risks and verify what it does within the broader process. 
4. Talented, highly capable people – Build and maintain advanced Category Management capability 
5. Governance – Establish solid governance with oversight of all category projects to drive process rigour, manage progress, track benefit delivery and share successes.

Jonathan O’Brien, CEO of Positive Purchasing Ltd, is a leading expert on procurement, and works with global blue-chip organisations to help transform their purchasing capability. He is also the author of Category Management in Purchasing.

For Chief Procurement Officers (CPOs), risk management is becoming an increasingly important initiative. The procurement function has traditionally been associated with cost savings and supply chain efficiency. However, procurement leaders must now adopt new roles. Increasingly, the function is essential to mitigating risks in areas such as digital resilience, AI ethics, and sustainability. 

The regulatory landscape is becoming ever more complex. In January, both the Digital Operational Resilience Act (DORA) and the second phase of the Corporate Sustainability Reporting Directive (CSRD) ² became applicable in the European Union. A key element of complying with these new regulations is managing risks from interactions with third parties. This is why procurement teams need to be involved in the process. 

If risks materialise, they can have significant financial and operational implications. For example, a supplier’s financial instability could result in a number of issues. These could include longer lead times, quality issues, or even the need to find an alternative partner at short notice. Often, this comes at a premium cost. Non-compliance with regulations can also result in hefty fines, legal action, and reputational damage. Since being introduced in May 2018, the General Data Protection Regulation (GDPR) has resulted in over €5.5 billion of fines. 

Integrating risk management into the procurement process

A good foundation for procurement teams to manage third-party risk successfully is to clearly define how risk management will be incorporated into the procurement process. For example, should due diligence be carried out at the sourcing stage, or at the onboarding stage after a supplier has been selected? If a risk has been flagged, what controls need to be in place to prevent an order being raised with that supplier until the appropriate risk mitigation is in place? 

Process design decisions such as these are further complicated in global companies. These organisations have to contend with the fact that local markets often have different regulations and systems architectures. A “core model” needs to be defined and standardised. This way, procurement can adhere to global compliance requirements, while staying sufficiently flexible to cater to nuances in local markets. 

Selecting the right software

Most companies have already defined what risks they want to manage and how they want to quantify them, but how easy it is to standardise that process depends on the software being used. 

Selecting the right software can be complex. There are risk management modules offered by software companies whose core product focuses on procurement, but also point solutions on the market that can be integrated with Source-to-Pay software. The best third-party risk management (TPRM) software enables companies to automate the process of sending due diligence questionnaires to third parties, scoring the responses, and validating risk data from external sources, such as credit ratings. 

Deciding which software is right for the business depends on many factors. These include budget, integration requirements, and the level of customisation required. It is worth investing the time to evaluate the strengths and weaknesses of the different options. 

The business case for implementing TPRM software can be easily justified by the avoidance of regulatory non-compliance fines; GDPR penalties, for example, can be up to four percent of annual global turnover.

Winning hearts and minds

One of the biggest challenges for CPOs when it comes to managing risk is communication. Risk assessments need to be completed by a large number of internal business stakeholders and third parties. 

Explaining what information is required, why it is important, and tailoring that messaging to people with different roles can be a challenge. For example, finance teams might focus on cost implications, while legal teams might prioritise compliance. There is also a delicate balance to be struck between mitigating risk, and not delaying business critical requirements. 

Risk management should be presented as a process to enable operations in a compliant and responsible way, rather than as a potential obstacle. It helps to have a dedicated change management team to explain to business users and suppliers why risk management is important, using practical examples. Building positivity around the initiative will increase the likelihood of TPRM being successful.

The benefits for Procurement 

Implementing a TPRM process can deliver a host of benefits for the procurement function. This is in addition to minimising the probability of operational disruption and financial losses.  

Encouraging third parties to consider risk might result in more collaborative commercial partnerships. It can also drive discussions around product innovations such as sustainable packaging or locally sourced materials. Building the company’s reputation as an ethical brand can improve customer satisfaction and competitive advantage. By driving initiatives that create revenue growth, procurement teams will raise their profile to a more strategic level. 

Conclusion: risk management as a priority in 2025

TPRM will be especially important in 2025, with DORA and the second phase of CSRD becoming applicable in the EU from January. There is additional EU regulation on the horizon: the Corporate Sustainability Due Diligence Directive (CSDDD) will become applicable in 2027⁴. Policy changes by the Trump administration may also have a potential impact on global supply chains. 

We are living in an era of heightened uncertainty and complexity. Risk management is no longer just a box-ticking exercise for Chief Procurement Officers. It’s a strategic imperative. By embedding risk management into procurement practices, CPOs can achieve a number of critical goals. They can enhance supply chain resilience, protect financial stability, ensure regulatory compliance, and uphold their organisation’s reputational goals. As businesses continue to navigate an unpredictable landscape, the ability to manage risk will set successful CPOs apart as true strategic leaders.

Third-party logistics organisations may be plagued by “significant operational gaps,” due to a lack of digital adoption. New research from TEG found that just one-third of 3PL companies are using eSourcing technology. The report found that more than 80% were only conducting “limited supplier audits,” according to the report.

A growing number of UK organisations are turning to 3PL companies as they seek to unlock an array of benefits, from increasing visibility into costs and access to 3PLs’ more extensive infrastructure, to scalability, flexibility, and new technology solutions. 3PL providers bring specialised knowledge, tools, resources, experience, and software to organisations which may be facing supply chain pressures. However, TEG’s report argues that these 3PL companies aren’t adequately embracing the necessary digital technologies to meet the operational demands of an increasingly challenging sector.  

Mounting challenges, widening gaps 

Road freight operators face mounting challenges in 2025, from driver shortages and new emissions regulations to the cost of transitioning to greener fleets and fluctuating fuel prices from the US’ burgeoning trade war. The TEG whitepaper outlines how 3PL companies can address these gaps through enhanced carrier management processes to boost supply chain efficiency and sustainability.  

“As road freight operators deal with rising costs, tightening regulations, and sustainability demands, 3PLs are searching for new solutions to old challenges. As the foundation for building resilient, efficient, and future-ready supply chains, optimising operations across technology, compliance and sustainability is key,” said Lyall Cresswell, Founder & CEO of TEG. “Making these solutions an essential part of day-to-day operations isn’t just an opportunity, it’s becoming a necessity. The time to adapt is now.”

Opportunities for development in 2025 

TEG’s report identifies four key areas where 3PL companies can develop their operations to plug widening gaps. 

• Technology adoption potential. Only 33% of 3PLs currently use eSourcing technology when procuring carriers, indicating a significant opportunity for digital transformation.
• Compliance enhancement. 83% of 3PLs audit less than 10% of their sub-contractors annually, highlighting opportunities to strengthen carrier validation processes.
• Sustainability development. Two-thirds (67%) of 3PLs identify sustainability as a pressing procurement challenge as new emissions regulations reshape carrier requirements.
• Skills development. 83% of personnel responsible for carrier procurement receive no formal training, hindering strategic carrier selection and relationship management.

The whitepaper provides a detailed roadmap for 3PLs to enhance their procurement practices. Steps detailed include implementing strategic sourcing, automating tactical procurement, and strengthening supplier auditing processes.

The past five years have seen a generational shift in the way we approach procurement. The act of buying has shifted gears from backroom to board room, from pedestrian and functional to an essential lever for strategic value creation. Much hay has been made by many people (including myself) about procurement’s transformation. The phrase “glow up” has even been thrown around by some (not including myself), with an implicit understanding that the days of staid, reactive, tactical purchasing are behind us, and we are all now hurtling towards a shining future of strategic procurement. 

Talk to Benn Godfrey — who most recently served as the vice president of procurement at Rolls Royce — however, and he’ll pull the rug out from under that line of thinking. “I almost dislike the word ‘strategic’ at this point. What I mean is that it’s so overused—it starts to lose meaning and undermine understanding,” he explains. “We often undervalue things that are tactical.” Godfrey continues, noting that there can be this perception in the industry that “tactics are bad and strategy is good.” However, “in reality,” he explains, “the two are deeply intertwined.” “In the current supply chain environment, of course, you need a plan. However, an increased emphasis on ‘doing’ is just as important.” Adaptability, agility, resilience, are all critical for survival in this modern procurement milieu. 

Godfrey and I sat down to explore how the balance between tactical and strategic procurement affects everything from aligning the function with the business’ goals to fostering resilience. 

Tactics and strategy — Striking the balance 

At its core, Godfrey explains, procurement is about problem-solving. It’s what drew him to the discipline in the first place. He explains: “You identify the problems and figure out how to fix them. Actively seeking out bigger problems to solve became an accelerator for me. Then it was about thinking: What tools do I need to solve these bigger problems?”  Godfrey also highlights the usefulness of considering leverage in how to scale the solutions, categorising leverage areas as “people, time, capital and, increasingly, digital technologies”.  

You can plot every business’ ability to solve problems along a maturity curve, and finding the right balance between the long term goals and shorter term tactical decisions that will help the organisation reach those targets is critical.

“The key is understanding what’s important for your business and aligning your procurement approach accordingly,” Godfrey explains. “Some organisations encourage constant experimentation, while others rely on iterative improvements to well-established standards. It’s about balancing the need for innovation with the appropriate level of control and pace.”  Considering then, that tactics and strategy go hand in hand as a cyclical process over time – OODA loop or the Deming cycle – whichever model floats your boat, or flies your plane, this way of thinking has common elements, such as sensemaking within a changeable external environment, taking actions and then resetting the cycle in an iterative way which makes them relevant to today’s procurement in an uncertain world.

Navigating the supply chain

Many industries, he notes, face similar challenges when managing supply chains. Some of these are tied to common structures and complexities internally, and others are rooted in the broader economic and geopolitical context of the market — currently, worldwide concerns over incoming tariffs from the US and the Chinese government’s recent restriction of key mineral sales abroad are putting pressure on many organisations’ ability to secure the raw materials they need. Regardless of industry, Godfrey explains, “the goal is always to match the approach to the business’ needs.”

Naturally, different stakeholders will advocate for different requirements, which can affect tactical procurement in the short term and learning to talk about procurement in this new way can represent a challenging learning curve for organisations. “For example, the CFO will expect cost reductions and improved cash profiles, so you have to deliver on those fronts, but procurement obviously involves so much more—resilience, leveraging insights from external supply chains, fostering innovation, and driving sustainability,” he notes. “It’s then about talking about what you do with the money saved,’’ and as such the opportunities this enables are increasingly where value is found, but nevertheless requires an openness in communication and experimentation.

Of course, the risk of overly focusing on the short term tactics of procurement risks losing sight of longer-term objectives. However, the inverse is also true. Godfrey points to many organisations’ long-term, ambitious net zero targets — many put in place with no clear, roadmap of how to achieve them. “Back when the Paris Climate Accords were signed in 2015, there were grand net-zero targets set, and everyone had long-term strategies. But tactically, for many, it’s been harder to implement short-term action, and now many of those targets are at risk of falling apart,” he says. 

Shaping procurement

Nevertheless, he still argues that “having big goals is a good thing. It inspires action, but you have to take things one step at a time and must guard against complacency as a leader.” Godfrey emphasises the need to ensure that the team is also empowered to take decisions and to act. The true role of a leader, he says, is to serve as an enabler and catalyst.  Looking around at the tactical and day-to-day to see where changes can be implemented quickly is vital. “You need to build something tangible,” he stresses. “We’ve talked about sustainability, but procurement can also shape the future in other ways. Take cost reduction or relocating a global supply chain as examples. If the process seems too hard, we could give up. But the better approach is asking, ‘What can we change to make it work?’ 

This way of thinking can be applied across a diverse range of topics important to the procurement agenda, whether it’s supporting the next generation of talent to enter the function or shaping net zero technologies and gen AI to deliver meaningful impacts. Godfrey is keen to stress this idea by sharing examples of the work he does in supporting organisations such as the social mobility foundation, initiatives like the King’s Trust, or acting as a mentor to net-zero technology and digital startups.

Collaborative approach

Godfrey argues that, while these investments of time and effort may not offer immediate returns, they’re well worth it in the long run and that giving back experience in a collaborative manner is the way forward. “Material science and digital technologies are key areas of development for industry, especially within the context of energy transition and while not all of these innovations will succeed, one or two might just make a significant impact. This idea of building stepping stones applies not only to supplier relationships but also to people and technology.” Connecting these threads isn’t solely an altruistic act however, it also, Godfrey notes, keeps him at the forefront of developments in the supply chain – “adding to and sharpening the tools in the problem-solving tool bag’’

Resilience is more than risk management  

One way in which a lot of the discourse around tactical-versus-strategic thinking in procurement flows concerns the goal of mitigating disruption. Godfrey is keen to stress, however, that tactical doesn’t always mean reactive. There’s a difference between a tactical approach to cultivating resilience and simple risk management. “The concept of resilience is far more powerful than risk management,” he explains.

“Risk management tends to focus on what could go wrong—identifying, ranking, and rating potential issues on a very long list. It’s a static, somewhat depressing exercise that’s hard to convince others of, especially when you need to justify spending time or money to prevent something that may never happen.” Resilience, on the other hand, is about sensing and anticipating what might prevent you from operating, implementing mechanisms for absorbing sudden shocks, and taking actions to adapt. “You spend time considering the impacts on the business and how to protect it,” Godfrey explains.

“In the event of a crisis—whether it’s a pandemic, a ship stuck in a canal, or war—you need mechanisms in place to remain flexible and adaptable.” Tactical, short-term capabilities and responses to immediate problems, but focused on the longer-term strategic goal of recovery and resilience, rather than simply trying to anticipate and avoid every possible form of disruption. 

Optimising supply chain inventory

“It’s not about listing all the risks; it’s about developing a plan that enables you to continue operating under adverse conditions,” says Godfrey, firmly drawing the distinction. “You need to think through processes, set up adaptability, and put measures in place to manage disruptions—whatever they may be.” One of the keys where a specialised producer like Rolls Royce is concerned, Godfrey explains, is considering how to optimise supply chain inventory, where the cash is tied up and decisions on holding raw materials in their base form. “It takes longer to respond to an immediate issue, but you have effectively traded speed for increased flexibility. If you have secured nickel, for example, you can direct it where needed. Once it’s processed into a finished product, it’s locked into a single use.” 

While he notes that it’s tempting to respond to shortages by increasing inventory at every point, that level of redundancy reduces agility, drives up costs, and generally isn’t feasible or practical. “Instead, build resilience into the supply chain at critical points where you can pivot quickly if needed — build a strategy that lets you respond tactically,” he says. 

The future of procurement demands tactics and strategy 

The pace of change in procurement and supply chain management feels faster now, Godfrey reflects, largely because of the influence of modern technology. “Technology accelerates information flows and amplifies perceptions,” he adds. Godfrey also notes that recent global events may have felt era-defining, each driving change and challenging assumptions in its own way: “Procurement processes have had to become more agile and responsive, leveraging automation and building flexibility into supply chains. The goal is for supply chains to bend rather than break under stress.” Sacrificing lean speed for the ability to change; learning to respond to any problem rather than trying to avoid every problem; resilience and adaptability are what will set successful supply chains apart from those that fail. 

However, while these events have prompted some to accelerate shifts in procurement practices, they’ve also highlighted the need for more considered, balanced responses. “You have to have the long term vision and the tactical short term understanding coupled with a bias for action,” he says, it is important at the same time not to over-correct in response to a shortage or perception of risk thus exacerbating the overall effect within a market. One step at a time towards the future. “Do what you can with what you have, wherever you are. It’s a quote from Theodore Roosevelt which sounds obvious, but it’s powerful. Whenever I’m stuck, that’s the mindset I return to: we know where we want to go, but what can we do right now? What’s the first step we can take?”

A new report by UK watchdog the National Audit Office (NAO) has highlighted ongoing issues with the ways in which the country’s public sector approaches IT procurement. 

According to the report, the Government has the potential to achieve meaningful cost savings by changing the way it engages with technology suppliers. But it will only do so if it “learns from its past procurement approaches to large-scale digital transformation projects”. The government’s past projects, the NAO argues, were riddled with mistakes, resulting in “decades of poor progress” and billions in mismanaged spend.

“Government needs to rethink how it procures digitally, including how to deal with ‘big tech’ and global cloud providers that are bigger than governments themselves,” commented Gareth Davies, head of the NAO. 

The £14 billion problem 

The NAO’s report highlights the fact that the UK government spends approximately £14 billion annually on digital procurement — a figure that has crept up over the past decade — with “mixed” results. The report suggests that a lack of technical expertise within government is at least in part responsible for the public sector’s mismanagement of the shift towards managed service models.

With the market shifting towards cloud-based platforms and SaaS models, the NAO argues that traditional models of outsourcing or creating government-owned assets are giving way to subscription-based models such as the use of cloud services. The government, they argue, has been slow to adapt to this new state of affairs. As a result, the report argues that the government needs to rework the the ways in which it engages with and manages suppliers. The government needs to define “a comprehensive sourcing strategy for the digital age” which, specifically, redresses the government’s approach to dealing with large technology vendors.

“Government has a long-standing need to improve its use of technology suppliers, and its slow progress in doing this has contributed to poor outcomes in its attempts to modernise government,” adds the report. 

In a press release, Davies criticised a “lack of digital and procurement capability within government”, which he argues has resulted in wasted expenditure and lack of progress on major digital transformation programmes.”

The second inauguration of President Donald Trump will take place on January 20th. The incoming president and convicted felon has made a series of promises on the campaign trail regarding his plans for the start of his administration. 

Among other claims, Trump has said that, during the first 24 hours of his presidency, he will close the US’ southern border and reinstate travel bans, carry out mass deportations, pardon insurrectionists who took place in the attempted coup on January 6th 2021, roll back federal regulations on fossil fuels, and scupper the meagre steps the country took towards environmental legislation during the past four years. 

While it may trail Trump’s other promises in terms of potential to inflict human misery and economic disruption, organisations in the US have spent the past month scrambling to prepare for another of his threats: tariffs and a new trade war with China.

The president-elect promised back in November that planned to implement 25% tariffs on Mexico and Canada, as well as an additional 10% tariff on goods made in China, on his first day in office. Reports from December found that such measures would likely create sweeping supply chain disruptions, resulting in higher costs for customers and potentially destroying US businesses. 

Whatever happens, there’s no doubt the impact on procurement and supply chain sectors will be profound. 

How do tariffs work? (Spoiler Alert: Not the way Trump says they do)

Despite his claims that tariffs will help grow the US economy, raise tax revenues, and protect jobs, almost all economists have agreed that this rhetoric (including Trump’s statements that his tariffs were “not going to be a cost to you, it’s a cost to another country”) is misleading. 

In reality, a tariff is a domestic tax levied on your own country when businesses and individuals purchase goods from overseas. Government then leverages a percentage of the total value of the goods when they arrive on US soil. Then, the importer pays the tariff. Not the foreign entity. 

Essentially, if a US company wants to purchase $1,000,000 worth of consumer goods from China at a 30% tariff rate, the Chinese company still gets paid $1,000,000. When those goods arrive in the US, however, the US company taking receipt of the goods will be forced to pay the US government an additional $300,000. 

Over the course of 2023, the US imported approximately $3 trillion worth of goods, equivalent to roughly 11% of the country’s GDP. 

“During his first term, Trump often used the threat of tariffs as leverage in trade negotiations, but didn’t always follow through,” notes Rob Carlisle, Associate Partner at operations transformation consultancy Argon & Co. 

The higher price of protectionism

Carlisle argues that, “if we take Trump’s campaign rhetoric at face value, the United States may impose tariffs at levels unseen since the 1930s, having a seismic impact on trade relations as we know them today.” 

He adds that, with Trump potentially considering tariffs of 10-20% on all imports and a staggering 60% on goods from China, these measures “would likely hit electronics, apparel, and toys hardest – sectors heavily reliant on Chinese manufacturing.” 

Often, companies add the cost of any tariffs they pay to the price of the final product. This effectively turns them into a tax on consumers. However, Carlisle notes that, not only could tariffs cost American consumers and businesses money at a time when the cost of living is higher than ever, but cutting the US off from its neighbours and their supply chains could have even more disastrous long-term consequences. 

“From a sustainability perspective, Trump’s proposed tariffs could be shortsighted,” he says, noting that, during the previous Trump previous administration, tariffs imposed in an attempt to curb China’s dominance actually backfired. Trump inadvertently enabled China to take a leadership position in technologies critical for the green transition, according to Carlisle. Six years later, the International Energy Agency’s data shows that China currently controls more than 80% of the global solar value chain. “If these tariffs go ahead, they could further cement China’s position in green technology while increasing costs for U.S. manufacturers and consumers,” Carlisle warns. 

How likely is World (trade) War II? 

A prickly (and expensive) trade war with China was — among other things — one of the defining characteristics of the first Trump administration. 

Now, with Trump going into a second term on an even more right-wing platform than in 2016, Carlisle notes that a trade war is “certainly possible.”

If that were the case, the “policy and response from other countries could take many forms. During Trump’s first term, we saw ‘tit-for-tat’ responses from China and the EU, and this pattern will likely escalate further if he follows through on his campaign promises,” says Carlisle. “The scope of a trade war largely depends on how other nations respond. While superpowers like China may engage directly, it looks unlikely that smaller countries would enter into a tariff war with the US and are more likely to mitigate exposure to the impacts. For example, countries reliant on U.S. energy exports might shift to alternative sources, as China has done in its long-term pursuit of energy independence. Can the U.S. really afford the consequences of sustained trade conflicts? The answer may not just reshape its economy but redefine its role on the global stage.”

What can we do about tariffs and the trade war?

The threat of increased tariffs and a looming trade war has sprung up in just a few months. Donald Trump announces policy via his social media platform du jour as quickly as he can think them up (or, more accurately, copy them from Tucker Carlson). Given the speed of the emerging threat, the majority of procurement teams are still evaluating their options. Carlisle notes that organisations have a wide array of potential responses, including moving operations to avoid tariff barriers, likely accelerating the nearshoring trend that has come to establish itself since the pandemic. 

Product flows, Carlisle explains, are increasingly being “broken up into three ‘global zones’ – the Americas, Europe, and APAC – to mitigate risks associated with tariffs. The new tariffs will likely speed up this trend with companies managing their supply strategies in a regional network,” and bringing their suppliers closer to home. He adds that, “we may see Chinese firms potentially acquiring Mexican businesses to sidestep tariffs in the States.” 

In the short term, manufacturers may try to mitigate their risks by increasing inventory buffers, firmly putting the era of “just in time” supply chains to rest. “Some firms might also stockpile resources with high anticipated tariffs, while others may explore ways to automate and cut costs in their manufacturing base. While much is still to be firmed up surrounding Trump’s tariffs, firms should look to tread a careful balancing act of cost, efficiency, and resilience,” Carlisle reflects. 

Newly released research by RS and the Chartered Institute of Procurement & Supply (CIPS) has highlighted some of the major trends and challenges teams responsible for the indirect procurement of maintenance, repair and operations (MRO) supplies. 

Respondents to the survey held procurement roles in sectors that include discrete and process manufacturing, public and private sector organisations, energy, facilities and intralogistics. Job roles included operational, managerial, tactical, professional and advanced professional levels. This relatively small segment of the procurement sector is, nonetheless, reflective of the larger whole — specifically, the pressures purchasing departments are feeling from multiple sides. 

The procurement balancing act 

Raj Patel, Managing Director for the UK&I at RS, notes that “people working in procurement face some of the most challenging conditions the profession has ever seen. Not only must they wrestle with external factors such as inflation, geopolitical tensions and supply chain disruptions, but they’re also under increasing pressure to make a tangible contribution to organisations’ wider carbon-reduction efforts.” 

Of the procurement professionals surveyed, 60% reported having reduced operational budgets, while 51% felt pressure to drive more sustainable and ethical procurement practices. A significant proportion (40%) also described pressure to reduce their inventory costs. 

This pressure to reduce spend is creating what the report describes as a balancing act between cost and quality. 

Increasingly, businesses are asking procurement to do more with less. This is reflected, according to the report, by a growing number of day-to-day challenges professionals are facing. The report found that delivering annualised cost savings had become the biggest pressure for those involved in MRO purchasing. Almost half (40%) of respondents cited cost containment as their biggest pressure, compared with 29% in 2023. 

While procurement teams have always walked razor thin margins, Jane Lynch, Professor of Procurement at Cardiff Business School and Director of the Centre of Public Value Procurement, argues that “there comes a point at which you can’t take any further cost out before it starts to impact on quality. The challenge now is balancing lowest cost with highest quality, and that applies to both products and services in MRO procurement.”

Old and new 

Many of the challenges cited in the 2024 report are still a concern for procurement teams, although the report notes that the pressures they pose have intensified. Inflation and higher costs still present the biggest challenge, cited by 62% of respondents, doubling the response in 2024 which was 31%.

Managing risk in the supply chain is becoming more of a worry, up on last year’s figures of 31% to 47% this year. A higher number of respondents said they were worried about global political uncertainty (37%) than last year (20%). The issue of attracting and retaining talent remains, with 33% of respondents highlighting this versus 29% last year.

The Procurement Act 2023 represents the most significant overhaul of public procurement in the UK since leaving the European Union. 

Coming into effect on 24 February 2025, the Act introduces substantial changes that will affect how suppliers engage with public sector procurement across England, Wales, and Northern Ireland.

The Act unifies various procurement regimes under a single framework, encompassing public contracts, utilities, concessions, and defence and security procurement. 

It introduces a shift in procurement objectives, moving beyond the traditional focus on equal treatment and non-discrimination. Now, contracting authorities are mandated to deliver value for money, maximise public benefit and act with integrity throughout the procurement process.

A significant change is in how contracts are awarded. The “most advantageous tender” (MAT) criterion replaces the previous “most economically advantageous tender” (MEAT) approach.

This shift allows for a broader consideration of factors beyond price, including quality, innovation and environmental impact. In some cases, non-financial criteria can be the deciding factor in contract awards.

Greater flexibility and transparency among key changes in Procurement Act 2023

A new digital platform will serve as the central hub for contract notices and supplier registration, streamlining the process for businesses seeking public sector opportunities. 

This single registration system will grant suppliers access to opportunities across multiple contracting authorities, significantly reducing administrative burden.

The procurement procedures themselves have been dramatically simplified, moving from seven procedures to three:

• Open: A single-stage procedure, similar to that in the current procurement regime
• Direct award: Allows authorities to award contracts without competition. Again, similar to the process in the current procurement regime but will require publication of a transparency notice before the contract is executed.
• Competitive flexible: A “build-your-own” procedure that allows contracting authorities to design the procurement process to suit the specific needs of a contract.

The introduction of the competitive flexible procedure particularly stands out as it offers greater flexibility in procurement design, allowing for more innovative approaches to tendering.

Transparency requirements have been substantially enhanced under the Act. For contracts exceeding £5m in England (but not in Wales), there’s a new obligation to publish at least three key performance indicators (KPIs) and regularly assess supplier performance against these metrics.

How can suppliers adapt? 

Suppliers will need to adapt to new requirements for publishing procurement documentation and contract performance data. There will be mandatory disclosure requirements for contract changes and modifications. Along with this, the Act also increases the emphasis on supply chain transparency throughout the procurement process.

The Act places particular emphasis on improving access for small businesses. The UK government has designed the simplified procedures to reduce barriers to entry. At the same time, the Act requires contracting authorities to consider breaking contracts into lots where appropriate. 

The reforms streamline the pre-qualification process, and new prompt payment provisions will ensure better cashflow throughout the supply chain.

A new exclusion framework has also been established, updating both mandatory and discretionary exclusion grounds. This includes the introduction of a centralised debarment list, alongside a clear process for self-cleaning and removal from exclusion lists. 

Enhanced due diligence requirements will affect how suppliers demonstrate their eligibility for public contracts.

How suppliers can prepare for implementation of the Procurement Act 2023

While contracts executed before this date are subject to existing rules under the Public Contracts Regulations 2015, full compliance with the Procurement Act 2023 will be required from 24 February 2025.

Implementation preparation requires significant attention from suppliers. Organisations will need to thoroughly review and update their internal processes to align with the new procedures. 

This includes preparing for registration on new digital platforms, developing enhanced reporting capabilities to meet transparency requirements and updating document management systems to handle new requirements.

Training and pre-market engagement

Training and development will be crucial during the preparation phase. Staff will need comprehensive training on the new procurement procedures, transparency requirements and digital platform usage. Bid writing and tender response processes should be updated to reflect the new requirements and opportunities presented by the Act.

Understanding the potential for multiple nuances and variations with the competitive flexible procedure is particularly important. The act encourages pre-market engagement. Therefore, suppliers should take advantage of the opportunity to provide input on how these procedures can better reflect local business practices.

Measuring performance and contract management 

There is an increased onus on contracting authorities to hit key performance indicators (KPIs), which means suppliers must also ensure they can realistically meet these, especially when linked to regional social or environmental priorities. The new regime will punish failure to meet KPIs, which could potentially damage future business prospects. 

Taking advantage of the detailed performance information published about competitors can assist with improving bid and performance strategies.

Supply chain checks

The central debarment list places greater attention on compliance considerations. Suppliers should conduct due diligence not only on their corporate structure, but also on their supply chains to ensure compliance with exclusion grounds. The act may result in buyers exclusing those that fail to meet environmental or specified standards from future procurement activities.

Having a team or process in place to quickly challenge or appeal any debarment decisions will be key, as exclusion from public procurement will have a long-term business impact.

Challenging decisions

The challenge process under the Act remains similar to the current regime, with suppliers required to issue challenges within 30 days of being aware of grounds to issue a claim. 

However, the Act introduces more stringent requirements for contracting authorities to provide feedback to unsuccessful bidders, giving them an opportunity to identify inconsistencies or errors.

Companies should flag commercially sensitive information in their bids to ensure they do not inadvertently disclose confidential business or bidding strategies. 

Opportunities and risks for businesses arising from procurement reform

The Act creates significant opportunities for suppliers to the public sector. Market access will be simplified through reduced administrative requirements and improved visibility of opportunities. 

The new flexible procurement procedure enables more innovative solutions and increases the opportunity for dialogue with buyers. Suppliers will have greater scope to demonstrate value beyond price considerations.

Commercial benefits include reduced bid costs through simplified procedures and better visibility of pipeline opportunities. The Act also introduces improved payment terms and conditions, along with enhanced supply chain opportunities for businesses of all sizes.

Compliance risks stem from new exclusion grounds and criteria, enhanced transparency requirements and increased supply chain due diligence obligations.

Contract performance reporting will require robust systems and processes. Operational risks include managing system and process changes, meeting training requirements, allocating resources effectively and adopting new technologies.

Suppliers should begin preparing immediately by reviewing their current procurement processes and assessing training needs. 

Organisations should prioritise planning for digital platform adoption and reviewing compliance procedures. 

Over the medium term, focus should shift to updating systems and processes, training staff and registering on new platforms. 

Long-term considerations include developing a strategic approach to public sector business development, building capabilities for new procedures, and strengthening supply chain and contract management capabilities.

As business leaders prepare for the year ahead, reducing third-party costs remains high on the C-suite agenda. While the Finance and Procurement departments will manage the technical aspects of identifying and delivering on cost-cutting opportunities, it is often forgotten how important the CFO and their senior peers are in creating the right conditions for successful execution. 

Working with a wide variety of organisations, we find that the likelihood of a good outcome rises by 40% when senior leadership fully support and manage opportunity assessments.

Getting started: Ambition and preparation 

When approaching an opportunity assessment, senior business leaders should consider the critical actions below:

Define scope and targets

The focus of the opportunity assessment should be clearly defined. This is true whether addressing a full scope of spend, targeting specific areas like indirect procurement, or aiming for additional objectives like Working Capital. Establish clear parameters, including timelines and concrete targets with anticipated bottom-line impact and ROI. The assessment requires a  clear direction to yield meaningful results. 

Secure executive commitment

Gaining commitment from executive peers is essential. Executive buy-in and accountability are key to building the momentum needed for successful programmes. Sometimes, other pressing initiatives will limit their availability. In such cases, it may be wise to reassess the timing or scope of the assessment.

Encourage “blue sky” thinking

Foster an open-minded approach. Encourage the kind of atmosphere where all ideas are welcome. This includes revisiting previously rejected ideas and considering those that require investments to unlock savings. In the beginning, make room for thinking that isn’t constrained by existing capability or resources. Later on in the process, this can be refined.

Establish strong governance and decision-making processes

Implement robust governance to ensure opportunities are reviewed in an open forum, allowing decisions to be made based on a solid business case rather than prematurely dismissing options without proper assessment.

The right context and timing are critical to success

Certain scenarios can make opportunity assessment particularly valuable. These include:

• Budget planning: Aligning the opportunity assessment with your budgeting process allows for the smooth integration of identified opportunities into financial planning. 
• Market changes: Inflationary pressures may create additional reasons to revisit supplier relationships to maintain margins.
   
• Company performance: If the cost base shows continued year-on-year growth, an opportunity assessment can help identify and address the underlying issue.
• Company Changes: An opportunity assessment can help organisations prepare themselves for an acquisition, private sale or an IPO.

Harnessing data to maximise impact

Lack of spend visibility limits the organisational focus to a budget level, restricting the ability to consolidate cross-functional spending and maximise value. This is where CFOs can play a pivotal role by aligning stakeholders across the organisation and identifying synergies to maximise impact.

By creating a comprehensive, organisation-wide spend cube upfront, with clear visibility into costs across business units and spend categories, CFOs can ask the right questions and ground the assessment in a realistic view of current operations. 

Putting plans into action

Identifying opportunities is only the first step. To turn those findings into tangible results, CFOs and senior leaders must ensure that the right commitment, resources, and capabilities are in place. Key actions include:

Focus on key initiatives

Momentum is essential. Concentrate on core initiatives that align with available resource levels and organisational goals. It’s often better to build momentum through smaller focused efforts than launch too broad a programme.

Engage the wider executive team

Achieving stretch targets will require significant time investment from various parts of the organisation. Building executive awareness and securing senior sponsorship is key to realising savings. This may involve high-level executive discussions and aligning budget targets with the developed initiatives.

Assess Procurement’s ability to deliver sustained results

Evaluate whether the procurement function can deliver on the identified opportunities by asking the following:

Does Procurement’s remit cover the entire spend targeted by the programme?

• Does Procurement have the skills and capacity to deliver results?
• Is Procurement aligned with key company goals? 
• Can existing employees be upskilled, or should temporary resources be brought in to meet a specific, time-bound need?
• Should the business invest in more senior procurement resources to lead the transformation programme? 

Is now the right time for an opportunity assessment?

An opportunity assessment might be the key to bringing about significant change if your company is getting ready for a big transformation, facing cost pressures, or nearing a budgeting cycle. CFOs and senior leaders should ask themselves:

• Do you think there might be cost savings available as a new budget cycle approaches, but you’re unsure where to begin? 
• Is your organisation getting ready for a significant financial or strategic event?
• Are you having to reevaluate your cost structure due to market pressures?

If you answered yes to any of these, now is the time to see how an opportunity assessment could assist your organisation in maximising value. 

Supply chain organisations and procurement leaders are bracing for a major crisis, as the incoming Trump administration promises sweeping tariffs in Q1 of 2025. A new report by spend management solutions firm Ivalua has revealed that half of organisations in the US and UK are preparing for changes in US trade policy, including rising tariffs. 

These changes, they believe, will create sweeping supply chain disruptions, resulting in higher costs for customers. Multiple organisations also warned that sweeping trade regulation changes could put them “at risk of collapse.”

Free trade agreements under threat 

Ivalua’s study of 200 US and UK supply chain and procurement decision-makers identified restrictions on exports of certain products and materials as their top concern (89%). The majority (84%) pressed worry about the overhaul or elimination of existing free trade agreements. A similarly overwhelming number (89%) also expressed concerns over broad tariffs on imports, while 84% fear high tariffs on goods imported from China. 

Sparked by President-elect Trump’s recent threats to hike tariffs on goods imported to the US from China, Canada and Mexico upon taking office, organisations’ fears could be realised as early as January when the new administration comes into power. 

“President Trump has been forthright in his position on tariffs, but the final details may vary based on negotiations with  certain countries and some categories of imports,” commented Alex Saric, a procurement expert at Ivalua. Uncertainty around how trade policies and tariffs will be implemented means companies won’t know how best to optimise supply chains to mitigate the impact until the last minute. At a minimum, organisations should start working with suppliers now to reconsider supply chain operations and identify ways to mitigate the impact of likely trade policy changes in the new year.”

The impact 

The impact, according to Ivalua, could be significant for US and UK businesses. Of the firms who anticipate more disruption from January:

• 52% say they will need to completely reevaluate which suppliers they work with.
• 51% say they will pass the cost onto customers – US organisations (65%) are more likely to do so than those in the UK (36%).
• Almost half (48%) foresee rising supply chain costs that reduce profitability.
• 45% warn rising supply chain costs will put their business at risk of collapse – with US organisations (52%) having a greater fear of collapse than those in the UK (36%).

“Organisations should prepare for the possibility of nearshoring or onshoring operations, factoring in evolving ‘made in USA’ thresholds and the impact increased tariffs will have on suppliers in China, Mexico, and Canada,” Saric added. “But the reality is that certain industries, especially those dependent on rare earth minerals or established manufacturing clusters, can’t easily shift away from China.”

In 2024, the procurement sector tangled with multiple headwinds that ranged from rising material and SaaS costs to mass layoffs in the tech industry and geopolitically-driven disruption. As we enter 2025, procurement leaders must make savvy decisions to avoid the ongoing challenges facing their discipline and capitalise on the opportunities presented by new legislation and emerging technologies like AI and automation. 

As the year draws to a close, we sat down with Eldar Tuvey, founder and CEO of Vertice, a procurement orchestration and SaaS saving platform, to hear his six predictions for procurement in 2025. 

1. Procurement continues shift from cost-cutting to ensuring value 

With Elon Musk appointed as the US’s “Secretary of Cost-Cutting,” the conversation around bold and occasionally brutal budget slashes is likely to dominate the news agenda and the way in which businesses consider their purchases. 

Yet procurement leaders are shifting from cost-cutting to evaluating investments by their broader value and impact – including efficiency, performance, risk mitigation and security. This risks becoming a point of contention in boardrooms if the importance of such evaluation is not well-communicated and proven out.  

2. Procurement workflows will finally be recognised as data workflows 

Procurement departments are seeing that despite traditional perceptions, they can be one of the most data-driven departments in the business.

The most advanced procurement teams are currently relying on streamlined, customizable, responsive workflows, well-integrated with the business’ wider technologies – especially project management and collaboration tools – and advanced analytics to assess and continually improve these workflows’ ongoing efficiency.

And it’s proving to be worth it — these businesses are achieving a 30% boost in speed to market, innovation, and efficiency. We know that in 2025, more and more procurement leaders are aiming to chase up with these early innovators.

3. Supplier Relationship Management will finally go ‘strategic’ 

With a greater determination to evaluate suppliers based on wider value rather than simply cost and SLA performance, Supplier Relationship Management will become more data-driven.

Organisations will rightly expect their procurement teams to be using real-time internal and external data to assess a relationship’s overall health. This may include price benchmarking, usage analytics, SLA performance, duplication, risk and more.  

4. AI adoption is accelerating.

Expect to see more native AI features within your SaaS products in 2025, and more dedicated AI tools being requested. Four of the top five fastest-growing SaaS vendors in 2024 are either AI platforms, or have integrated / native AI features within them.

But AI will still only support rather than replace human-led functions for the time being. Using AI would require a change of working behavior – something notoriously hard to achieve. It will be some considerable time before using – and trusting – AI as even a co-pilot becomes the norm, let alone handing over responsibilities.

5. Outcome-based pricing up to 4%

AI will accelerate a transformation in SaaS pricing models, pushing the industry toward usage or even outcome-based pricing – where customers pay for measurable success, such as performance improvements, cost savings or efficiency gains, not just access or usage. 

The shift in pricing models will be more gradual. Today, 49% of SaaS contracts are still priced per user, 29% on usage, and 22% are hybrid models – meaning traditional models still dominate the landscape. Of the 29% of contracts that charge based on usage, only 4% of these are outcome-based – demonstrating that we are a long way off from outcome-based pricing becoming the new normal, despite the hype. 

6. Single-suite platforms will finally overtake point solutions

Customers want simplicity and centralization from their SaaS in 2025, vendors will answer this with white-labelled point solution integrations.

Businesses have, on average, 128 live SaaS applications in 2024 – an 8.5% growth YoY. To reduce the complexities and cost that can come with managing so many tools, many businesses are switching their procurement strategy away from best-in-class point solutions towards more multi-feature platforms. As a case in point, all-in-one finance and CRM platform NetSuite – which has been aggressively broadening its capabilities recently – has been the tool with the highest renewal rate for the last two years.  

Many larger platforms may choose to integrate with the particularly successful point solutions – on a white labelled basis or otherwise – to save on development time and cost. But in 2025, the overall trend will be for a shift towards more muti-functional platforms to reduce the number of SaaS tools in use.

In the face of evolving global challenges, procurement leadership in 2025 is poised to undergo a transformative shift. Leaders will be expected to adapt to more frequent global disruption by increasing resilience, technological expertise, and enterprise leadership into their core role. Below are six key hiring trends that will shape the future of procurement leadership.

1. Strategic Risk Management and Supply Chain Resilience

As geopolitical tensions continue to rise and the global economy becomes increasingly difficult to predict, procurement leaders must demonstrate exceptional risk management capabilities. A 2024 report by Economist Impact found that 44% of executives continue to focus on encouraging diversity in their supplier base – a trend likely to intensify amidst global trade tensions and proposed tariffs under the Trump administration.

Nearshoring, supplier diversification, and regional collaboration are becoming routine for procurement leaders. As a result, many are increasingly developing flexible and adaptable sourcing strategies. Scenario planning and risk management will also become essential components of modern procurement practices.

Leaders adept at identifying supply chain vulnerabilities, diversifying procurement sources, and fostering resilience will be invaluable in this environment. Boards will seek individuals who can proactively navigate uncertainties, ensuring operational continuity and minimise disruption in the face of challenges.

2. Emphasis on Digital Transformation and AI Integration

The integration of AI and digital technologies into procurement processes will dominate leadership priorities in 2025. Leaders with expertise in AI-driven analytics, automation, and digital procurement platforms will be sought to enhance decision-making and drive efficiency.

Balancing innovation with practicality, these leaders will manage the integration of AI while addressing the associated security risks. Boards will prioritise candidates capable of aligning these technological advancements with broader organisational goals. They will also favour those who can ensure robust yet adaptive supply chain systems.

Already, AI is being used in spend analysis, contract management, supplier risk assessment, demand forecasting, and even autonomous negotiations. Procurement sits at the confluence of huge quantities of data. The function is an untapped gold mine for predictive models and AI-driven analytics. Boards want procurement leaders who can tap into this and capitalise on it.

3. Enterprise Leadership: Business Leader First, Function Leader Second

Procurement leaders are increasingly expected to adopt an enterprise-wide perspective. Acting as business leaders first, they must align procurement strategies with overarching corporate objectives. This is often a mindset shift, and involves fostering cross-functional collaboration and contributing to organisational growth beyond the CPO’s functional remit.

This is a must-have skill for any procurement professional looking to step into the CPO role. Boards want their procurement leaders to translate supply chain and procurement nuance into the broader strategic framework. In doing so, they will position the function as a driver of innovation, cost-efficiency, and competitive advantage.

To achieve this, procurement professionals should ensure they understand the overarching business objectives. Common examples include revenue growth, market expansion, and sustainability. They should attempt to act as a bridge. Essentially, procurement initiatives should support and amplify the efforts of other functions to drive organisational goals. Finally, they should also influence at the executive level. Procurement should be presented as a strategic driver by communicating its impact on cost-efficiency, innovation, and competitive advantage.

4. Data-Driven Decision Making and Predictive Analytics

Predictive analytics is becoming a cornerstone of strategic procurement. Leaders proficient in data analysis will be able to anticipate market trends, refine sourcing strategies, and enhance supplier performance. This data centric approach provides organisations with a competitive edge that goes far beyond traditional cost, quality, and delivery metrics.

A 2024 McKinsey survey found that 22% of procurement employees in best in class companies now work in analytics roles. The trend demonstrates the growing emphasis on data literacy and the necessity for procurement leaders who can translate insights into actionable strategies.

Next year, this will become a key priority for procurement leaders with boards looking for those individuals who are both proficient in data analytics and who can overcome its associated challenges. These include, data quality issues, communicating the business case to the board, and embedding data analytics transformation into the rest of the business.

5. Talent Development and Multigenerational Workforce Management

With a diverse workforce that spans multiple generations, fostering an inclusive and adaptive culture in the organisation is essential. Leaders who can bridge generational gaps, promote continuous learning, and attract top talent will play a critical role in building dynamic procurement teams.

According to a 2024 McKinsey report, access to talent is a key priority for procurement leaders. Of course, we already know that most face shortages in traditional procurement skills. Not only that, but many lack the technical and analytical capabilities needed to deploy and run advanced digital technologies. Therefore, in 2025, successful procurement leaders will focus on creating environments that empower teams, drive innovation, and align individual growth with organisational goals to attract and retain the best talent.

6. Procurement as a Value Creation Lever in Private Equity

Private equity firms are increasingly recognising the strategic value of robust procurement and supply chain management as key drivers of operational improvement and portfolio-wide synergies. Therefore, in a macroeconomic climate marked by higher interest rates, inflation, extended deal cycles, and diminished exit values, traditional financial strategies alone are no longer sufficient to deliver expected returns.

As a result, procurement leaders who can align supply chain strategies with private equity objectives will be in high demand. These leaders must demonstrate the ability to identify cost saving opportunities, streamline operations, and foster collaboration across portfolio companies to leverage common areas of spend. Boards and investors will seek procurement professionals skilled at integrating operational excellence into the value creation process, making sure that procurement functions as a transformative lever in delivering measurable financial and operational outcomes.

In this environment, procurement leaders who can navigate the complexities of private equity backed organisations, balancing short-term results with long-term strategic improvements, will be highly important to driving portfolio success.

The clock is ticking for the public and private sectors to prepare themselves for the Procurement Act 2023 to come into effect.

When and what to prepare for

The UK government developed the Procurement Act 2023 following Brexit, which consolidates four sets of existing regulations into one. 

There are four core objectives, which include creating a simple and more flexible purchasing system, opening up public procurement to new entrants such as small businesses and social enterprises, taking tougher action on underperforming suppliers, and embedding greater transparency through the commercial lifecycle. The objectives work together with the aim of making the new procurement regime better than the former system – maximising the huge opportunity to embrace flexibility and innovation.

The changes will come into effect from the revised date of 24 February 2025, instead of the original date in late October 2024, as announced by the Cabinet Office in September. The new Labour government recently opted to delay the commencement of the act. This is ostensibly to allow time for the government to produce a new National Procurement Policy Statement (NPPS), which is a statutory statement that allows the government to set and communicate wider policy objectives to which public procurements should consider. 

The proevious government laid out the current NPPS in parliament in May 2024. It therefore does not align with the new government’s strategic priorities for public procurement. And, as a result, the government has withdrawn it. The delay provides time for the government to produce a new NPPS, ensuring full alignment with the government’s strategy once the Procurement Act begins. Pagabo contributed to the survey for feedback that closed on 4 November.

The new NPPS

The Cabinet Office has stated the new NPPS will create a “mission-led procurement regime which builds on the transformative powers within the Act, and which meets the challenge of applying the full potential of public procurement to deliver value for money, economic growth, and social value.” This aligns with the objectives of the act: increased transparency, simplicity, and the move from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT). This will ensure that procurement functions will prioritise best value over lowest cost. 

The government will draft the new NPPS before putting it out for consultation. This will allow adequate time for contracting authorities to review the updated strategic priorities. Then it will undergo a 40-day passage in parliament – consistent with the process followed for the existing NPPS. 

In the meantime, work on the central digital procurement platform will continue – designed to host all the information required to support the transparency agenda and the Procurement Act’s new reporting obligations – with the Cabinet Office currently reviewing how to use the additional time for testing and deployment.

We can expect changing processes because of the act and new terminology to understand and use, but it is unrealistic to expect everyone to be procuring perfectly straight away. However, contracting authorities and suppliers should be ready to embrace the new procurement regime and its objectives – establishing lasting behavioural change. 

Contracting authorities should examine their procurement pipeline between now and March. A key thing for them to consider is whether to adjust their timings or continue as planned using a compliant framework.

The Act will, hopefully, improve the way suppliers engage with contracting authorities. Though the new processes will become clearer as they are implemented, there are several key changes to become familiar with. 

1. Notices 

Under the current regime, notices focus on the procurement process – including tender notice and contract award. From 24 February, there will be a noticeable shift meaning that notices are required throughout the full procurement and contract lifecycle – changing the number required from four to 14. This starts as early as the new mandatory pipeline notice, which sets out information about a contracting authority’s public procurement pipeline where the anticipated spend is more than £100m within a defined reporting period. The notice will set out information on each public contract with an estimated value of more than £2 million.

The new notices will drive transparency throughout the procurement lifecycle, increasing inclusion and enabling greater scrutiny of procurement decisions and contract performance to maintain high standards.

For suppliers and especially SMEs, it will mean greater opportunity to engage in upcoming procurements, while tracking progress and performance. It will also increase transparency of underperformance, which should be considered given that it could impact the ability to bid for future work. 

Contracting authorities will need to invest time into their procurement resources or engage with managing agents like Pagabo to deliver their frameworks, but increased administrative burden may be offset by the simpler system aiming to reduce duplication.

2. Procedures 

The act streamlines the procedures under the current regime from seven down to two competitive procedures – open, and the new competitive flexible procedure. The new mechanisms aim to create maximum flexibility for procurement solutions and reduce barriers to entry. 

Suppliers will need to undertake appropriate training to ensure bid teams are aware of the changes and where to access information. Suppliers are encouraged to engage with contracting authorities to contribute to pre-procurement planning stages to support the design of procurement solutions. Therefore, suppliers should allocate the appropriate resource and time to review published opportunities and raise clarifications with contracting authorities if the documents contain any ambiguities.

Contracting authorities are encouraged to utilise preliminary market engagement to determine the most appropriate route to market and ensure their internal policies and procedures align with the new mechanisms.

3. Exclusion and debarment 

The discretionary and mandatory exclusion grounds will remain very similar, targeting non-compliance and poor performance but the scope widens under the act. The act drives the transparency agenda with plans to launch a debarment register housed on a central digital platform and the mandatory issue of a new notice detailing any unsatisfactory performance or contract breaches. Contracting authorities will need to review and verify applications against the live debarment register and any notices detailing unsatisfactory performance for each procurement opportunity. 

There is some nervousness around this. However, there are several robust steps that precede a contractor finding themselves on the debarment register. This includes the contracting authority issuing notice to the government on the recommendation to place a contractor on the register, a thorough impartial investigation, and an eight-working day standstill period also applies to any debarment decision. 

Suppliers should review their supply chains to ensure no organisation poses unacceptable risk. Policies and procedures should also be subject to a levelling up exercise to ensure the correct governance is in place. 

Ultimately, the debarment list is there to prompt accountability, ensure compliance and protect the investments of those procuring works, providing ample incentive for suppliers to get things right and keep bidding for work into the future.

4. Performance 

Procurement performance is a core focus of the Procurement Act and therefore it formalises and strengthens some of the existing requirements. This includes the issuing of at least three mandated performance measures prior to entering into contracts with an estimate value above £5m, the publishing of payment compliance information and the social value tender commitments which will form a contractual commitment and KPI. 

There will be increasing analysis of the entire procurement lifecycle, from performance of frameworks through to individual contracts via the publishing of new notices, and suppliers will be assessed on whether things are performing as intended within bids. 

Greater access to information may increase scrutiny and the volume of challenges. It could potentially increase opportunity or damage chances depending on what performance data shows. Reputational damage is a risk if performance is below the expected standard, but the act aims to encourage collaboration in pre-procurement stages to ensure performance measures are suitable and support everyone involved in procurement to improve processes and benefit from attention to detail.

5. Challenges 

The provisions remain broadly the same, but there are some changes to the challenge process, including changing the standstill period to eight working days. Contracting authorities must provide all bidding organisations that have been assessed with feedback in the new assessment summary format. This drives transparency and will aid industry betterment by enabling suppliers to improve future bids. 

Contracting authorities must now provide all bidding organisations that they have assessed with feedback in the new assessment summary format. This also drives transparency and will aid industry betterment by enabling suppliers to improve bids.

There are two pieces of advice for suppliers. The first – and most obvious – is to thoroughly digest all feedback using the assessment summaries provided. The second is to flag confidential information within bids. This ensures no one shares the information with other bidding parties, reducing competitive edge. 

Where to go for further guidance

These are just some of the changes to be aware of ahead of February, and there are various free government resources available online to help prepare for a more successful and transparent future in procurement. 

Despite the recently announced delay, there is no impact on the availability of content or any of the official materials, which will continue to be available up to and after the new commencement date. The official line from the Cabinet Office is that if you plan onstarting any training in the new regime, or have booked a ‘Deep Dive’ session, you should continue as planned.

If all goes to plan, prolonged time to learn and become familiar with the upcoming changes will lead to greater levels of practical understanding and confidence within procurement teams once the act comes into force. 

For more information, please visit www.pagabo.co.uk or www.pagabo.co.uk/procurement-reform

Shamayne Harris is head of procurement at Pagabo.

The UK government has announced new controls on the public procurement of consultancy services by government bodies. The new restrictions are being introduced to cut “unnecessary spending” on consultancies in order to save the government £1.2 billion by 2026. Departments are already expected to save the £550 million committed to this financial year.

More oversight, less spend

The new controls, according to a government press release, will provide more oversight for any consultancy spend over £600,000. They will also affect contracts lasting more than nine months. Ministerial signatures will be required for such projects to go forward. Additionally, spending over £100,000, or lasting more than three months, will now require a signature by the relevant permanent secretary.

When combined with commercial agreements that are focused on value for money, the government expects these controls to drive a reduction in consultancy spend in Whitehall.

“We’re taking immediate action to stop all non-essential government consultancy spend in 2024-25 and halve government spending on consultancy in future years, saving the taxpayer over £1.2 billion by 2026,” commented Georgia Gould, Parliamentary Secretary at the Cabinet Office.  She added that the restrictions are part of the governments work to” make the Civil Service more efficient and effective.” She also hailed the government’s efforts to take “bold measures to improve skills and harness digital technology.” 

New framework agreement bidding announced

In conjunction with its announcement, the government has also invited companies to bid for a new framework agreement. The agreement’s purposeis to streamline the way the government uses consultants in the years to come. 

The goal is to create a single, centralised list of suppliers. These organisations, will have already been through a rigorous and competitive tendering process to gain a place on the agreement. As such, it will cut down the time spent by departments on the procurement process. Ultimately, the government believ es this will ensure better value for money and more competitive prices.

In line with its commitment to cut consultancy spend, plans are already in place to dramatically cut the framework’s value. The framework’s total value will fall, from £5.7 billion over four years as planned to £1.7 billion over two years.

The new agreement will be managed by the Crown Commercial Service (CCS), the UK’s biggest public procurement organisation and an executive agency of the Cabinet Office, which will play a coordinating role in consolidating the government’s consultancy spend as it delivers change for working people.

“Consultancy services are sometimes needed to support government to deliver for citizens, but taxpayers must get value for money,” said Sam Ulyatt, CEO of Crown Commercial Service. 

“This agreement will help to ensure a behavioural and cultural change of how consultancy is procured throughout the UK public sector.”

Organisations are supposedly “neglecting” artificial intelligence (AI) adoption and, according to a new report by Icertis, it’s hurting their contract negotiation performance. Costly contract mistakes are a widespread pain point that the majority of C-suite executives believe can be solved with AI.

A new survey of C-Level executives by AI contract management tool provider Icertis found that as many as 90% of CEOs and 80% of CFOs are failing to negotiate contracts effectively. This major oversight is, Icertis claims, leaving millions of pounds on the table. It represents “vast amounts of money” that could be recouped with better pre-signature contract negotiations.

Everything runs on contracts 

Contracts define every business relationship and form the foundation of global commerce. In the current financial climate, every pound counts. Icertis’ report argues that contract mismanagement is a key pain point for organisations looking to prevent revenue losses. The report surveys 1,000 c-suite executives to illuminate how contract inefficiencies are causing severe revenue leakage within organisations. Industry experts have called the digital transformation of conteact management the next frontier for the procurement industry.

70% of CFOs stated that most revenue loss occurs from rising costs in their contracts due to inflation adjustments. These adjustments have largely gone unchecked or ignored in contract reviews. Also, a further 30% of business leaders point to revenue loss from unchecked auto-renewals.

Both issues which could be easily captured through AI-driven contract monitoring.

Icertis: “AI is being overlooked” 

Despite being complex, Icertis argues that AI-driven contract monitoring is now capable of capturing the reoccurring issues associated with contract value leakage. However the report also shows that CEOs are underestimating the role AI can play in addressing costly contract gaps within their legal departments – the hub for contract negotiations and agreement management across the enterprise.

When asked where AI would deliver the most business value by 2025, the legal function (23%) was ranked last. It came in behind finance (47%), marketing (46%), sales (35%), and several other business units. Icertis argues that the ranking indicates that many leaders are overlooking the transformative potential of AI in mitigating legal inefficiencies and boosting profitability.

“Millions of dollars flow in and out of the enterprise through commercial agreements with customers and suppliers. This survey from Icertis proves that c-suite leaders lack confidence when it comes to optimising those agreements and are unknowingly overlooking critical areas of value leakage in their business relationships,” said Rajat Bahri, Chief Financial Officer at Icertis. “Executives in all industries want to increase revenue and improve profit margins in 2025, no matter what the economic landscape looks like. Turning contracts into strategic assets with the right AI technology is key to recapture revenue and ultimately get ahead as global commerce continues to evolve.”   

Other Key Report Findings Include:

1. CFOs are turning a blind eye to value leakage. CFOs cite late or outstanding customer payments, unused discount opportunities with suppliers among the top five sources of revenue leakage.
2. Overconfidence is the biggest threat to regulatory compliance. 70% of c-suite leaders feel “very prepared” to demonstrate compliance in 2025’s rapidly shifting regulatory landscape. However, nearly half (44%) of businesses were fined for regulatory violations in the last five years.
3. AI will trump macro-economic factors in shaping the 2035 business landscape. Executives believe advancements in AI will have the biggest effect on how their business evolves in the next 10 years. That’s even more of an impact than climate change, increased market competition, geopolitical shifts, and evolving supply chains.

 The research findings serve as a call to action for business leaders. Icertis argues that they need to urgently need to rethink how AI could play a vital role in contract management. AI can prevent costly errors and ensure more efficient negotiations throuh automated monitoring, inflation adjustments, and real-time insights.

Going forward, businesses will continue to face economic pressures. However, Icertis argues that those that adopt AI to tackle contract inefficiencies will likely see significant reductions in revenue leakage and unnecessary expenditures in the years to come.

In today’s rapidly evolving healthcare landscape, the estates and facilities profession face a complex array of challenges ranging from capability and capacity constraints to financial efficiency and the urgent need to reach net zero carbon emissions. As the NHS and public sector strive to deliver high-quality healthcare services amid these pressures, the NHS needs more than just a route to market. 

More than just a route to market

The size of the UK public health decarbonisation market has been estimated in the billions. The sector, however, requires a step change in terms of the support offered to public sector organisations to make and succeed in funding applications and private sector funding alternatives. The public sector needs more than just a route to market; it needs new ways of financing and delivering its net zero goals.

This means engaging more deeply with the clean technology procurements themselves — procurements of sustainable and energy-efficient solutions, such as LED lighting and solar PV, for example. We need to go beyond mere target-setting for climate mitigation to be able to effectively serve the NHS and the public sector. 

Buying green with procurement frameworks

Over £100 million of green technology transactions have been processed for UK public bodies since 2021. So far, procurement frameworks have enabled promising levels of access to fundamental clean technology upgrades. These include implementing smart LED lightning systems that adjust brightness based on the time of the day and occupancy as well as building upgrades for energy efficiency. Engaging early with procurement frameworks is a key action for estates and facilities teams to focus on, as this will significantly reduce the time and effort required to identify, evaluate, and implement green technologies.

The public sector and NHS are dealing with increasingly complex projects. From £20million solar farm installations through to nationwide LED deployments, these complex projects require specialised skills and funding. This is where procurement frameworks provide much needed structure for sourcing green technologies and act as a springboard to accelerate delivery, for example, public bodies can move from piloting LED rollout to scaling-up through a direct award. 

Estate and facilities managers can also seek support with contract development and agreement to ensure the project meets the requirements set within the direct award parameters defined as part of the framework. This will also help the NHS process projects promptly, as well as deliver savings. According to London Borough of Waltham Forest for instance, “the energy saving LED lightbulbs use less electricity than traditional incandescent light bulbs, with the improvements expected to shave off around 7% off the Council’s annual energy bills.”

Beyond strategic procurement

Looking beyond strategic procurement, addressing the current challenges of capability, capacity and efficiency will require workforce development, skills building and careful fiscal management. Through framework procurement we can unite supply chain experts with NHS client teams, for example, to jointly execute on clean technology projects. 

Only through a well thought-out and collaborative approach can we ensure the continued delivery of high-quality healthcare services while advancing sustainability objectives.

With the Budget expected October 30^th and the new Procurement Act set to come into force in February 2025, it is a time of change for the public sector, its capital works programme and procurement processes. Amidst the change, we must not take our eyes off the prize. In the UK, the public sector provides the size and scale of energy and climate projects needed to boost British supply chains to make every UK home net zero. Better hospital, school and local authority buildings will mean better outcomes for us all.

Clean tech poses unique challenges 

Clean technology procurement is different from procuring stationery or purchasing digital and telecoms solutions. With informed procurement support from clean technology experts, our public health system can focus on doing what it does best: delivering high-quality healthcare services. Working together in this way, we can procure effectively for net zero.

Finally, the transition to net zero in the public sector also presents an opportunity for innovation and collaboration between various stakeholders. By fostering partnerships between public bodies, private sector companies, and research institutions, we can accelerate the development and implementation of novel clean technologies. These collaborations could lead to the creation of pilot projects that test cutting-edge solutions in real world settings, such as energy-positive buildings or advanced waste-to-energy systems. 

Moreover, such initiatives could serve as valuable case studies, providing insights and best practices that can be scaled across the entire public sector. This approach not only supports the UK’s decarbonisation goals but also positions the country as a global leader in sustainable public infrastructure, potentially opening up new export opportunities for UK green tech firms.

Asset management and investment firm Achieve Partners is throwing its weight behind new boutique procurement and supply chain advisory firm RiseNow. The investment is part of Achieve’s broader project. The firm’s strategy is to identify high growth companies in fields facing severe talent shortages. Then, it builds apprenticeship programs to close those gaps and speed up growth. 

Dealing with disruption and disarray 

The COVID-19 pandemic threw the world’s supply chains into disarray from which they are still working to recover. Simultaneously, new sources of disruption continue to create major challenges for supply chain executives and purchasing departments. From extreme weather events and political conflict to the skills shortage, CPOs are facing myriad challenges. As a result, execs are looking for new solutions to the problems presented by this era of perpetual disruption. 

As a result, organisations are embracing technology at a remarkable rate. Ongoing challenges are driving the need for advanced SaaS platforms to support critical digital functions. However, according to RiseNow, many organisations adopted technology as a quick fix. As a result, they have overlooked critical process design and talent considerations needed for long-term success. Uniquely positioned to build the operating models and talent necessary to implement, configure, integrate, and manage these technologies at scale, the newly launched RiseNow is ensuring companies achieve sustainable outcomes in an increasingly complex landscape. 

Meet RiseNow

RiseNow was one of the first implementation partners of leading platforms like Coupa, JAGGAER, SAP Ariba, and Tecsys, and is currently investing in building an intake and orchestration practice. The organisation was a pioneer in inventory management, point-of-use, and warehouse management, especially in healthcare, so hospitals and clinicians have sustainable, reliable, and efficient access to what they need to provide the best patient care. 

Achieve’s investment will reportedly enhance and propel RiseNow’s capabilities in these already-established areas. 

“Procurement and supply chain are evolving at an unprecedented rate, which is both driving reliance on expert boutiques and exacerbating a longstanding talent shortage to manage next-gen software and processes that support these functions,” says RiseNow co-founder and CEO Matt Stewart. “Many companies rely on offshore talent, but we’re committed to creating opportunities for the next generation’s workforce here at home. I would not be here without those who apprenticed me, and this disruptive model is exactly what’s needed right now. So we’re delighted to announce the launch of RiseTalent, the first apprenticeship program for digital procurement and supply chain.” 

“RiseNow is bringing both domain expertise and innovative thinking to bear on addressing the unique challenges facing modern supply chains,” added Cassidy Leventhal, Principal at Achieve. “This investment goes beyond capital – we’re partnering with RiseNow to redefine how talent, technology, and processes intersect, ensuring their customers not only implement advanced systems but also have the people and operational frameworks to leverage them effectively.” 

Koray Köse, futurist and expert in geopolitical risk, supply chain technology, and strategic advisory, has announced the launch of Kōse Advisory. Specialising in providing actionable insights, Kōse Advisory focuses on the convergence of people, processes, and technology to create tangible business impact for its clients.

Kōse Advisory: The Vision 

Kōse Advisory’s vision, according to its founder, is to inspire and empower technology companies, corporations, and investors to navigate an ever-evolving landscape by helping them strategise for visionary success, prioritise transformative initiatives, and elevate their operations through innovative technology and AI. The organisation has committed to managing the convergence of people, processes, and technology. It will do so with a focus on effectiveness, responsibility, and competitiveness. 

Sustainability is also central to its founder’s vision for the business. Kōse Advisory’s services also focus on ensuring the organisation’s comittment to a more resilient and responsible future.

Kōse Advisory will serve a wide range of clients, including:

• Technology Firms (Startups & Scale-ups). Companies eager to advance in market presence, investor and analyst relations, and efforts to scale.
• Corporations on a Journey. Enterprises seeking technologies to enhance their value and supply chains while becoming more sustainable and resilient.
• Venture Capital & Private Equity Firms. Investors exploring their next supply chain technology investment or looking for industry expertise to support their current portfolio through mergers and acquisitions.
• Events & Conferences: Organisers seeking cutting-edge, research-driven content, engaging public speakers, and dynamic panel discussions.
• Research Organizations and Consultancies. Firms looking to collaborate on advancing their coverage in AI, advanced technologies, and supply chain risk management.

“In today’s interconnected world, sustainable supply chains are not just a competitive advantage; they are essential for long-term success. At Kōse Advisory’s, we empower organisations to harness the potential of AI and emerging technologies, transforming challenges into opportunities for growth and resilience,” said Köse. “We are dedicated to providing strategic insights that not only enhance operational effectiveness but also foster a responsible and sustainable future.”

Kōse Advisory’s mission is to deliver actionable strategies and cutting-edge insights to technology companies, corporations, and investors. Going forward, the company will focus on creating tailored strategic plans. These plans will prioritise key initiatives, and leverage advanced technology and AI to drive operational excellence. “Our research into technology, geopolitics, and economics informs our approach to enhancing global value chains and procurement. We guide clients through every phase of transformation—from strategy development to implementation—while integrating sustainability to achieve lasting benefits for businesses and the environment,” added the company in a press statement. 

Looking back over the last few years, it’s no wonder that procurement leaders are worried. 

From geopolitical conflict and a pandemic to material shortages and inflation, the decade so far has been defined by disruption. It’s also re-defined supply chains, seeing nearshoring and protectionism start to supplant thirty years of globalisation. And none of this looks like it’s about to change any time soon. 

According to a new report from Gartner, supply disruption is currently sitting at the top of procurement leaders’ list of reasons to lose sleep. However, it’s far from the only challenge keeping the industry’s CPOs up at night. 

“CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events,” Andrea Greenwald, Senior Director Analyst in Gartner’s Supply Chain practice, commented. “They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”

Competing anxieties

Gartner’s latest survey was conducted from June through July 2024, and interviewed 258 sourcing and procurement leaders. The data, Gartner claims, intends to help CPOs understand and prioritise the most significant risks that could impede procurement operations, as well as what actions can be taken to manage them effectively.

The responses revealed a strong tendency to worry about supply disruptions. Almost half (42%) of respondents listed it as the biggest risk procurement faces, including natural disasters and transportation issues. According to Gartner, this prioritisation is due to the unpredictability and speed of such disruptions as well as their magnitude. It’s worth noting that the findings are from the months before two severe hurricanes hit the United States. Since then, Helene and Milton threw millions of lives into disarray and severely disrupting supply chains across North America. With hindsight, the data feels almost prescient. 

After supply disruption, macroeconomic factors, including economic downturns, inflation, and other economic factors, rank as the second most significant risk. These factors, while easier to predict, can still have a major influence on long-term procurement strategies.

Geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks, tied for the third most significant risks. 

Responding to the risks 

Gartner’s report recommends that CPOs manage these risks by taking the following steps. 

• Assess and prioritise risks: CPOs should evaluate the impact of all major risk factors. They should then prioritise them based on their likelihood, impact, and speed. This includes considering organisational maturity and industry-specific factors.
• Develop and/or strengthen partnerships: Segment suppliers that provide critical goods and services to the organisation. Then they should implement techniques to proactively safeguard the organisation.
• Navigate internal complexity: Collaborate with strategy, finance, and legal teams to address macroeconomic factors and compliance issues effectively.

NASA has announced that, following a successful first year, the agency plans to relaunch the NASA Acquisition Innovation Launchpad (NAIL). 

NAIL was first launched in February 2023. The procurement innovation program aims to identify ideas and solutions to encourage innovation from diverse perspectives, improve reach, reduce barriers, and build an innovation-focused culture that can produce ideas from team members in the Office of Procurement or across the agency, as well as from industry. 

NASA’s Office of Procurement manages the NAIL program. The program was established to find ways of managing risk-taking and encouraging innovation. It does this through the submission, review, and approval of ideas from anyone who engages in the acquisition process. 

“The success of the NAIL inaugural year has laid a strong foundation for the future,” said Karla Smith Jackson, deputy chief acquisition officer and assistant administrator for the Office of Procurement. 

NASA procurement on the ropes 

NASA spends approximately $21 billion or 85% of its budget on acquiring goods and services. However, the agency needs to find new efficiencies and ways to innovate with regard to procurement, as some experts have described NASA’s funding as inadequate to perform the activities core to its mission. 

A report released in September 2024 by the National Academies, entitled “NASA at a Crossroads – Maintaining Workforce, Infrastructure, and Technology Preeminence in the Coming Decades” argued that, while NASA’s ability to pursue high-risk, long-lead science and technology challenges and opportunities in aeronautics, space science, Earth science, and space operations and exploration has arguably been the agency’s greatest value to the nation, the agency not only “faces internal and external pressures to prioritise short-term measures without adequate consideration of longer-term needs and implications”, but has a budget that “s often incompatible with the scope, complexity, and difficulty of its mission work.”

NAIL promises to achieve new procurement milestones

Over the past year, NASA spokespeople claim that NAIL has achieved numerous milestones. The program, NASA claims, has allowed it to approach various procurement challenges and implement diverse solutions. 

Key accomplishments reportedly include improving procurement processes and technological automations and developing an industry feedback forum. The program update will leverage industry’s feedback to continue fostering innovative solutions and optimise the agency’s procurement efforts.

NASA’s Office of Procurement will use information from the program’s pilot year to focus on the following priorities in 2025:

Providing additional engagement opportunities for the agency’s network of innovators

• Enhancing the framework to improve internal outcomes for the agency
• Promoting procurement success stories 
• Investing in talent and technology

“We are incredibly proud of the program’s achievements and are even more excited about the opportunities ahead with the relaunch,” said Kameke Mitchell, NAIL chair and director for the Procurement Strategic Operations Division. “We encourage everyone to get involved and make fiscal year 2025 a standout year for innovation.”

Total global procurement spend totals more than $13 trillion annually. With so much money on the line, the need for procurement optimisation is critical. This substantial spending underscores the critical role procurement optimisation plays in improving efficiency and cost management for businesses around the world. Organisations are increasingly turning to digital solutions to improve visibility and control over their procurement processes, reportedly underscoring the significance of a new merger between Unimarket and VendorPanel.

Unimarket-VendorPanel merge

 Unimarket, a global technology provider of spend management and e-procurement solutions, recently announced an upcoming merger with VendorPanel, a source-to-contract procurement platform. The companies argue the union will combine the strengths of both organisations, allowing them “to deliver a more robust source-to-pay solution”. The merger will also help improve business processes and deliver tangible business outcomes for both companies’ customers worldwide. 

The combined company now serves nearly 450 customers across the United States, Australia, New Zealand, and Canada, in sectors such as corporate, education, healthcare, government, energy, facility management, transport, and utilities.

“Both companies bring over 15 years of expertise and a proven track record of delivering exceptional results,” said Phil Kenney, CEO of Unimarket. “This merger strengthens Unimarket’s ability to meet the evolving needs of our global customers, offering scalable solutions that capitalise on growing market opportunities.”

“Our merger with Unimarket provides an incredible opportunity to deliver even more value to our customers,” said James Leathem, CEO of VendorPanel. “Our combined platform delivers a comprehensive solution that enhances visibility and drives operational performance across the entire source-to-pay process.”

“This strategic merger marks a significant milestone for both Unimarket and VendorPanel, reinforcing their leadership in the procurement technology space,” said Phil Cunningham, Managing Director at Accel-KKR. “With their combined capabilities, these two companies are now poised to capitalise on global growth opportunities, delivering unmatched value to their customers while driving innovation and performance improvements across the source-to-pay ecosystem.”

Despite vocal enthusiasm and “a proliferation of government guidance documents”, the UK government is failing to support local authorities when it comes to artificial intelligence procurement, claims a new report by the Ada Lovelace Institute. 

The independent research organisation’s findings were released on Tuesday. The report analyses 16 different pieces of guidance and legislation – published under the previous Government – relevant to AI procurement. They include newer AI technologies, such as generative AI, as well as data-driven technologies already widely used by local authorities, such as predictive analytics.

Neither clear, nor comprehensive, nor consistent 

The report found that local governments lack access to “a clear, comprehensive or consistent account of how to procure AI.”

The public sector procures the majority of AI technologies from the private sector. Therefore, the institute’s report argues that the procurement process can and should play an important role in assessing the effectiveness of potential solutions, anticipating and mitigating risks, and ensuring that any deployment is proportionate, legitimate and in line with broader public sector duties.

Imogen Parker, Associate Director at the Ada Lovelace Institute commented: “Procurement can and should be a key lever in ensuring that AI tools being used by local government are safe, effective, fair and in the public interest. Local authorities face the unenviable task of having to navigate unclear, overlapping and sometimes conflicting guidance.”

The Institute’s report includes a number of practical suggestions for improving procurement of AI and data-driven systems in local government. These include clearer guidance, definitions, success metrics and responsibilities. Specific examples include implementing governance mechanisms like the Algorithmic Transparency Recording Standard, piloting impact assessments and supporting public participation.

AI as the answer to a local governments in crisis? 

The report comes at a time when local authorities in the UK are facing severe pain points. Public services in the UK, including the National Health Service, are “stretched and struggling.” This year, a record number of local authorities declaring effective bankruptcy. This is largely the result of funding cuts by the central Government. The effect of these cuts has also been compounded by the strain of the COVID-19 pandemic. Lastly, increasing demand for local services due to economic pressures and an ageing population have also contributed.

In the face of these growing challenges, policymakers have touted AI as a potential “cure-all” solution. The technology could, politicians argue, help address societal problems such as the cost-of-living crisis. It could also, they argue, enable innovation or improve efficiency within government at all levels. However, we can’t determine whether or not using AI to fill in the massive funding gaps that plague the UK’s local governments is a viable solution until local authorities can implement AI tools. The Ada Lovelace Institute urges that “the use of AI in the public sector must be carefully assessed to ensure it is fit for purpose” and deployed for the public good. 

The first step, warns Parker, is “‘Embedding a robust, ethical procurement process in the context of reduced budgets”. She admits this represents a “significant challenge.” However, she also insists that “it is important to also consider the cost of not doing this, both financially and ethically, something demonstrated all too clearly by the Post Office’s Horizon scandal.” 

The new Procurement Act, which will now come into effect early next year, introduces new regulatory standards for public sector higher education institutions, focusing on areas such as transparency, competitiveness, accountability and efficiency.

It has never been more important for higher education institutions to ensure the physical infrastructure of educational buildings is up to standard and equipped to drive quality education and research. Universities are facing unprecedented challenges including fluctuating enrolment numbers, leading to a need for sustainable and resilient infrastructure to attract students.

The new Procurement Act emphasises the importance of openness, requiring greater transparency when it comes to procurement in construction. This means decisions should be clearly justified and accessible to key stakeholders including students, the public and government bodies. 

Single stage or two stage?

When considering building procurement, higher education institutions must consider the method. In single stage procurement, a client issues a tender for a whole project and contractors compete for the project based on price. 

Two-stage procurement divides the project into pre-construction and construction phases. In the pre-construction phase, bidders compete via a mini competition for the contract based on their capacity, capability and experience. A client can review the approaches of bidding contractors and compare their rates for profit, fees, or overheads.

In the second stage, the contractor and their key supply chain members including designers, subcontractors, and manufacturers engage with the project as early as possible. They will fully scope the project and assess risks early on. This reduces any chance of unforeseen issues occurring later in the project that impact costs and deadlines.

A single stage procurement model with fixed outcomes alongside squeezed budgets runs the risk of putting the original design intent at risk and can force use of poorer-quality materials, risking quality and in turn the reputation of the university to stakeholders and students alike.

At a time of tightened public budgets and rising costs, collaborating with industry through a model such as two-stage, is key to facilitate innovation, while unlocking public value. 

The importance of two stage for considering non-price factors

The new Procurement Act is set to refocus the criteria for awarding contracts from the most economically advantageous tender (MEAT) to the most advantageous tender (MAT). This will enable contracting authorities to place more value on non-price factors, such as social value, environmental impact and innovation.

 This is becoming increasingly important for higher education institutions, with students expecting that their campuses, universities and schools are more sustainable and should showcase this through the learning and built environment. 

With a two-stage process, since the mini-competition involves pre-qualified suppliers who have already demonstrated their skills and experience, Higher Education Institutions can be assured that bidders will be able to meet high standards in areas such as functionality, compliance with educational requirements, leading to better overall outcomes. 

The competitive nature of the mini-competition phase also pushes suppliers to differentiate themselves through offering innovative designs, technologies or construction methods that add value in areas such as waste reduction, renewable energy, or operational standards.

This approach saw Bristol Humanities Hub achieve BREEAM Excellent through a decision to install natural ventilation, significantly reducing operational carbon usage. 

Early engagement is key

The mini-competition stage of two-stage procurement also ensures all parties can address potential issues early. This means higher education institutions have an opportunity to highlight and clarify any uncertainties in terms of project scope, timelines or technical requirements. 

Two-stage open book also gives higher-education the opportunity to tap directly into the supply chain when making early-stage choices in areas such as materials and methodologies, identifying and mitigating risks in both the design and cost plan. This helps avoid costly reworks later down the line, like unaddressed accessibility requirements for students, or incorrect sizing of HVAC systems including heating and ventilation for spaces such as laboratories or research centres which could result in rework. 

Early engagement is also key for bringing in the supply chain early, making early-stage choices in construction methodology and materials, and ironing out timelines to ensure the project can be delivered in a way that brings the most value to a higher education institution. With the Public Procurement Act encouraging public sector organisations to have a deep understanding of the market before issuing tenders, engaging the supply chain early through soft market testing via two-stage will ensure that higher education institutions have a thorough knowledge of supplier capabilities. 

Oxford Brooke’s new teaching and engineering facility on the Headington Hill campus showcased the importance of clients and contractors collaborating via two-stage open book to ensure the appropriate materials were available earlier on in the process. In doing so, the contractor Willmott Dixon, was able to phase the works to complete certain blocks earlier. This allowed international students to take residence in summer, allowing the university to have additional income to continue to provide a higher quality learning environment. 

Sustainable futures

The two-stage process also allows contractors to work with higher education institutions to embed sustainability, a key focus amid net zero targets. 

For example, The University of Hertfordshire’s Spectra Building saw the contractor Morgan Sindall working with its supply chain to source sustainable materials.  Timber was used for staircases as opposed to steel after early-stage conversations revealed the importance of these elements for meeting sustainability requirements.

It also emerged that operational carbon efficiency was at the top of the client’s agenda, so Morgan Sindall worked closely with the client team on the electrical side to ensure longevity in terms of maintenance, installing motion sensors that switch off when not in use.

To conclude, early engagement through a two-stage procurement process encourages market understanding and innovation while mitigating risks, ensuring value for money. 

This is increasingly important at a time when technological advancements and innovation are calling for specific requirements for space, technological integration and infrastructure, which can be challenging to address without early, specialist input from contractors and suppliers.

Since 2020, global supply chains have experienced higher levels of volatility. The COVID-19 pandemic, geopolitical conflict, economic tensions, and the worsening climate crisis conspired to drive sharp price increases in energy, metals, polymers, packaging materials, wood, and other raw materials in 2021 and 2022. Thankfully, prices have fallen over the last 18 months. However, purchasing organisations now “find themselves needing to adjust commodity and component prices back to a “fair price” level, based on actual raw material cost and energy price developments,” argues a new report by McKinsey. 

According to the report, advanced analytics in the form of “Spend Digital Twins” could be the answer. 

End-to-end spend visibility

McKinsey argues that, for purchasing organisations to achieve fair pricing, analytics are key. Powerful analytics tools will, they argue, provide the necessary transparency to understand the impact of changes to input cost drivers. Without end-to-end spend visibility, achieving fair pricing with suppliers is next to impossible, and can lead to loss of profitability. 

A spend digital twin is the tool to provide this transparency. The tool uses advanced analytics to build a digital copy of the entire spend cycle. This then enables organisations to more closely examine cost drivers at the category level. This in turn allows them to aassess the impact of their market development over time. And, finally, to establish a “robust fair price in relation to supplier’s price.” It’s the same approach taken with digital twins in manufacturing or warehouse management that allows organisations to drive efficiency, uncover the sources of pain points, and mitigate disruption. 

Doing it with procurement means, broadly speaking, modelling essential parts of the purchasing spend from the ground up. Organisations can do this based on input cost factors, which can be used to dynamically track fair price development over time.

Uses for a spend digital twin 

The procurement landscape is constantly changing, with current trends seeing a rise in sustainable sourcing, as well as nearshoring to increase resilience. Given the level of volatility,  the need for transparency and real-time insights is only going to grow. According to McKInsey’s report, spend digital twins can be valuable tools in several critical (and common) procurement contexts.  

Identifying negotiation potentials

Spend digital twins compare the fair market price index with actual price progression. By doing so, they can help a procurement buyer know when price changes have deviated from fair market price. Once identified, these deviations can be used as the starting point of a negotiation. 

Preparing for supplier negotiations

Once deviations in price have been identified, procurement teams can use a spend digital twin to prepare for negotiations with suppliers. The tool can help calculate the difference between the fair market index and the supplier price. This can help determine fair price adjustments at the current market level.

Deriving indexation contracts

A spend digital twin can also support purchasing departments trying to derive indexation strategies. Analysing the price development of previous years relative to a fair market index helps with understanding patterns. For example, if cost increases are immediately passed through by suppliers on a regular basis while cost decreases come with a delay, this may be a motivation to implement indexed contracts.

Repeated supply chain disruptions have put an immense strain on businesses over recent years. Global conflicts have interrupted critical supply routes such as the Red Sea. Geopolitical tensions are leading to additional tariffs on companies doing business with the likes of China, Russia, and Iran. Add the harsh realities of lingering inflation and higher energy costs to the mix, and businesses have their work cut out navigating an increasingly complex and volatile global landscape.

The UK is taking action, with the 2024 supply chain strategy. This legislation aims to boost collaboration between businesses and the government to help relieve pressure and resolve disruptions quickly. 

However, procurement leaders can’t afford to wait for these initiatives to come in. Disruptions can stop a business in its tracks. A serious event can prevent a business from providing goods or services. It can raise costs and damage customer relationships. To avoid them, procurement leaders must act to restructure their supply chains and increase their resilience.

Completing the transition to the supply chain of the future necessitates building agility and resilience into businesses’ supply networks. But what steps can they take to achieve this?

Ensuring supplier diversity

Firstly, businesses need to change the makeup of their supply chains, ensuring they have a diverse portfolio of suppliers to mitigate the impact of geopolitical, regulatory, and environmental risks. This approach may require adopting tactics such as on-shoring and near-shoring to bring suppliers closer to home. 

Recent research has shown that 46% of businesses have switched to on-shore and near-shoring methods to minimise the impact of disruptions.

However, while bringing suppliers close to home can reduce risk from far afield, businesses must be wary of placing too many eggs in one basket. If disruption hits a region where most of their suppliers are located, operations will grind to a halt.

Kickstarting supply chain recovery

To foster agility and resilience in the supply chain, it is essential to build a better understanding of pre-existing suppliers. Businesses must learn from previous disruptions, putting the right processes in place to identify future risks and be able to spot potential suppliers that would be affected by disruptions – including tier 2 and 3 suppliers, where the risk is highest.

Businesses also need the flexibility to identify and onboard alternative suppliers for critical goods and services, should an existing supplier fail. This means implementing supplier contingency plans which include identifying alternative suppliers, so firms are not forced to scramble when disruptions occur.

Visibility for supply chain stability

By using cloud-based solutions to gather supplier data into a single, Source-to-Pay platform, businesses can make procurement smarter, enabling them to map suppliers, identify areas of risk, and ultimately gain a 360-degree view of the supply chain. 

Increased visibility will ensure a single source of truth for all supplier information, including performance, risk, orders and much more.

Businesses can use this information to streamline two-way communication with suppliers, as well as other internal stakeholders. This is essential for more strategic collaboration. For example, buyers can notify suppliers of planned orders or forecasts ahead of the actual purchase. This will help suppliers to prepare for larger orders or reduce their unnecessary inventory. 

On the other hand, suppliers can share information from their side too, notifying buyers of any advance or delayed shipments. And increasing data sharing between the business, suppliers, and stakeholders will also produce benefits elsewhere. For example, sharing data can drive improvements in ESG and offering the ability to co-innovate on new products and services.

Businesses can also bolster their supplier visibility and communication efforts by utilising the latest advances in Generative AI (GenAI). GenAI tools can further the procurement function’s ability to derive actionable insights and free up time from operational activities to focus on analysis and relationships. 

For example, GenAI can be used to assess existing supplier performance and draft improvement plans, draft communications to suppliers to speed up information sharing, or identify alternative suppliers that meet specific requirements.

Supply change

Ultimately, to avoid disruption and bolster resilience, organisations must transform their spend management. Businesses who fail to digitalise their spend management will miss out on the ability to continually assess risk exposure and build a complete view of the supplier ecosystem, falling foul of the next unexpected black swan event. 

On the other hand, those who can build a more resilient supply chain will set themselves up to swerve future disruptions, build stronger supplier relationships, and overtake the competition. 

Contract management could be the next area where procurement’s transformation from a legacy purchasing function to a strategic value creator has the potential to meaningfully support the business as a whole. 

Procurement has been on a journey over the past few years. The function has gone from tactical back office department to a key driver of resillience and strategic wins. Contract management is increasingly looking like the next stage in that evolution. 

In the public procurement sphere, the UK government’s Procurement Act 2023 will likely elevate the importance of contract management. The act is due to come into effect in early 2025 (after a recently announced delay). Under the new law, the public sector will need to more closely monitor supplier performance. Companies will do this through Key Performance Indicators (KPIs). Organisations tendering contracts worth £5 million and above will need to assess performance using three different KPIs.  

As the public sector reforms its approach to contract management, private sector firms can expect to start investing greater time, attention, and resources into the process as well. 

Beware of contract drift

Plenty of businesses have found out the hard way that finalising a contract with a vendor and implementing the terms of that contract over its entire life cycle are very different things. Over the course of a contract, hard-fought terms can end up being forgotten, ignored or misinterpreted. This is broadly referred to as “drift”. 

Contract drift can lead to increased spend, logistical failures, loss of liquidity, and supplier disputes. Not only that, but potential breaches of compliance can result in massive financial and reputational damage. Effective contract management can help negate these risks. 

What is contract management? 

Contract management refers to the process of managing a contract after the participating companies sign it. Handling contract management refers to all the activities that are required at different stages of the contract lifecycle. These start with the drafting, signature and mobilisation and progress through exit and termination. 

Effective contract management can help your business drive positive results. Done correctly, businesses can use a holistic view of supplier performance to ensure that all parties are adhering to the terms of the contract. 

Without an effective, holistic approach to managing contracts, businesses run the risk of having siloed data across disparate repositories, setting teams up for failure. Lower visibility makes compliance more challenging and audits unnecessarily complex. In turn, businessses can lose revenue if untracked spending and unused contract entitlements go unnoticed. 

Organisations can avoid these risks by investing in proper contract management. Doing so will, in turn, create further value from the supply chain and create competitive advantage for the business.

Done right, contract management takes a holistic view of the supplier ecosystem, tracking everything from delivery, finance, and quality to risk and relationships. Digital tools like centralised contract management software can integrate into the source-to-pay process, and provide a wide range of benefits, from preventing siloed data to allowing more collaborative contract authoring between different business departments. 

Until now, contract management has played second fiddle to other aspects of procurement like sourcing. However, a shift is taking place throughout the sector. Businesses are starting to recognise the value of contract management and its potential to drive value, improving their bottom line. 

The most in depth investigation of COVID-19 pandemic medical materials procurement under the Conservative government to-date has found evidence of corruption. After an analysis of over 5000 contracts across 400 public bodies, the report released by Transparency.org found several glaring issues. 

Researchers from Transparency.org analysed a wide array of date. This included publicly available data on UK public contracting, official reports, litigation in the courts, and public interest journalism. They identified 135 high risk contracts with a value of £15.3 billion with three or more corruption red flags. 

“The scale of corruption risk in the former government’s approach to spending public money during the years of the COVID pandemic was profound. That we find multiple red flags in more than £15 billion of contacts amounting to a third of all such spending points to more than coincidence or incompetence,” said Daniel Bruce, Chief Executive, Transparency International UK. 

Four key issues identified

The report’s analysis of the government’s procurement contracts uncovered four key issues with how the conservative government handled the pandemic. Over 230,000 British citizens are estimated to have died due to COVID-19.  

The report has identified billions of pounds of potentially mismanaged public contracts. This mismanagement may have resulted in lower quality healthcare and preventative measures in response to the pandemic.

• Political connections: at least 28 contracts worth £4.1 billion went to those with known political connections to government. This amounts to almost one in ten pounds spent on the pandemic response
• VIP Lane for PPE: 51 contracts worth a total of £4 billion went through the unlawful ‘VIP lane’, of which
  • The government awarded 15 contracts worth £1.7 billion to politically connected suppliers
  • Politicians in office at the time referred 24 contracts worth £1.7 billion.

• New inexperienced suppliers: eight contracts worth a total of £500 million went to suppliers no more than 100 days old.
• Uncompetitive procurement: the UK government awarded over £30.7 billion in high-value contracts lacking competition. THis is equivalent to almost two-thirds of all COVID-19 contracts by value.

Systemic issues and what to do next 

The report amounts to a shocking indictment of public procurement under the previous Conservative government. 

Bruce noted that the UK’s COVID procurement response had several serious problems. He added that political choices were made that allowed cronyism to thrive, all enabled by woefully inadequate public transparency. “As far as we can ascertain, no other country used a system like the UK’s VIP lane in their Covid response,” he added. “The cost to the public purse has already become increasingly clear with huge sums lost to unusable PPE from ill-qualified suppliers. We strongly urge the Covid-19 inquiries and planned Covid Corruption Commissioner to ensure full accountability and for the new government to swiftly implement lessons learned.”

Disruption has become a new and abiding fact of life for supply chain managers and procurement functions in the UK. New research from spend management firm Ivalua has found that nearly half of UK businesses (47%) have experienced an increase in supply chain disruption in the last 12 months. In the last year alone, a significant portion of UK businesses experienced disruption. High inflation (79%), high energy/fuel costs (75%), the war in Ukraine (53%), and the Red Sea conflict (44%) all affected UK businesses’ ability to procure goods and manage their supply chains.

The study of 300 supply chain and procurement decision-makers in the UK found that over the next 12 months, 45% anticipate that supply chain disruption will increase. In fact, 60% of UK businesses agree that after years of disruption, their supply chains feel more fragile than ever.

Beating the trend — effective disruption mitigation strategies   

As supply chains and procurement teams battle a growing ambient likelihood of disruption, UK businesses highlighted several strategies that they said had been effective at mitigating the impact of disruption to their value chains. 

Improving the geographical diversity of their supplier base (64%), finding alternative suppliers for critical goods and services (64%), increased nearshoring (63%), and increased onshoring (61%) were all highlighted as increasing supply chain and source-to-pay process resilience. 

“Supply chain disruption continues to have a significant impact on business operations due to repeated, unpredictable ‘Black Swan’ events,” comments Ian Thompson, VP Northern Europe at Ivalua. “These major disruptions used to be rare, but now feel like a fact of life. This has meant global supply chains have become more fragile than ever, causing delays, shortages, and increased costs as factories shut down and transportation networks fall victim to delays. Consequently, UK businesses feel like they’re stuck in a loop of constant disruption, unable to fully recover after each event.”

Preparing for disruption amid uncertainty  

The increasing number of supply chain disruptions have prompted organisations to re-evaluate supply chain strategies to insulate themselves from supply chain shocks. However, 46% say they don’t have enough sufficient visibility. This lack of visibility makes it hard to understand which suppliers are impacted by supply chain disruption. At the same time, 43% of organisations say they can’t adapt quick enough.

To deal with ongoing uncertainty, UK businesses are focusing on adopting the right tools and processes. Over half (58%) of organisations said investing in technology to improve supply chain visibility has been very effective at helping to mitigate the impact of supply chain disruption, while 58% said the same for collaborating with suppliers to share more risk data. A further 71% said implementing AI to automate supplier risk management has been effective at reducing the effect of supply chain disruptions.

“Four-in-ten UK businesses agree that their supply chain recovery is moving at a snail’s pace, so it’s vital they take proactive measures to minimise the impact of disruptions,” continues Thompson. “This means arming procurement teams with the right tools to improve supply chain transparency and collaboration.”

The increasing complexity of procurement and supply chain management is eroding the C-suite’s confidence. According to a new report by supply chain consultancy Proxima, 86% of CEOs see resiliency issues in their supply chain. 

Proxima’s annual 2024 Supply Chain Barometer report found that CEOs are attempting to address these concerns by reorganising critical supply chains and leveraging technologies like AI. However, significant challenges persist. 

“It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads. The results of this year’s Barometer show that business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address,” Simon Geale, Executive Vice President and Chief Procurement Officer at Proxima, commented.  

Regionalisation, AI, and capex

Proxima’s report is based on a survey of 3,000 CEOs in the UK, Europe and the US. The survey explores how business leaders are responding to geopolitical, economic and environmental supply chain issues. This year’s results reveal that complex supply chains continue to be redesigned and reconfigured. Increasingly, globalisation continues to give way to regional, “friendly” trading zones.

Large organisations were found to be focusing more on offshoring. Notably, they were focusing less on onshoring (25% below overall). CEOs in Europe were more likely to be looking at onshoring supply chains than those in the UK and US.

AI adoption remains a major source of investment, attention and, for many organisations, frustration. Functionally all (over 99% of) CEOs are considering the technology for their supply chains. An overwhelming majority (82%) also said they are planning new AI initiatives this year. However, the staggering amount of money being spent on AI isn’t expected to start delivering returns immediately. Just 22% of CEOs said they expect significant impact within the immediate future. Instead, they indicated that there is significant “hype” around the technology but limited adoption in real terms. Nevertheless, the money keeps coming. 

More generally — whether because of their uncertainty or in spite of it — CEOs said they would be paying more attention to supply chains this year. Despite easing inflation and stable markets, 96% of CEOs are dedicating equal or more time to supply chain issues in 2024, compared with 2023. Geopolitical tensions are pushing leaders to navigate uncharted global dynamics with no end in sight.

Human rights and the climate crisis cast a shadow over supply chains 

In a continuation from last year, over two thirds of CEOs (70%) said they are concerned about the potential for human or labour rights issues in their supply chain. This comes just a few weeks after child labour was found in the supply chain of fast fashion giant SHEIN. 

Concern was found to be highest among the utilities (78.2%), manufacturing (77.1%) and retail (75.4%) sectors. 

There was also a consensus among the CEOs surveyed (99%) that there are barriers to decarbonizing supply chains. However, a consensus does not exist on which barrier is biggest. The largest barrier remains the complexity of the work (29%). However, the other response options carry nearly the same weight for CEOs. These included cost, access to skills, and access to data). The leading barrier in larger organisations is the lack of access to required data, at 30% in contrast to the 22% average for all organisations.

Geale added that it was “Perhaps most worrying… that concerns around human rights issues persist, but the findings also shine a light on just how multifaceted the decarbonization conundrum is. What is for sure is that amongst other priorities like right-shoring, and investing in AI, there is a very definite focus on cost reduction in the 12 months ahead.”