Trust For London’s new report argues that the UK government’s procurement act could lift communities out of poverty and build a fairer economy.

The UK is at a crossroads in terms of how its economy serves — or doesn’t serve — the people who live here. The cost of living crisis saw prices rise sharply across the UK between 2021 and 2022, with the annual rate of inflation peaking at 11.1% in October 2022. Prices haven’t gone down in the two years since, and wages have barely risen to meet them. Similarly, the housing crisis continues to put affordable living spaces out of reach for more and more British citizens, as the poorest 20% of renters in the UK pay over half their income to landlords, and (in 2023) England had the highest proportion of homeless households in the OECD. 

With over £390 billion of public money spent every year, public procurement is one of the largest levers at the government’s disposal for redressing social inequalities, according to a recent report by the Trust for London

More than buying goods and services

The report, Public Procurement For Good argues that government purchasing can do more than buy goods and services. Public procurement used for the public good can, the report argues, lift communities out of poverty, promote fair wages, and build a stronger, fairer economy through better wages, working conditions, and legislation that fights discrimination in the labour market. 

Setting the Real Living Wage as a default condition of every public contract as a minimum will ensure that good employers are not undercut by the bad and will generate more money in local economies. 

Making “Good Jobs” a standard condition of very public contract will ensure public money isn’t wasted on employers who fail to guarantee their employees decent conditions at work. “Bad work” drags down local economies and leads to increased pressure on hard pressed public services. 

By rebuilding local economies to support Good Work organisations, authorities have the power to reserve contracts for organisations and programmes designed to tackle discrimination in the labour market. The report research shows that if the UK government directed just 1% of procurement spending towards such positive action employment programmes this would generate £3.9 billion of contracts — helping support local delivery and address economic inactivity.

The Government also recently issued a National Procurement Policy Statement Survey. Trust for London is urging individuals and organisations to support its recommendations through responding to the survey and making the case for:

  • Real Living Wages as a minimum for every public contract.
  • Good working conditions as a baseline standard.
  • Reserved contracts for social enterprises and local organisations that put communities first.

You can access the government survey here, which closes on 4 November. 

If you miss the deadline, you can still make your views known by emailing your MP or the transforming procurement team at procurement.reform@cabinetoffice.gov.uk. 

Stephen Carter, Director of Product at Ivalua, explores how defence firms can navigate growing complexity in their supply chains.

Defence supply chains are becoming more complex than ever. For many defence organisations, the number of suppliers and sub-tier suppliers they depend on has reached hundreds of thousands.

This complexity is becoming increasingly difficult to navigate. Especially as defence firms typically use traditional and outdated legacy technology that hampers supply chain visibility. For example, the UK Ministry of Defence (MoD) acknowledged long-standing issues with its many legacy systems earlier this year, which is harming its ability to make supply chain improvements. Key problems identified with legacy systems were limited functionality and fragmentation of the MoD’s inventory management.

Beyond defence, other industries such as manufacturing and automotive are facing increasingly convoluted supply chains that must accommodate rapidly changing risks. In fact, according to Gartner, 53% of supply chain leaders say supply chain complexity reduces their ability to implement change. To overcome this challenge, defence organisations need technology that enables transparency and is adaptable enough to manage growing complexity.

The challenges

For defence organisations with supply chains spanning numerous tiers, across different countries, and involving multiple moving parts, deep visibility is critical. Without deep visibility, defence firms are at risk of, for example, the slow delivery of critical materials and components needed for military operations and equipment production. However, rising supply chain complexity makes this extremely difficult. And without visibility and control of the entire supplier base, defence firms can’t react quickly to supply chain shocks or identify and onboard new suppliers at pace. 

Increased geopolitical instability means visibility has become even more important. Blockages caused by sanctions, war, and other geopolitical events are more frequent and unpredictable, requiring organisations to be agile in order to adapt. For example, shipping disruptions in the Red Sea following the “War” in Gaza have resulted in disruption to the flow of materials, parts and other goods that defence firms rely on.

However, many defence organisations are stuck in the past when it comes to managing risk, or even identifying opportunities to find savings and innovate. They rely on outdated manual processes and Excel spreadsheets, rigid ERP systems, and dispersed data, leading to gaps in visibility. The changing supply chain environment underpins exactly why defence firms must take a smarter and more flexible approach to procurement. In fact, with the Labour government voted in, defence spending will rise to 2.5% of GDP, giving the industry more incentive to modernise procurement technology. This will help shift attitudes away from cost-saving and into defence innovation.

Strategies for supply chain success

To achieve full visibility across highly complex supply chains, defence firms must equip themselves with the right tools to mitigate disruption, make better informed decisions, and identify areas to add value.

Technology like cloud-based Source-to-Pay (S2P) offers tremendous strategic value by providing a single source of truth, helping organisations manage all spend and suppliers. Effective S2P increases supply chain observability and improves collaboration with suppliers on mitigating risk, innovating and more. But not all S2P solutions are created equal. Outdated legacy technology is a challenge in most defence organisations. Such systems limit data quality and access, making it difficult to take quick, informed decisions and understand the trade-offs involved in specific supplier decisions. What’s more, cumbersome legacy technology can slow collaboration, making it difficult for stakeholders across multiple departments to work towards common goals and objectives.

As geopolitical uncertainty and disruptions continue, defence organisations stuck using poorly architected S2P technology will be affected by limited visibility. Being unable to swiftly adapt to disruption, means critical military equipment and resources may not arrive on time.

Defence organisations need smart procurement platforms that can pull in data and insights on the entire supply chain to identify dependencies and properly assess risk. These technologies must provide a single source of truth for all relevant information, from suppliers, internal sources and third-party information providers.

Platforms must also be flexible enough to expand data models and embrace emerging technology that can deepen observability into complex supply chains. For example, defence organisations should look to embedded AI solutions to reduce complexity and assist in contract management, supplier performance management and other critical processes to improve efficiency and decision-making within the sector.

Levelling up tomorrow’s defence

With advances in Generative AI, many vendors are now offering use cases for supply chain risk visibility. These will continue to expand, and defence leaders should be sure that solutions also support them refining and creating their own use cases to not be hundred by vendor roadmaps and R&D investment. To realise the true potential of Generative AI, leaders must think holistically and ensure they have an adequate data foundation and roadmap strategy.

Outdated, legacy processes and systems are unable to comprehend the complexity of modern defence supply chains. Only with modern platforms and systems can today’s defence industry companies make their supply chains simple, providing both transparency and a platform for organisations to adopt automated processes that save valuable time, mitigate risk, and increase agility. 

A smarter approach to procurement empowers defence organisations with a 360-degree view of all spend and supplier data in one place. With complete visibility into defence supply chains, procurement will be more able to predict risk, navigate uncertainty, and identify opportunities for future growth.

Olivia Matei, Procurement and Framework Coordinator at Lexica, argues for a more nuanced approach to sustainable procurement in the NHS.

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 30th 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.

New features increase speed, insight, and Human-in-the-Loop (HITL) Capabilities for Beroe Live.ai Procurement Intelligence tools.

Procurement software developer Beroe has announced a suite of new features and upgrades to its procurement intelligence platform, Beroe Live.ai. According to the company, the enhanced features provide procurement professionals with unprecedented insights and support. Their platform reportedly excels at combining AI with expert human insight.

The new features include enhancements to Beroe Live.ai’s Category Watch and Risk Watch modules. Also Beroe has made upgrades to Abi, the company’s AI assistant. Beroe is also launching ‘Category Digest’, a groundbreaking AI-generated category podcast.

Data driven insights with human expertise 

A large part of the way Beroe approaches designing its procurement solutions is driven by the understanding that AI tools should exist to support human decision making. 

“Businesses deserve smarter, more powerful solutions combining reliable, data-driven insights with human expertise,” said Prerna Dhawan, Chief Product Officer at Beroe. “At Beroe, we believe there’s a different way to make procurement decisions, and the new features and updates we are announcing today reinforce our commitment to empowering procurement professionals to make confident choices every day, helping them to be in the know, always.”

The new and upgraded features coming to Beroe Live.ai include:
Category Health Score: One Metric for a Holistic View

With the introduction of ‘Category Health Score’, a unified weighted indicator that provides a quick and comprehensive signal of category performance, Beroe is enabling faster response times in a dynamic market.

Category Digest: AI-Generated Category Podcast Series

Initially for a limited set of categories, these AI-generated monthly podcasts powered by Beroe’s expert-curated data will provide a new way to catch up on significant developments and market dynamics wherever you are.

Supplier Disruption Monitoring

This new capability enables customers to gain real-time insights on global and local events impacting their suppliers. The soluton categorises insights for relevance, mapping them visually to enhance supply chain resilience and continuity.

Abi, Beroe’s AI Assistant, with enhanced HITL capabilities 

In addition to Abi’s multilingual features and industry-leading integration with enterprise collaboration tools such as Microsoft Teams, Slack and Zoom, Beroe has further strengthened its HITL (Human in-the-loop) capabilities, ensuring accurate and nuanced responses tailored to customers’ needs.

With this release, Beroe is expanding its tools’ category coverage. It now provides insights on 2,300 direct and indirect categories at global and regional levels. This is an increase from 1,500 at the start of 2024. Coverage of commodity price forecasts and other macro indicators has also increased from 8,000 region-grade combinations to more than 12,000.

“We understand that many procurement professionals are dealing with cognitive overload managing large amounts of data across disparate tools. To help address this, our product roadmap is focused on simplification and contextualisation, delivering not just reliable data but intelligent recommendations,” Dhawan added. “We will continue to expand our category coverage and strengthen ecosystem partnerships with leading procurement technology and solution providers to ensure our customers can make smarter, faster, better decisions.”

The new procure to pay solution from Spendesk promises to help facilitate better collaboration between stakeholders and streamline workflows.

Procurement spend management platform Spendesk has released a new procure-to-Pay solution. The solution reportedly positions Spendesk as the first European platform to fully integrate procurement and spend management for businesses of up to 1,000 employees. The launch comes six months after Spendesk’s acquisition of intake-to-procure (I2P) solution provider Okko.

SMBs struggling to handle supplier volume and complexity

According to a recent Spendesk report, the average SMB handles between 50 and 500 purchase requests a month and has a median of 800 suppliers on its books. 

With corporate purchasing becoming increasingly complex, Spendesk’s Procure-to-Pay tool reportedly helps organisations bring clarity and efficiency to procurement processes by supporting better collaboration between internal stakeholders and streamlines workflows. 

Spendesk customer Michael Stone, Procurement Director at Egg Events, commented: “Spendesk’s Procure-to-Pay solution will help us to optimise purchase management, which has been a key issue for our business. The automation of purchase orders and contract renewal alerts will enable us to gain efficiency and ensure that our spending policies and budget are respected. With purchase management and expense management all handled by the same platform, new workflows will be simple to implement while we now have full visibility of all spending.”

The solution also offers automation features that enable businesses to save time, reduce risk and increase spend control. Handling everything from intake to payment, the tool is easy to use and allows finance and procurement teams to easily put in place their procurement processes and have them widely adopted internally. 

Key features include:
  • Dynamic purchase request forms, tailored to the needs of the business. The solution guides requesters through the intake process so it can collect all necessary information.
  • Bespoke procurement processes with custom workflows. Reduce risk and increase clarity by ensuring you involve the right stakeholders at the right time.
  • Clear visibility for each stakeholder. All parties see every step in the process and have certainty on when to provide approvals and actions.
  • Contracts and renewals tracking: Alerts when renewal dates approach help businesses meet contract deadlines and avoid unwanted subscriptions being renewed
  • Efficient supplier management: Provides a centralised, detailed view of all suppliers enables organisations to identify dormant vendors and optimise supplier management
  • Automate accounts payable: Automatically generate purchase orders, record, approve and pay invoices directly from Spendesk
  • Payment flexibility: Issue virtual cards or pay bills directly from the Spendesk platform

Julien Chriqui, previously Co-Founder of Okko and now Procurement Product Lead at Spendesk, said: “Spendesk has always been at the cutting edge of innovation in spend management and the launch of the procurement platform signals our intention to keep developing solutions that match the needs of SMBs across all European territories, supporting smarter purchasing practices.”

Chriqui continues, “The procurement process is central to the smooth operation of a business but is traditionally a source of inefficiencies that can cause a great deal of frustration. Our Procure-to-Pay customers will be able to unify spend management and procurement in a single workflow, improving internal collaboration, and taking away the pain of procurement from individual employees and finance, procurement, legal, and IT teams. Through real-time visibility of the process, businesses will be able to make better and faster procurement decisions, streamline supplier management, and make significant cost savings.”

Achieve Partners bets on RiseNow’s plan to help the procurement industry tackle its skills shortage and growing appetite for tech.

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.” 

The “native AI” procurement company is the latest procurement tech firm to raise significant cash in a successful Series D round.

AI-driven sourcing and procurement platform developer Globality is the latest procurement tech firm to rack up a sizable funding round headed into Q4. The company raised $47 million in a Series D-1 and Series D-2 preferred stock offering. The company’s existing preferred shareholders and new investors, including Rollins Capital, supported the roiund, bringing the total capital raised by Globality to $356 million.

Procurement looking for a better way

At a time when multiple headwinds are conspiring to disrupt global supply chains, organisations are increasingly on the lookout for new ways to reduce costs, increase resilience, and drive strategic wins. According to Joel Hyatt, Globality’s Co-Founder and CEO, “Procurement is the low-hanging fruit because it is an enormous business function directly impacting the bottom line that utilises decades-old analog processes and outdated technology.” 

Hyatt adds that more and more executives are turning to artificial intelligence (AI) to increase procurement efficiency, visibility, and strategic potential. “All CFOs are looking at how they can best deploy AI to lower costs and capture efficiencies,” he says, adding that “Procurement leaders recognize that Globality’s AI-driven software delivers immediate, material benefits, putting an end to unmanaged spend and enabling the function to become a stronger business partner.”

Enabling procurement with Globality AI 

Globality is one of the industry’s leading developers of AI-enabled solutions for procurement. Judges named the company best Technology Provider at this year’s World Procurement Awards and, earlier this month, was the only autonomous sourcing platform included in the prestigious Spend Matters 50 to Know list.

The company’s platform runs on proprietary domain-specific data, adaptive machine learning models tailored and continuously refined for procurement. It also uses Gen AI to guide the user through an intuitive, interactive experience. As a result, the company claims, businesses that deploy Globality’s platform reduce costs by 10% – 20% across all their spend, while capturing 60% – 90% operating efficiencies and achieving better business outcomes.

As a result, Globality has had a marked impact on the way that large companies manage spend, source suppliers, negotiate lower costs, and evaluate performance. Globality’s Fortune 500 customers include Fidelity, Santander, British Telecom, Tesco, IQVIA, T. Rowe Price, Invesco, Hewlett Packard, Dropbox, and Allegis Global Solutions.

“We are delighted with the market momentum for adopting state-of-the-art AI technology that enables companies to do more with less and empowers employees to perform better and add more strategic value,” added Hyatt. “And we are grateful for the continued support of our shareholders and stakeholders.”

The new AI-powered training tool could be a step towards plugging the procurement skills gap.

Contract negotiation is a cornerstone of the procurement process. Training procurement professionals to negotiate for lower costs and better outcomes has always been a critical part of the sector’s talent pipeline. However, a rising demand for procurement professionals, growing amounts of work, the changing nature of the job, and an industry-wide skills shortage threaten to undermine the ability for procurement teams to effectively train the next generation of talent on vital skills like negotiation. 

Organisations have had some luck plugging the skills gap with virtual training. One of the key issues, however, is that good negotiation training relies on a nuanced back and forth between teacher and student. In traditional in-person training workshops, learners would often rely on the ability to ask the trainer to elaborate on specific points. Virtual training, while efficient, lacks this level of interactivity.

LavenirAI, an artificial intelligence-powered procurement training platform operator, claims that its new feature, Ask Harini, is a step towards solving this problem. 

Ask Harini — Personalised, interactive procurement training 

Representing “a major leap forward” for interactive, on-demand learning, AskHarini is a tool available within the LavenirAI Procurement negotiation training platform. It allows learners to engage with Harini, an intelligent, photorealistic avatar, powered by AI, to ask questions at any point during their e-learning content. Whether seeking further explanation on complex concepts or additional insights on negotiation strategies, users can rely on Harini to offer instant and considered responses that deepen their understanding and enhance the overall learning experience. 

Ask Harini supposedly eliminates this pitfall, bringing the same level of engagement found in physical classrooms to the digital learning environment. Learners can now ask Harini questions in real time, just as they would with a live trainer, closing the knowledge gap and giving each learner an experience closer to 1-to-1 training with a human. 

“Ask Harini is a game changer for digital learning, not just in Procurement but across the learning sector as a whole,” said Clive R Heal, CEO of LavenirAI. “It’s like having a virtual mentor alongside you, ready to help whenever you need it. We believe this feature will significantly enhance the learning experience for our users, empowering them to gain deeper insights and truly engage with the material.” 

The $190 million investment in Zip is the largest single sum invested in procurement tech for over 20 years.

AI-powered procurement orchestration platform Zip is the recipient of a major new funding round. The cash injection represents the largest single round of funding for a procurement technology company in over 20 years. On Monday, the San Francisco-based company announced $190 million in Series D funding led by BOND. 

The investment brings Zip’s valuation to $2.2 billion, a significant increase from its $1.5 billion valuation in 2023. Additional participants in the round included new investors DST Global, Adams Street, and Alkeon. Existing investors Y Combinator and CRV also participated.

Fixing the “broken” procurement sector is a multi-billion dollar job 

Organisations around the world face mounting pressure on multiple fronts. From the climate crisis to economic instability and geopolitical pressures, procurement managers are increasingly struggling to optimise spend and mitigate risk. Procurement has become a critical function within the larger supply chain picture. Each year organisations spend “trillions” on everything from office supplies and software subscriptions to professional services and marketing agencies. Procurement represents the second largest area of business spend after payroll. However, despite its enormous financial impact, Zip argues that the purchasing process has remained stuck in the past. Procurement solutions remain “slow, complex, and riddled with inefficiencies.”

Procurement is broken,” said Rujul Zaparde, Co-founder and CEO of Zip. “Companies are wasting billions of dollars and countless hours navigating byzantine approval processes, dealing with security risks, and manually entering data. Zip has already proven that we can fix that, saving our customers billions of dollars and thousands of hours of time — and our new round of funding will allow us to continue to revolutionise business spending.”

Zip’s platform offers a stunningly intuitive, consumer-grade interface that “makes purchasing as easy as online shopping,” while ensuring compliance, efficiency, and cost control. 

Zip streamlines complex workflows across departments — from legal and IT to security and finance — seamlessly connecting all teams involved in the procurement lifecycle. This holistic approach has already transformed operations for industry giants like Snowflake, Discover, and Sephora, who have collectively saved over $4.4 billion in procurement spend through Zip’s platform in less than four years. To date, over $107 billion in customer spend has been processed through Zip, and Zip has achieved 3x growth across large enterprises just this year.

Where’s the money going? 

Planning on having an equally transformative effect on procurement as Salesforce had on CRM and Workday had on HR, Zip aims to redefine how businesses interact with suppliers and manage spending. This new funding will fuel several initiatives for Zip, including: 

Accelerate R&D efforts, doubling down on Zip’s approach to building best-in-class procurement software entirely in-house. This includes further development of Zip’s Procure-to-Pay (P2P) product line. The product has already seen strong growth and adoption by major enterprises like Northwestern Mutual, Toast, and Coinbase. The funding will also support expansion into new product lines to address evolving market needs.

Establish the Zip AI Lab to continue developing and deploying AI solutions that integrate with legacy enterprise systems. Zip’s existing AI suite has already dramatically improved procurement processes across legal, security, finance, and IT teams. 

Broaden global expansion with a particular focus on the EMEA region where Zip saw over 200% growth last year. Zip will leverage its new London office and expanded EMEA team to meet demand across the UK, Germany, and France. This expansion will solidify Zip’s position as the go-to procurement solution for large enterprises worldwide.

“Zip is one of those rare opportunities in enterprise software that doesn’t come along often,” said Jay Simons, General Partner at BOND, who previously served as President of Atlassian (NASDAQ: TEAM). “What sets Zip apart is its relentless focus on customer success and product innovation, which in today’s tough macro environment, is exactly what enterprises need to drive efficiency and rein in costs. The team has built a product so essential that it’s quickly becoming the go-to platform for the world’s biggest companies. We’re confident Zip is primed to be a staple in every Fortune 500 tech stack.”

New supply chain consultancy Kōse Advisory will provide actionable insights to organisations tackling the biggest problems facing the supply chain industry.

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. 

A new report from Gartner reveals that supply disruption is the risk at the forefront of procurement leaders’ minds.

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.

After a successful pilot, NASA is relaunching the NASA Acquisition Innovation Launchpad (NAIL) to drive innovation and modernise its procurement process.

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.”

Both companies bring over 15 years of expertise and “a proven track record of delivering exceptional results” to the merger.

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.”

Findings of a DPW survey point to AI adoption set to grow 187% in the next year, but just 20% of teams currently use AI at scale.

DPW Amsterdam, one of the procurement and supply chain sector’s leading events, has released the findings of its new 10X Procurement study. The study is a collaboration between DPW and Professor Remko van Hoek from the University of Arkansas. Its research draws insights from over 200 global procurement leaders, and claims to have found a “staggering disconnect” between the appetite for digital transformation among procurement teams and their ability to actually execute those transformations.

As businesses grapple with rapid changes in the market, the findings underscore the urgent need for procurement to evolve and drive meaningful change.

“Technology is advancing at the speed of light – but procurement leaders are struggling to drive change at the same rate,” said Matthias Gutzmann, Founder of DPW. “There’s a disconnect between the ambition to transform and the readiness to make it happen.” Gutzmann adds that the 10X Procurement study demonstrates that “while procurement is on the brink of something groundbreaking, teams are ill-equipped to harness that potential.” 

DPW: preparing procurement to capitalise on technological advancement

DPW aims to provide procurement teams with the insights, technology, and partnerships needed to “think and act ten times bigger than their current capacity.”

Key findings from the DPW 10X Procurement Study include:

1. Skills Gap Widens the Divide Between Vision and Execution

Procurement technology providers are sounding the alarm on a widening skills gap, citing a 30-35% shortfall in critical capabilities such as change management, openness to AI, and digital acumen, threatening the success of procurement’s digital transformation efforts.

2. Tech Adoption is Rising, But Underutilization Hampers Progress  

Despite AI making waves across industries, just 20% of respondents are adopting or scaling AI within their procurement functions, and procurement processes remain only 50% automated on average. This lack of adoption represents a significant missed opportunity to streamline operations and drive innovation, putting procurement at risk of falling behind on the digital transformation movement.

3. 2025 Set to Drive a Digital Revolution in Procurement

Looking ahead, respondents predict a dramatic 187% increase in AI adoption and scaling in 2025 across procurement processes and tech stacks. This points to a shift from operational technologies to more strategic, relationship-driven solutions.

4. Culture Lag Holding Back Digital Transformation Despite Clear Roadmaps

While many procurement teams boast clear roadmaps for digital transformation, DPW’s report finds that the culture required to embrace and sustain this change remains underdeveloped. Respondents rated their organisations’ readiness to drive the kind of sweeping transformations required to stay competitive as low.

5. New Playbook Requires Agility and Innovation Over Cost Savings

A large number of respondents were found to put cost savings before other objectives. In contrast, organisations that emphasise agility and resilience consistently see better results than their peers. This underscores the urgent need for procurement to redefine success metrics and shift away from rigid cost-saving goals toward more innovative, relationship-driven strategies that drive more resilience.

The findings of the study will be highlighted at the DPW Amsterdam 2024 conference currently underway in the Netherlands, featuring sessions led by industry experts designed to empower procurement teams and technology innovators in navigating the path toward 10X Procurement

Kelly Archer, Managing Partner and Joe Gibson, Head of Digital at 4C Associates, explore what sets good and bad AI apart in the procurement space.

Given the widespread consensus that the future is AI-driven, there’s one observation that never fails to amuse us. Time and again, people are still shocked by the idea that not all AI is created equal

AI is not new. Workflow automation has been around for decades. The technology dates back to when we first started tinkering with process flows at the turn of the century. The real change? AI has simply become accessible to the masses (thanks, ChatGPT!). More importantly, it’s found its voice, literally, through conversational models.

The current hype around AI barely scratches the surface of its potential, particularly when we compare generative AI to configured conversational AI. But this is just the tip of the iceberg. What many miss is that there are significant technical, procurement, and long-term delivery implications tied to the AI solutions you choose to invest in.

It seems like everyone is suddenly an AI “expert.” Practically overnight, the same technophobes who wouldn’t have touched a data model or architectural diagram with a ten-foot pole are now rebranding as digital innovators, hell-bent on revolutionising their industries with AI. It’s both fascinating and slightly ironic. In the case of Procurement and supply chain management professionals, the utilisation of AI capabilities is a real thing – advanced demand forecasting, optimising supplier selection and more recently, autonomously negotiating contracts, are all tangible examples.

Choosing the right path to AI  

But the real question is: where does your business start its AI journey? In our view, there are three primary paths to consider. 

First, we have AI extensions—enhancements to existing products, adding functionality without reinventing the wheel. Then there are AI solutions, typically targeted at specific industries or use cases. Finally, there are AI platforms, which act as an integration layer, connecting various workflows across your technical architecture. 

Each option has its pros and cons. Your choice will shape the costs of future innovation, the level of expertise your organisation will need, and, crucially, the longevity of your IT architecture, data security, and—most importantly—your organisational culture. 

With Gartner predicting at least 30% of GenAI projects will be abandoned after the proof-of-concept phase, organisations and more specifically, procurement and supply chain functions must recognise that AI is more than a tool. It’s the DNA of your business’s future.

AI everywhere, people-centricity nowhere

Businesses are mutating into organisms, industry convergence is everywhere, and corporate battlelines are being redrawn. However, very little emphasis has been given to human-centricity. Not in the workplace anyway. 

Procurement functions, for example, need to drive strategic value, manage both internal and external relationships, as well as sustainability. Yet, despite all this transformation, we’re still drowning in a sea of outdated procurement systems and rigid processes that treat people as cogs in a machine. There’s little thought given to how these tools affect the people using them. Procurement professionals need intuitive, user-friendly systems that let them focus on value creation rather than bureaucratic box-ticking

Whilst we have been busy teaching machines how to think, they’re teaching us to question everything. Cost-cutting, efficiency, data-governance, and the almighty bottom line. We are seeing a proliferation of new cultural norm data is no longer merely ‘collected’ or ‘feared’ — it’s now worshipped. 

Attitudes towards AI crystalise 

Data-cultures have become the norm. Cultures predicated on data are a collective mindset/practices within an organisation that define how data is handled, valued and leverage to drive decision making and innovation. 

 Are you on the right (Dovish): Do you align your company environment to Big Tech giants (Apple, Amazon, or IBM) who see data as an endless, extractive resource?

Or are you on the left (Hawkish): Do you lean into the push for data ethics (Salesforce), privacy (Motorola), and the emerging ethos of digital rights?

Gone are the days when AI was confined to optimising logistics or predicting consumer trends. Now, it’s a reflection of who we are—our biases, our ethics, and our societal hierarchies. 

Then again, that is the weird part: AI models carry the same prejudices we, as humans, can’t seem to shake. You’re not just buying a machine learning solution. In reality, you’re onboarding the assumptions and blind spots of an entire culture of developers, data scientists, and executives. And that is the crux of the problem today.

Our data shows that around 52% of software functionality in procurement and supply chain functions is never used. These are important statistics for commercial professionals looking to deploy AI and/or any software across the function. We cannot be the guardians of the bottom line if we cannot get our people to use the software we’re crying out for. 

AI success (or failure) is cultural, not technological 

If you don’t think about the cultural implications of the AI systems you’re integrating, you are profoundly at risk. Today, AI has a bit of a trust problem. Tomorrow, it will be embedding your future corporate values. And those values can make or break a company in this era where what you do with data can be as important as what you do with your product. For any sustainable competitive advantage, the birth of the inseparable triplet – Culture, data and AI is upon us, but the advantage will be with organisations that weigh them in that order. 

Remember, organisational culture is everyone’s and no one’s problem. In an age of AI-everywhere, without a robust, governed, and harmonised data-culture, people will become the problem and, honestly, AI won’t be the solution.

Jane Broberg, CHRO of Basware, examines the changing metrics for supply chain success and the role sustainability increasingly plays.

For CFOs, ESG is a new part of the currency for corporate success. In today’s rapidly evolving business landscape, the integration of Environmental, Social, and Governance (ESG) criteria into financial practices is not just a regulatory necessity but a crucial differentiator for sustainable and ethical operations. As the significance of ESG grows, environmentally-friendly procurement processes are emerging as a key driver of sustainable operations, enabling companies to align their practices with broader societal and sustainability goals

Evolving ESG regulations are making businesses and their respective supply chains more accountable to shareholders and customers. This new way of working is transforming supply chains into a catalyst for sustainable development, emphasising the social dimensions of ESG alongside environmental and governance aspects.

ESG Integration: Transforming Finance for Sustainable Operations

Companies are increasingly aligning their financial and accounting processes with sustainability initiatives to address stakeholder concerns, reduce emissions, manage risks more effectively, and contribute to societal wellbeing. 

This shift towards ESG in finance is driven by a growing recognition of its importance in corporate performance, with 71% of corporate leaders anticipating a larger role for ESG in the future. This highlights the need to incorporate ESG into everyday business activities, not just for compliance but also for social impact.

In financial services, upcoming regulations like the European Sustainability Reporting Standards (ESRS) and the SEC’s guidelines are pushing ESG to the forefront of business strategies. For instance, a survey with Forrester found that 90% of accounts payable decision-makers in the EU and 74% in the US prioritize improving their ESG footprint

Research indicates that the average enterprise still receives almost 50% of its invoices in paper format. An automated e-invoicing platform can reduce paper-based invoicing by 80%. This shift to digital invoicing helps businesses significantly cut their carbon emissions.

The environmental benefits of e-invoicing go beyond saving paper. Beyond the conservation of trees, it also decreases waste in landfills and eliminates the need for the energy-intensive processes involved in paper production and transportation, reducing methane emissions. Moreover, the streamlined electronic process saves office resources and reduces energy consumption for physical storage, contributing to more savings in energy conservation. Additionally, the adoption of digital solutions like e-invoicing can reduce the need for commuting to the office, as tasks can be completed remotely, further lowering carbon emissions associated with transportation.

Wider ESG: A Broader Social Dimension

This focus on ESG is not just about meeting regulatory requirements but also about being held accountable for social and environmental impact. By revamping financial reporting processes to prioritise ESG factors, finance departments can influence company policies across the supply chain, driving widespread positive change and contributing to broader societal goals which are increasingly becoming a priority.

The social dimension of ESG is increasingly becoming a priority. Companies are now recognizing that addressing social factors—such as labour rights, community impact, and ethical business practices—is essential for building trust with customers, partners and all stakeholders and ensuring long-term sustainability. By integrating these into CFO strategies, companies can enhance their social footprint and also mitigate risks associated with unethical practices in their supply chains. 

The social dimension of ESG is increasingly becoming a priority. Companies are now recognizing that addressing social factors—such as well-being, Diversity, Equity, Inclusion, and Belonging — is essential for building trust with customers, partners, and all stakeholders, and ensuring long-term sustainability. Additionally, community impact, labour rights, and ethical business practices, which are part of the Governance and Ethics dimension, play a crucial role. By integrating these elements into CFO strategies, companies can enhance their social footprint and also mitigate risks associated with unethical practices in their supply chains.

Additionally, according to ‘The 2023 State of Corporate Compliance’. 60% of companies are willing to invest in ESG to gain a competitive advantage which is pivotal in redefining procurement to meet sustainability goals. This investment is not just about improving environmental and social footprints, but also about standing out in the marketplace. Companies that lead in ESG integration are more likely to attract socially conscious consumers, investors, and great talent, therefore enhancing their brand reputation and market position.

Supplier Spotlight: Assessing ESG Compliance for Ethical Supply Chains

Companies are focusing on setting clear ESG criteria for their suppliers based on industry standards, conducting thorough audits and assessments, and fostering continuous improvement to promote compliance and sustainability. 

Effective strategies for maintaining high ESG standards in supply chains include:

  • Detailed due diligence processes
  • Robust supplier evaluation methods
  • Regular audits

These steps are critical for ensuring that suppliers adhere to ethical standards and contribute positively to society. 

For instance, companies are increasingly conducting comprehensive assessments to evaluate suppliers’ adherence to labour laws, health and safety standards, fair wage practices, as well as working environments that are inclusive, fair, and free from harassment and discrimination. This thorough approach helps identify potential risks and areas for improvement, fostering a culture of continuous improvement and accountability 

The emphasis on supplier compliance is highlighted by the fact that more than half (56%) of company leaders acknowledge the high value of ESG investment. This demonstrates the growing recognition that ethical supply chains are not only a moral imperative, but also a strategic advantage. By ensuring that suppliers meet high ESG standards, companies can mitigate risks, enhance their reputation, and build stronger, more resilient supply chains.

Innovating ESG Integration: Tech-Driven Transparency

Technology plays a significant role in driving transparency and efficiency in ESG integration within procurement and accounts payable (AP) practices. 

Innovations such as ESG analytics and automation are reshaping how companies measure, report, and act on ESG metrics, including social impacts. These technologies help track compliance, reduce complexities, and foster collaboration among stakeholders working towards shared sustainability and social goals. 

Given that 91% of companies use third-party solutions for ESG management, the impact of technology in this area is significant. It simplifies the process of measuring and acting on ESG metrics, making it easier for companies to integrate ESG processes effectively and transparently.

Technological advancements are enabling companies to gain deeper insights into their supply chains, enhancing transparency and accountability. For example, ESG analytics tools can provide real-time data on suppliers’ performance across various ESG criteria, allowing companies to identify potential issues and take proactive measures. 

The Path Forward towards Supply Chain Sustainability

Automation technologies streamline data collection and reporting processes, reducing administrative burdens and enabling companies to focus on strategic initiatives. Moreover, technology fosters collaboration among stakeholders by providing platforms for information sharing and engagement. 

Companies can collaborate on their ESG goals and progress with suppliers, customers, partners and investors, building trust and transparency. This approach is essential for driving collective action towards sustainability and social responsibility.

The integration of ESG criteria into financial practices and supply chain management is no longer optional—it’s imperative for long-term success. CFOs must lead this charge, leveraging technology and innovative strategies to transform supply chains into catalysts for sustainability. 

By prioritising ESG, companies can mitigate risks, enhance their reputation, and drive positive societal impact. The benefits extend beyond compliance, offering competitive advantages in attracting conscientious customers, partners and investors. The time has come for CFOs to embrace their crucial role in this transformation.

Mark Elkington, Delivery Director at Barkers, lays out 6 procurement strategies for carrying out successful software renewals.

As we approach the end of the calendar year, many organisations will experience the ritual of software licence renewal demands from their software providers. In many cases these may be expected, but in some cases not. 

For both these scenarios, it’s worth having a gameplan to hand. In this article we’ll take you through a systematic approach that will ensure you understand your organisational requirements, are cognisant with the current state-of-play and know what best-in-class looks like, to facilitate a successful renegotiation of your IT software contracts.

1. Check software usage

Check if the software is still used or if it is something that has been superseded since the last renewal. If it is still used, what are the licensing metrics (e.g. number of users, number of transactions) and what is the current count of those metrics? 

Looking forward, consider if the count of the licensing metrics is likely to go up or down. Understanding these things will enable you to decide if the renewal is required and if any true-ups or true-downs need to be negotiated.

2. Determine planned future use of software

Check with IT if this software forms part of a solution that will require review in the next 1 – 3 years. You may need to consider this at a software component level if the renewal is for multiple products. 

If the software will be used over a longer period then, in some cases, longer periods of renewal will yield either additional discounts or periods of extended price-hold. For longer periods of renewal, it may also be possible to negotiate staged annual payments. If the software is deemed as a potential divest technology, then a shorter renewal term with pre-negotiated extensions may be a consideration.

3. Review the terms of your software licence agreement

The licence agreement may be on-premise or SaaS where a renewed subscription is required. 

The licence agreement should be scrutinised for terms such as discount protection. Future renewals may have a guaranteed level of discount or a maximum level of increase. If there is discount protection in the licence agreement then this may be linked to a limited number of renewals after initial signing. 

In this case it may be worth considering a longer period of renewal to take advantage of this.

4. Ensure you are issued with line-level renewal quotes

When negotiating software agreements, pushing for commercial transparency is key to a successful negotiation. Renewal quotes are often summarised making it difficult to check pricing, benchmark and negotiate. Software providers will supply line-level quotes if requested, although not always willingly.

5. Benchmarking

Once you have a line-level quote, this should be benchmarked. Benchmarking a line-level quote for most popular software products is not as complicated or as expensive as often perceived. In a single source negotiation, with the absence of competitive tension from a competing supplier, the benchmarking insights will provide a firm and credible basis for the negotiation of the renewal amount.

6. Negotiation

Your company is now ready to negotiate. You know what metrics you have consumed and what the likely usage is going forward. You know how long the software will be used for, and any special renewal terms in your licensing agreement. Lastly you have a benchmarked line-level quote which will enable a credible basis of negotiation with the supplier. 

Through skilful use of these different levers, you will now be able to negotiate the best possible renewal deal for your business.

A new report blames a lack of UK government guidelines for AI procurement woes among struggling local authorities.

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.” 

Adam Sanford, Operations Lead at Southern Construction Framework (SCF), explores the need for two stage building procurement in the UK.

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.

Globality claims new AI tools will extend scoping, workflow, and line item functionality to help blue-chip customers reduce company spend.

AI-powered spend management platform provider Globality has launched a suite of new tools to enhance the functionality of its offering. The upgrades reportedly add “game-changing Next-Gen AI-driven capabilities” to Globality’s platform.

AI-driven visibility from end-to-end 

Globality’s latest round of tools now deliver enhanced visibility across all organisational spend. This ranges from large, complex purchases to straightforward, unmanaged tail spend. It does this through enhanced features across key areas in the sourcing process:

  • Next-Gen AI-Based Scoping: The platform uses Generative AI, along with Globality’s AI and proprietary data, to quickly identify end-user needs. It can then define the scope of a purchase more accurately than ever before.
  • Workflow & Journey: Globality’s AI Agent, Glo, enables procurement to set oversight and approvals, and guides users through an optimal project journey that balances end-user efficiency and commercial outcomes.
  • Line Items: Users can quickly specify items, descriptions, quantities, and units of measure for tail spend and request for quote (RFQ) events. According to Globality, this not only saves organisational time but also improves precision and ensures more comprehensive pricing capture. 

“We’ve introduced powerful, dynamic functionality to the platform, enabling the most tailored journeys for every project type,” said Matt Malden, Chief Product Officer, Globality. “These updates reinforce our commitment to a technology platform that delivers next-generation AI-driven capabilities while creating an intuitive experience for all users.”

What the customers want 

Globality says it has developed the latest round of upgrades in direct response to feedback from large scale enterprise customers. These include UK telecom operator, BT. BT has been using Globality’s AI platform to boost the effectiveness of its procurement processes for over a year now. The platform is reportedly used to manage more than £2.5 billion of project spend within the company. Globaility’s AI tools allow procurement teams to delegate activities like bid writing and drafting statements of work to stakeholders. The savings this creates are a key part of BT’s plan to realise substantial cost reductions through digitalization by 2025. 

Other organisations consulted by Globality when developing the latest enhancements included Fidelity Investments, Santander, T. Rowe Price, Tesco and UCB Pharma. These companies reportedly use the platform to drive more value from the tens of billions of dollars they spend each year, reducing costs by up to 20%, increasing operating efficiencies by 70% and improving speed to market by 90%.

“Procurement is the lowest hanging fruit across the enterprise to reduce costs, capture efficiencies, and improve business operations,” said Lior Delgo, Co-Founder and President, Globality. “Globality is the only sourcing platform that modern global enterprises can depend on to manage critical spend, leveraging AI to save hundreds of millions of dollars, accelerate decision-making, and unlock new opportunities for investment and growth.” 

Comprehensive analysis of spend through digital twin analytics could help procurement teams get back on track in volatile times.

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.

Procurement platform operator Zip has launched a suite of new innovations and given its platform a new look.

Industry leading intake and procurement orchestration platform, Zip has unveiled its new, dramatic brand transformation. The announcement took place at the company’s second annual Zip Forward conference in San Francisco. The transformation involves a complete visual overhaul of Zip’s platform. Additionally, Zip has introduced a suite of powerful new innovations that “push the boundaries of what’s possible with enterprise purchasing.” 

Zip was recently named a leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Spend Orchestration 2024 Vendor Assessment. Now, Zip intends become the global standard for business spend. The company’s tools and services aim to empower every organisation to seamlessly access the resources they need for peak performance.

“Zip gives us the flexibility to scale with Arm’s evolving needs and ensures we’re prepared for whatever the future holds,” said Sean Park, vice president of Procurement Transformation, Arm, speaking from the stage at Zip Forward.

Zip Forward 

More than 400 finance and procurement executives from industry leaders like Prudential, Arm, and Reddit entered SF JAZZ this morning. There, they found every inch of Zip’s visual presentation had been reimagined. 

Zip’s design talent pools was drawn from companies like Nike, Airbnb, and Google. The revamp sought to further elevate Zip with a cutting-edge, consumer-grade experience that embodies the company’s core philosophy. Namely, that when businesses achieve ‘flow’ in their work, they unlock their ‘peak’ potential. In short: creating value that elevates the entire business ecosystem.

“In today’s interconnected business world, companies thrive by focusing on their core strengths and leveraging the expertise of suppliers for everything else. This makes procurement one of the most critical processes in business, yet it’s often a fragmented, bureaucratic mess,” said Rujul Zaparde, Zip Co-founder and CEO. “Zip is changing this paradigm by reimagining how businesses connect with other businesses — enabling them to build on each other’s strengths to maximise their impact. When a hospital quickly accesses life-saving equipment, a manufacturer effortlessly sources sustainable materials, or a retailer swiftly stocks seasonal products—that’s Zip in action.”

Un-zipping the new innovations 

From the Zip Forward keynote stage, in addition to the brand reveal, Zip also unveiled several disruptive product innovations, including:

Preferred supplier purchasing

A new suite of capabilities that helps employees fast track purchasing from existing suppliers in a single, unified catalogue experience. By streamlining the vendor selection process, Zip saves employees thousands of hours of manual searching across catalogues. It also helps to reduce vendor sprawl by encouraging employees to spend with existing suppliers. Ultimately, this also reduces risk and maximises procurement savings across the organisation.

AI invoice coding

A revolutionary new way for accounting teams to reduce manual work and process invoices faster. This solution leverages artificial intelligence to determine the appropriate invoice line structure and automatically code invoice lines.

Unlike other solutions on the market, Zip AI analyses how invoices have historically been coded within the organisation. This allows it to make more accurate suggestions. Not only this, but the solution eliminates the need for accounting teams to manually review dozens of individual invoice lines.

Budget integration with Workday Adaptive Planning

A strategic integration that provides real-time budget visibility within Zip’s interface. This allows teams to make informed purchasing decisions based on current financial data. This seamless connection enables organizations to enhance spend control, improve financial predictability, and manage complex budgets across multiple regions more effectively.

“As an engineering, product, and design-led company, we’ve made it our mission to continuously push the boundaries of what’s possible in procurement,” noted Zip CTO Lu Cheng. This commitment is evident in Zip’s significant R&D investment and rapid innovation pace. In the past year alone, Zip completed 500 feature requests, implemented 20,000 code changes, and introduced several groundbreaking products — including Zip Premier, Zip’s Integration Platform, and powerful Zip AI enhancements like an AI assistant and AI intake automation. The result? Over $4.4 billion in procurement savings for Zip’s customers in less than four years.

At the forefront of this procurement transformation are Zip’s customers, who are setting new standards for operational excellence and forging paths to sustainable success. “Through our collaboration with Zip we are transforming our procurement process,” said Sean Park, vice president of Procurement Transformation, Arm, from the stage at Zip Forward. “The powerful Zip platform gives us the flexibility to scale with Arm’s evolving needs and ensures we’re prepared for whatever the future holds.”

Anthony Marshall, Procurement Specialist at Barkers, breaks down how to address indirect technology spend.

We live in an increasingly digital world. The vast majority of organisations out there – regardless of their size – are now underpinned by technology. Technology spend is often the largest indirect spending category, and will only continue to grow as companies invest in digital tools to keep up with their consumers’ digital preferences and maintain their competitive advantage

However, this huge spending category is often ignored due to a priority focus on more visible expenses and organisational objectives. This can obviously have a detrimental impact on an organisation’s financial health if technology spend begins to spiral. However, neglecting technology spend also means negelecting a significant opportunity for cost savings.

What does addressing spend really mean? 

What it shouldn’t mean is simply renewing contracts shortly before their renewal date with light touch tactical negotiation. This is transactional procurement and offers little value to the organisation beyond keeping the lights on. Procurement can do more. It can be more to the organisation.

Addressing spend should mean optimising through strategic procurement activity, such as tendering, benchmarking, and strategic negotiation. To enable the time required to conduct strategic procurement activities, a proactive and strategic outlook is required. A detailed understanding of the cost make-up of technology services and solutions and business strategy and objectives is necessary. Once armed with this intelligence, opportunities to optimise may be explored. These can inlude rationalising suppliers, strategically approaching a contract renewal or displacing current technologies with cost-effective alternatives.

But why does it matter so much that addressing technology spend is done properly? Here are 10 reasons why it’s important to strategically address indirect technology spend.

1. Avoid cost increases

Technology is often difficult, complicated and costly to change when compared to other categories. A simple example of this is a software platform embedded into an organisation. It takes a lot of effort to remove and replace this, especially the longer it’s been in place. 

If contracts aren’t proactively addressed ahead of time, then – in a best-case scenario – you’ll likely see annual “inflationary” increases. In a worst-case scenario, suppliers could exploit their position – knowing that you require time and resources to exit the relationship – and impose significant cost increases.

It’s important to understand your pipeline of contracts and when these are due to renew. Make sure you give yourself enough time to address them, and to understand the alternative options out there. Once you do, you can leverage this in your negotiations. 

2. Ensure that cost-saving opportunities are realised

It’s highly unlikely that suppliers will proactively offer a cost reduction for a contract renewal, even if their underlying costs to deliver have reduced. This can often be the case in technology categories, such as traditional telecoms connectivity networks, where the supplier’s underlying assets to deliver the service have fully depreciated, and more generally where improved processes and technology means that it costs a supplier less to deliver the same service. 

There may also be situations where similar services are being provided by multiple providers. These can be consolidated into fewer services from fewer providers, or even consolidated to a single provider. Also, the specific requirements could be reduced with the proper scrutiny and challenge leading to further savings. 

Material cost savings are only likely to be achieved through strategic initiatives. These include RFPs or introducing commercial pressure through benchmarking initiatives in order to leverage better negotiation with suppliers.

3. Maximise value from the supply base

Transactional and reactive engagements with key suppliers are unlikely to deliver optimal commercial outcomes. Not only that, but they’re also unlikely to deliver additional value. For example, a transactional engagement is less likely to see you getting the best value out of a product or service. Likewise, you’re unlikely to get better value services such as improved SLAs, consultancy, and training, not to mention general goodwill and collaboration.

Spending more time engaging with incumbent suppliers through proactive engagement will lead to better, more transparent and more fruitful supplier relationships. Not only that, but regularly engaging with the market will ensure ongoing competitive tension and the introduction of new suppliers where appropriate.  

4. Keep pace with the market

Technology moves fast, so it’s important to be motivated to keep up with innovation and developments. 

A key focus for businesses should be to minimise technical debt wherever possible. This is where outdated technology incurs a large cost to run and maintain. Not only that, but it also inclurs a large cost when it inevitably runs its course. The further behind you fall, the more it’ll inevitably cost you to catch up. 

There’s also the impact that lagging behind can have on attracting top technology talent to your businesses. Engineers are leaving university trained on modern technologies, not legacy technology that was in its prime 20 years ago. The more reliant you are on a dwindling resource, the more difficult and expensive the resource becomes to hire. 

5. Manage risk

Proactively addressing your spend will help you to identify risks early on. These can then be managed and mitigated by reducing your reliance on a certain supplier. You can do this by introducing a second supplier to reduce dependency, for example. 

There are different kinds of risks that you might be facing. These could include a concentration risk with a particular supplier, or a commercial risk due to a lack of price protection at the end of your current agreement. This is why it is key to start negotiations early.

Putting proactive measures in place – such as exploring alternative suppliers, other ways of delivering a particular service, or planning a strategic negotiation to improve contractual protections – are solid ways to negate these risks. 

6. Ensure appropriate due diligence and challenge

Approaching your technology spend ahead of time ensures that all relevant parties have ample opportunity to review and contribute. This could include data privacy, cybersecurity, resilience, and other disciplines. All of these departments will have priorities to be taken into consideration when deciding on a new product or service.

This point is particularly important as organisations increasingly look to outsource technology platforms to the cloud, and the resultant data considerations that this brings. 

As more organisations move to Software as a Service (SaaS), the hosting and management that would have traditionally been done in-house is outsourced to the SaaS provider. Where this happens, it’s essential that appropriate due diligence takes place. This ensures that the right purchasing decision is made and that effective controls are in place to mitigate potential risks. 

Equally important to carry out appropriate due diligence is a collaborative challenge to requirements. 

Often a business’s wish list of requirements can outweigh its capacity for change. Therefore, it’s important to challenge associated requirements and the scale of perceived implementation for example. It needs to be a risk-based decision made with all parties fully informed. All all options and alternatives need to be carefully considered.

7. Create better internal alignment and business collaboration

Proactive efforts to address spend will lead to more collaborative and beneficial internal stakeholder engagements, ensuring that all SME knowledge is taken into account. 

In order to strategically address spend, procurement will need a thorough understanding of business strategy and objectives, along with different departments’ subject matter expertise in order to effectively offer commercial advice. 

A more collaborative approach will also lead to an improved perception of the procurement department all around, being viewed as a strategic partner and part of the decision-making process, rather than simply the team that fulfils an already defined outcome and requirement. 

The ultimate outcome should then be that procurement is in a position to put in place more commercially fit-for-purpose solutions that align to longer-term business objectives.

8. Ensure contract terms are addressed  

If current contracts are being addressed reactively shortly before renewal, it’s unlikely that key legal terms will be negotiated and appropriately updated; adequate time and leverage is required to do this. Particularly within regulated industries, contracts may no longer be compliant with current regulations or legislation; for example, there are now many more requirements in place surrounding data protection that suppliers will need to adhere to.

These discussions can take a lot of time but can often represent significant value to the business in terms of protecting against operational and commercial risks.

9. Make sure that evolving business requirements are considered

Proactively approaching contract renewals will provide the perfect opportunity to ensure that new and evolving business priorities can be discussed with suppliers. 

For example, ESG (Environmental, Social and Governance) is becoming a more important consideration for businesses across all sectors, and as such there is a requirement for organisations to push these obligations through to suppliers. 

This can be done through the introduction of ESG clauses with the purpose of encouraging or requiring suppliers to operate to defined standards. 

10. Create financial capacity to reinvest

Technology is continually evolving, as are business service offerings and requirements – both of which require continuous reinvestment. 

Strategically addressing technology spend will help to create capacity in a business’s budget to spend that money on the organisation’s offerings and objectives, whether it is an improved digital offering, or keeping up with new competitors. 

Financial capacity can be created in a number of ways, many of which have been discussed above. There is no one right answer, but organisations will find different approaches to save money and become more efficient in their technology spend if a proactive and strategic approach is adopted.

A final thought

Most – if not all – organisations are underpinned by technology, which makes it a necessary spend line to service business requirements. It can’t be eliminated, but it can be optimised. 

Managing indirect technology spend is about spending money optimally and creating the capacity to reinvest where possible, whilst also using that process to manage the inevitable risks that are associated with third-party suppliers.

Tim Mawhood, Executive Director, GHD Advisory, answers our questions on supply chain sustainability and procurement’s role in driving ESG transformation.

Despite growing regulatory and public pressure to decarbonise global supply chains, many companies’ efforts appear to have stalled. Despite widespread pledges to become carbon neutral, climate positive, and reach net zero, often by 2030, the last year and a half have seen many companies walk back or go silent on their sustainability commitments. Whether that’s due to a rise in the environmental impact of technologies like AI, geopolitical tensions, fossil fuel industry lobbying, increasingly undeniable ties between the electronics components industry and slavery in the Congo and other mineral rich nations, or any number of other factors, the end result is that the global push to clean up supply chains has lost steam. 

Green messaging may have been a staple of corporate public relations for close to a decade now, but missed targets, greenwashing, and backpedalling have increased consumer cynicism and risk normalising this kind of failure, letting companies off the hook for falling short of their climate goals. 

We sat down with Tim Mawhood, Executive Director at GHD Advisory, to dig a little deeper into the pain points preventing sustainability reform in the supply chain, and what GHD’s new research says about how organisations can address them. 

What are some of the most prevalent pain points preventing companies from making their supply chains more sustainable?  

Surveying 500 global industry leaders to examine the state of corporate sustainability, our research, the Sustainability Monitor 2024, has shown there’s a growing realisation that true integration of sustainability into overall strategies demands a greater level of stakeholder engagement and change management than exists today.

Tim Mawhood, Executive Director, GHD Advisory

One major pain point is the complexity of engaging all stakeholders across the supply chain. Modern supply chains often involve numerous tiers of suppliers, making it challenging to track emissions and evaluate the sustainability performance of each supplier. This complexity makes it difficult to pinpoint high-emitting suppliers and implement consistent sustainability practices across the entire chain.

Another significant issue is the difficulty in  integrating sustainability into the mindset and culture of an organisation. For sustainability to be truly effective, it must be at the forefront, rather than as an afterthought or “bolt-on” addition.

This shift requires better communication and a cultural change that helps everyone involved – from top executives to frontline employees – understand how sustainability impacts their day-to-day roles.

How can organisations overcome those pain points? Are you seeing any unintended consequences or unexpected as a result of organisations tackling sustainability?

Addressing these pain points involves a multi-faceted approach. This involves creating a well-established and proven framework that helps to educate and incentivise a sustainability mindset across external stakeholders that promotes participation and accountability, including tier two, three, and four suppliers. Establishing a solid strategy, risk identification and mitigation planning for the supply chain is critical. Supply chain-related ESG activities should cover material indicators and disclosure practices, with reliable baseline data and updated metrics to inform ongoing measurable performance targets. Organisations must address the integrity of their supply chain sustainability practices upfront ahead of any detrimental hits to their brand or bottom line.

For organisation who do drive sustainability into their supply chain there can be consequences similar to any change, increased complexity, increased costs at least initially, reputation risks if an organisations sustainable claims are not met. Generally these can be overcome through green procurement practices, deeper collaboration and a move to action to achieve targets. 

On the flip side, there are often unexpected benefits to driving supply chain sustainability, firstly making a material difference to our environment, more engaged staff and clients, attracting new business, brand building and alike. These benefits are material and lasting. 

What kind of role can technologies like AI, big data analytics, IoT, and digital twins play in meeting these challenges?

Supply chain by their nature are complex and require organisations to forecast demand accurately to maximise commercial outcomes and optimise  delivery, the predictive analysis that AI  can bring to this  is very powerful. AI can also drive enhanced automation outcomes and much improved materials usage for manufacturing which can result in significant commercial gain. 

Big Data is a fact of life now – the quality of that data, it’s integration and the power of analytical tools is very important. We are working with clients to really get actional tactical and strategic insight from their data, once again helping with optimisation, supply chain visibility and better sustainable outcomes through accurate and timely decision making. 

Real time monitoring through IoT devices can really improve sustainable outcomes, issues can be detected and tackled early, assets can be maintained effectively to minimise emissions footprints for example and the data from these devices is game changing for decision making (with good analytics).

In particular, digital twin stands out as a transformative tool, GHD’s Digital Twin Offering (DTO) is a perfect example of this innovative solution. In a nutshell, our tool leverages advanced technology to replicate virtual models of physical assets, thereby enabling real-time monitoring, analysis, and simulation of performance. By providing detailed insights into asset performance and operational efficiency, digital twins could potentially help organisations identify opportunities to reduce energy consumption and lower their environmental impact. For example, by optimising equipment and infrastructure, companies can decrease energy use and minimise waste, contributing to their sustainability goals.

Obviously, there’s some debate as to whether the recent revelations of forced child labour in Shein’s supply chain resulted from wilful negligence or a lack of transparency. If the latter is true, how can organisations gain the necessary transparency to keep forced labour, polluters, and other unsustainable practices out of their value chain? If the former is true, how do we create an industry where we incentivise ethical behaviour more strongly than child slavery in service of cost containment?  

While the debate surrounding Shein’s supply chain has reignited the debate, critical questions about transparency and ethical behaviour in global supply chains have remained constant. An investigation this year by the Swiss-based nonprofit group Public Eye highlighted various issues with its supply chain, suggesting that the company’s low-cost production model might involve unethical practices. Incentivising ethical behaviour and encouraging transparency are essential to eradicating bad practices.

Steps organisations can take to gain necessary transparency includes the implementation of comprehensive supply chain audits. These audits should be conducted regularly and should cover all tiers of suppliers to identify and address issues related to forced labour, pollution, and other unsustainable practices. Further to this, there is a need for accountability from suppliers at all tiers of the supply chain – refreshed or new contracting methods including green or sustainable principles are required – these can hold consequences for non-compliant organisations.. Whilst this is more stick than carrot, it is necessary to start bringing a change in behaviours. On the “carrot side”, training, awareness and where required practical hands-on support for suppliers should be provided. Just pointing at the issue doesn’t change it, everyone needs to be accountable and move to action. 

Organisations should also establish clear standards and codes of conduct that outline expectations for ethical behaviour and sustainability. These codes should be communicated to all suppliers and integrated into contractual agreements, with regular reviews to ensure compliance. Additionally, engaging suppliers in training and building their capacity to adhere to these standards is vital. It requires an ongoing commitment to weed out poor performers and promote awareness and understanding of labour rights and environmental practices.

Would you agree that unsustainable practice in the supply chain (whether that’s irresponsible treatment of the environment or mistreatment of workers) only worsens the conditions within the supply chain, exacerbating pain points in the future? How do we make long term sustainability more appealing than short term profit-seeking?

Certainly, I would agree that unsustainable practices are not tolerable, but we need to be realistic that they exist. Where these issues surface, the accountability to act positively to mitigate the risks is critical. Major brands are feeling this now and it will drive much-needed change. 

Whilst bad practices may provide short-term gains, they will result in long-term pain leading to disruptions in the supply chain, such as resource depletion, reputational damage, regulatory penalties, and increased operational risks. The negative impacts tend to accumulate, resulting in a cycle where the supply chain becomes increasingly fragile and less resilient, ultimately threatening the very profitability that short-term profit-seeking aims to secure.

To make long-term sustainability more appealing than short-term profit-seeking, a shift in perspective and incentives is essential. Our Sustainability Monitor 2024 research has revealed that that people increasingly view commercial value through the lens of relationships – with customers, suppliers, employees, investors, and the broader community. This suggests that action on sustainability is not just a moral or environmental imperative; it is also becoming a critical differentiator in a highly competitive marketplace.

What do the next few years look like to you with regard to evolving discussions and practice around supply chain sustainability?  

The next few years are likely to bring significant advancements in both the discussions and practices surrounding supply chain sustainability. The momentum we’re currently witnessing in the adoption of sustainable practices across supply chains suggests a promising future, with several key trends expected to shape the landscape.

Firstly, there will be an increased focus on sustainability, particularly in how procurement can drive organisations towards achieving their ESG goals. As companies recognise the critical role that procurement plays in shaping supply chains, there will be a greater emphasis on integrating sustainable practices at every level. This means that procurement functions will not only need to source responsibly but also ensure that their suppliers adhere to stringent sustainability standards.

In addition to sustainability, the use of predictive and prescriptive analytics in procurement will continue to grow. These advanced analytics tools will enable better forecasting, allowing companies to anticipate and respond to supply chain disruptions more effectively. This shift towards data-driven decision-making will help organisations optimise their supply chains, reduce waste, and minimise environmental impact, all while improving efficiency.

We can also expect a broader adoption of digital transformation within procurement functions. Organisations will increasingly hire tech-savvy procurement teams and build internal stakeholder groups that are capable of integrating e-procurement systems into their ecosystems. This digital transformation will be crucial for enhancing the transparency and efficiency of supply chains, making it easier to monitor and manage sustainability initiatives.

Olivier Berrouiguet, CEO at Synertrade, looks at the procurement function’s role in long-term reputation management.

Reputation management is crucial for long-term success, enabling companies to improve credibility, market value and stakeholder relationships. A strong reputation can take years to create and can significantly transform public perception. However, a business’s reputation can also be negatively impacted instantly. This can prove costly and attempting to reverse the damage isn’t always guaranteed.

The core of this challenge lies within an organisation’s procurement function. With every new partnership gained through a procurement team, there is an added risk when it comes to the new supplier’s reputation. We live in a world where businesses’ ESG credentials are seemingly always under a microscope. As such, partnering with credible suppliers is paramount and can foster business growth.

Leveraging Data 

The availability of good data is rising rapidly and lies at the core of the digital ecosystem. The continual collection, storage and processing of information creates limitless opportunities for organisations. For procurement teams, data can enhance strategic sourcing and supply chain management through comprehensive supplier databases and advanced analytics tools.

By leveraging supplier databases, organisations can access a wealth of information about existing and prospective suppliers. This data can include historical performance metrics, financial stability and sustainability credentials. By using this information, businesses can make well-informed decisions, selecting partners who are compliant with regulatory needs and align with the company’s values and long-term goals. 

Focusing Strategy

Data creates enormous potential for organisations at all levels. However, one area where its impact shines is refining and focusing on corporate strategy. The business landscape is evolving faster than ever before, with the race to remain competitive leading businesses to search for innovative and creative ways to leverage an edge in a crowded marketplace. 

Acquiring access to real-time data permits businesses to combine a proactive and reactive approach to their operations – allowing procurement teams to create long-term plans while having the flexibility to capitalise on short-term changes in the market. 

By continuously analysing market trends, changing customer behaviours and ongoing disruption to global supply chains, procurement teams can react to emerging threats or opportunities as they happen, minimising the impact caused by rigid and outdated planning. A 2023 Deloitte report found that only 25% of firms could identify and predict supply chain disruptions. These findings highligh how additional work, such as regular quality audits, is still required to address this.

Regular Quality Assessments 

To maintain a strong reputation, businesses must implement effective Supplier Relationship Management (SRM) practices. A key component of SRM is conducting regular audits and assessments of supplier performance. These evaluations ensure that suppliers consistently meet the business’s standards and adhere to relevant regulations, adapting operations to align with changing legislation. 

Regular audits provide a structured approach to evaluating a supplier’s performance, including the quality and delivery of products produced, scalability of services and compliance with industry standards. By continually monitoring suppliers, procurement departments can proactively identify risks, addressing them before they escalate into significant issues that could harm the company’s reputation. 

Frequent operational reviews encourage transparency and trust between an organisation and its suppliers. Supply chain partners establish open lines of communication, providing full operational visibility and enabling continuous improvement and collaboration. Suppliers are more likely to invest in their processes and quality when they see a commitment to partnership from the business, leading to mutual growth and success.

The Benefits of Reputation Management

In today’s marketplace, consumers – whether B2B or B2C, are more environmentally aware and informed than ever. They typically gravitate towards businesses that actively demonstrate honesty, reliability and a commitment to their ESG practices. A strong business reputation generates trust, which in turn encourages customers to become loyal. In turn, customer loyalty is the foundation of sustainable, long-term business success. 

Companies with a positive reputation can leverage it to gain a competitive edge, improving relationships and trust between customers and suppliers alike. This is hugely advantageous for the current business landscape and long-term planning.

Not working on these topics can leave your company open to negative press, lost business and even objections. Ignoring your supply chain visibility is not an option.

Driving an Effective Procurement Strategy

An effective procurement strategy is crucial for developing strong relationships within the supply chain. A well-developed strategy allows procurement teams to be adaptable, continually thinking and testing different approaches to enter new markets, deliver higher customer value and reduce excess spending. 

In a highly competitive world, businesses combine reactive and proactive elements to reap future rewards. There are always risks that need to be navigated. However, prioritising innovation and clear communication channels allow proactive teams with the tools required to build strong relationships. And, in doing so, maximise operational efficiency. 

Ian Thompson, VP Northern Europe at Ivalua, explores the road to supply chain recovery, starting with procurement’s source-to-pay process.

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. 

Effective contract management is a key part of eliminating risk and ensuring compliance that procurement managers can’t afford to ignore.

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. 

A new report found evidence of systemic bias, opaque accounting and uncontrolled pricing in the former UK government’s handling of COVID-19 procurement.

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.”

New data from Ivalua found that 47% of UK businesses experienced a supply chain disruption in the last 12 months.

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.”

CEOs in the UK, Europe, and the US lack confidence in their sourcing and supply chain functions, according to a new report.

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.”

A new report by Vertice argues that just 18% of businesses have the budget and mandate to “optimise” their procurement processes.

Optimising your procurement process could support innovation and reduce time to market. However, just one-in-six businesses are providing the necessary tools, funding, and support to optimise their procurement, according to a new report by procurement SaaS provider Vertice

“Clear correlation” between procurement maturity and overall commercial performance

Vertice’s study surveyed 300 global procurement leaders, asking them to rate their business’ purchasing processes and also their business performance across 8 key metrics. These ranged from cost control and budgeting to the ability to maintain compliance. According to the report, a clear correlation emerged between businesses with a mature procurement function and those with a healthier overall commercial performance. 

Of course, there’s a possibility that a number of other factors that contribute to a business’ success could also be at play, and that those factors could also encourage investment in better procurement processes, rather than better procurement being the root cause. Investment in procurement is not a guarantee of overall business improvement. 

The problem is reportedly worse in the US than the UK, where Vertice’s report found that almost half of businesses (44%) are in the lowest maturity levels, in comparison to the UK where two-thirds of businesses (67%) are in the more advanced stages of procurement maturity with more reliance on automation, AI and integrations.

Procurement underappreciated in the “race to innovate” 

Just under 40% of procurement leaders blamed their struggles to evolve and improve on the overall business’ “poor perception of procurement’s strategic value.” Vertice’s research identified what they call a “procurement innovation gap”, where companies who have invested the most heavily in advanced procurement capabilities are also the fastest to innovate. 

These companies are seizing the competitive advantage by being 32% more able to implement new initiatives and 29% faster in bringing new products and services to market. Not only that, but the more mature a procurement organisation is, the better prepared it is to tackle complexities and disruption.

Businesses with the most mature departments were found to be faster to put innovation into practice than other companies, but only 1 in 6 businesses have reached this level. Meanwhile the remaining 82% of businesses — whose procurement teams rely instead on decentralised, reactive and manual procurement processes — all perform worse. By comparison, companies with the most advanced purchasing were found to experience a 27% jump in efficiency and ease of collaboration, a 22% improvement in budget control, and a 20% increase in an business’ ability to maintain IT and security compliance.

“Procurement is an important catalyst to business innovation; the secret weapon that often goes unnoticed. Quick, intelligent, integrated processes can equip teams faster, with safe and compliant tools, accelerating overall project timelines. But most procurement departments have been unable to mature their outdated, manual processes, throttling the business’ progress and reinforcing an unnecessary negative perception,” said Eldar Tuvey, CEO and founder of Vertice

Tony Mannix, Strategic Advisor – Retail Logistics at GXO, take a closer look at the rise of pre-loved fashion and how retailers can respond with procurement.

The rise of ‘pre-loved’ fashion has been undeniable in recent years. Second-hand purchases in the UK reached £1.2 billion and Vinted has grown to a third of the size of Asos. This trend is driven by the increasing demand for sustainable choices among consumers and businesses. This is further encouraged by the cost-of-living crisis prompting individuals to reconsider their wardrobe expenditures.

Platforms like eBay, Vestiaire, and Vinted have become dominant players in the eCommerce space. These second hand platforms have emerged as go-to destinations for consumers seeking to add new pieces to their wardrobes. In addition to these platforms, initiatives and trends like the “Rule of five”, started by fashion consultant Tiffanie Darke, challenge consumers to buy no more than five new items a year.

While this shift promotes sustainability, it creates a market that traditional retailers are not directly part of. This leads to challenges for the industry. Revenue loss is obvious. However, companies also have less control over the quality of items being sold bearing their brand name.

However, with the right partnership, retailers have the opportunity to establish their own pre-owned fashion channels. These are driving revenue, attracting new customers, and strengthening relationships with existing ones. This approach is particularly crucial in light of impending legislation encouraging businesses to take more responsibility for pre-owned fashion.

The Challenges of Unregulated Peer-to-Peer Commerce

The growth of peer-to-peer commerce is forcing established retailers to try and find ways to positively partake in this movement, even though many of the products being sold on the current platforms do not go back in their supply chain directly.

Brands lack control over the provenance of products listed on peer-to-peer marketplaces. This can pose risks in the form of counterfeit goods tarnishing their reputation, with sub-par quality associated with their label. This issue was highlighted when a US jury found that luxury reseller ‘What Goes Around Comes Around’ had sold counterfeit goods and falsely implied its affiliation with Chanel.

The overall sustainability of the brand is also an important factor. The fashion industry is under immense pressure to reduce the number of garments going to landfill. No matter where the consumer buys their product, the responsibility will continue to be on the brands to proactively think about their own sustainability commitments.

Seizing the Opportunity

To evolve with customer desires, participating in the second-hand movement is crucial for brands. Research from ThredUp shows that over half of Gen Z prefer brands that offer both new and used items.

Yet how can retailers retain control over their brand and the products being resold?

Partnering with the right experts can help retailers to embed sustainability into their brand, create new revenue streams, and extend the lifecycle of clothing through the resale of pre-loved items. This strategy, combined with repair, cleaning, and restoration capabilities, attracts new customers and underscores the value of buying directly from the brand.

In 2022, GXO collaborated with the luxury children’s clothing brand Polarn O. Pyret (PO.P) to develop an integrated pre-loved solution. Customers can register trade-ins online, send unwanted items to the distribution centre, and receive vouchers for new or pre-loved stock. The extensive rejuvenation service ensures items are in prime condition for resale, maximising their value and preventing disappointing their customers.

PO.P offers pre-loved items with new season stock on its website, offering customers a seamless shopping experience. This approach has been well-received, with demand exceeding expectations and expanding PO.P’s customer base, as 35% of pre-loved shoppers were new to the brand. 

The integration of new and preloved within the same webstore offers more choice for the consumer but equally importantly does not differentiate between customers who may be seeking either option, This creation of a single channel for the brand has proved powerful as it treats all customers in the same manner and offers the same brand experience. It is now common for customer orders to feature both new & preloved items.

Collaborating for Growth

PO.P’s approach not only capitalised on the demand for pre-loved clothing but also enhanced customer loyalty and brand connection. This strategy is vital for retailers in a competitive market, as diverse services appeal to various audience groups.

With external factors like the cost-of-living crisis and environmentally conscious shoppers driving the second-hand market, there are no signs of this trend slowing down. Retailers must define a strategy to offer the experiences and products customers seek elsewhere. Doing so will add value to the brand and promote sustainability. Adapting to these changes is essential to avoid losing out to competitors.

GXO’s solution set allows for rapid deployment, enabling brands to swiftly enter the pre-loved market with sector leading capabilities The Polarn O.Pyret experience has demonstrated that when approached in the right manner, with a partner with expertise, Preloved can offer a commercially viable solution that is brand enhancing and delights customers.

Awareness of greenwashing, greenwishing, and greenhushing in the procurement process and supply chain is growing among consumers.

Green messaging has been a ubiquitous part of corporate strategies for close to a decade now. From reusable shopping bags and paper straws to renewable energy and electric vehicles, consumers and regulators alike are driving organisations in every industry to operate more sustainably and create products that are more aligned with a more modern, sustainability-conscious public. However, new research points to a growing trend. Consumers are becoming more cynical when it comes to corporate sustainability claims. A growing awareness of greenwashing, greenwishing, and greenhushing is driving the trend, accoding to industry experts.

“Green and conscious consumer demand is rising, but there is growing scepticism about the accuracy and completeness of sustainability claims,” the report released by professional services consultancy Alvarez & Marsal notes. 

Greenwashing

The practice of making misleading or flat out false claims about a company’s sustainability actions. For example, inflating or obfuscating emissions data to make a company or product appear to be “net zero”. Also, greenwashing companies apply legally unprotected terms like “climate friendly” and “eco” to products or services that are no more environmentally friendly than those sold by their direct competitors. The term can also refer to companies making bold, long-term commitments to reducing their environmental impact without concrete plans. Declaring plans to be “net zero” or “climate positive” by 2030 without an action plan, for example, is a common example of greenwashing. 

Greenwishing 

When a company publicly expresses the desire or intention to address its environmental impact, but fails to make any serious, meaningful steps towards becoming more sustainable. Referred to by KPMG analysts as “unintentional greenwashing” greenwishing occurs when “a company hopes to meet certain sustainability commitments but simply does not have the wherewithal to do so.” 

Greenhushing 

One of the most common ways a company can work against not only its own green reporting but its whole industry. Greenhushing refers to a company’s refusal to publish its ESG information, hiding emissions data and other key details that might result in a loss of public trust and pressure from its shareholders or board to make changes. KPMG notes that, while greenhushing isn’t fundamentally dishonest, it also “limits the quantity and quality of publicly available information. Without this transparency, it becomes challenging to analyse corporate climate targets, share best practices on decarbonization and calculate Scope 3 emissions, which by definition require widespread reporting.”

Growing scepticism 

Awareness of the practices of greenwashing, greenwishing, and greenhushing is growing among consumers, creating a sense of cynicism that threatens to also undermine genuine sustainability efforts made by some firms, as disillusioned consumers dismiss these attempts as intentionally misleading. 

“Awareness of terms such as greenwashing, greenwishing, and greenhushing is increasing, along with criticism of claims about carbon neutrality and the integrity of carbon credits,” notes the Alvarez & Marsal report. “To gain credibility with consumers, regulators, and investors, companies are urged to make genuine and verifiable improvements in their sustainability practices. Overstating progress or making unrealistic forecasts that may not be achieved economically can be risky in today’s environment.”

James Stirk, CEO at Tradeshift, lays out how procurement can move faster and be more strategic with a more digital approach.

Procurement professionals often express frustration that the value they deliver, the complexity of their role, and the difficulty of getting it right are not fully understood or appreciated. 

For years, Procurement has been considered a back-office function – necessary, of course, but not a strategic function. However, this perception is now shifting. Driving this sea change is a state of near-constant disruption that has come to define the global economy.

The New Imperatives for Procurement

The post-pandemic landscape has introduced new pressures on organisations, requiring agile decision-making in response to rapidly changing conditions. A more complex and fragmented macroeconomic environment now offers Procurement the ideal opportunity to demonstrate its strategic value.

From cost management and risk mitigation to regulatory compliance and sustainability efforts, procurement is increasingly central to executive-level priorities. Eliminating latency and friction from the procurement process has become imperative, whether sourcing alternative suppliers or adjusting production based on real-time insights. 

Additionally, procurement teams are tasked with controlling spending across a growing array of indirect spending categories due to a growing reliance on third-party providers for goods and services.

Challenges in Scaling Procurement Processes

Managing a diverse and multifaceted supplier base presents significant challenges. Procurement leaders frequently see their teams become overwhelmed by an expanding array of business-critical tasks. Stories of burnout are rising across the profession. 

A major hurdle lies in integrating procurement and finance systems, which are essential for managing relationships with an extensive supplier network. Traditional procurement tools, bogged down by outdated methods and manual processes, fail to meet modern business demands. Research indicates that more than half of all procurement processes are still conducted manually, leaving professionals burdened by inefficient systems. Experienced professionals spend days each month doing drudgery that could easily be automated. This represents a sad waste of human potential, especially when so many of today’s challenges require creative thinking and a renewed focus on human relationships between buyers and suppliers. 

This challenge is particularly pronounced for mid-market organisations, where growth often leads to a patchwork of disparate software and processes struggling to keep pace with expanding needs. A recent study found that 84% of mid-market organisations have outgrown their existing processes. A full 75% stated that their technology is not suited to their current business size.

Regulatory Pressures Driving Digital Adoption

As procurement teams navigate these operational challenges, they are also facing new regulatory pressures, such as the rising trend of e-invoicing mandates worldwide. These mandates, designed to enhance tax compliance and reduce fraud, require procurement professionals to swiftly adapt their systems and processes. However, this regulatory change should also serve as a catalyst for broader digital transformation efforts across the procure-to-pay process. 

Non-compliance with regulations can result in significant business and financial harm, including administrative fines, protracted audits, and loss of VAT rights. By contrast, those who adopt a joined-up, cross-border approach to meeting evolving regulations worldwide will reap the benefits of cost reduction opportunities and efficiency gains that stem from embedding digital at the core of every business transaction.

Ignoring this shift is not just a missed opportunity—it’s a risk that no forward-thinking business can afford. Companies that fail to act swiftly and strategically may find themselves outpaced by competitors in an increasingly complex and interconnected regulatory environment. 

Bridging the gap between Procurement and AP 

A pervasive challenge for many organisations is the disconnect between Procurement and AP. Ideally, these departments should work in tandem, yet they are frequently hindered by outdated, disparate systems that prevent effective collaboration.

The lack of an integrated P2P process forces Procurement and accounts payable (AP) teams to constantly play catch-up, managing an increasing workload with inadequate tools. Delays in invoice approvals, miscommunications, and lack of transparency lead to higher costs and increased compliance risks. Supplier relationships suffer due to missed invoices and payment delays, while employees become frustrated by cumbersome systems that take weeks for approvals, even on small purchases.

The financial impact of these disjointed systems is substantial. Errors such as missed invoices or duplicate payments disrupt cash flow and undermine financial accuracy. Studies have shown that manual processes can significantly extend transaction cycles, adding days or even weeks to invoice approvals. This affects supplier relations and leads to missed cost-saving opportunities, such as early payment discounts.

The Strategic Shift to Fully Digital P2P Systems

Adopting fully digital P2P systems provides a strategic solution, seamlessly integrating procurement and finance functions. These platforms automate routine tasks, improve visibility, and accelerate transaction cycles, reducing errors and inconsistencies.

Digital P2P systems break down silos between Procurement and AP, enabling more effective collaboration. With a unified system, procurement can track purchase orders, monitor supplier performance, and ensure timely payments. AP benefits from streamlined invoice processing, automated invoice matching, and better cash flow management.

Transforming Procurement Through Digital Integration

As Procurement and Accounts Payable integrate digitally, the benefits extend beyond operational efficiencies. The relationship evolves into a strategic partnership, aligning both departments toward common goals. Real-time data and analytics provide comprehensive insights into procurement activities, spending patterns, and supplier performance. As a result, they enable informed decisions and better anticipation of disruptions.

Integrated P2P systems also ensure timely payments, which help maintain strong supplier relationships and provide more opportunities to negotiate better payment terms, driving cost savings across the organisation. Moreover, these systems help ensure compliance with procurement policies and regulatory requirements, reducing the risk of fraud and legal issues.

A Call to Action for Strategic Digital Transformation

Investing in advanced P2P technologies will drive efficiency, foster innovation, and build resilience, positioning organisations for future success. Mid-market organisations that may view this level of sophistication as the preserve of large enterprises are benefiting from the emergence of a new breed of unified, cross-business procure-to-pay platforms. These platforms deliver the flexibility and scalability to meet their evolving capability needs while integrating seamlessly with their existing systems. 

Transitioning to fully digital P2P systems is not just a technological upgrade but a strategic necessity. Businesses need to integrate processes, break down silos, and utilise real-time data. By doing to, organisations can eliminate inefficiencies, increase agility, and make more informed decisions. 

Businesses’ struggle to adapt to recent disruptions in global trade has put the Procurement function front and centre. No longer a business backwater, the C-Suite is beginning to appreciate the role Procurement plays in the wider organisation. The new breed of all-digital P2P technologies are essential tools for saving time and reducing friction. Not only that, but they are the platform on which procurement can further build its reputation as a driver of business growth. 

Anthony Marshall, Procurement Specialist at Barkers, on how IT procurement can add real value to financial services firms.

IT Procurement within financial services (FS) represents a complex mix of functions. There are many requirements, stakeholders, and suppliers to tackle. This is not to mention the need for regulatory compliance as well as third party risk management and operational resilience.

In addition, the nature of the market, particularly within the banking sector, is changing significantly. The demand for branches and ATMs has significantly decreasedm with much more appetite for on-demand digital services. This shift has created an opportunity for new agile, digital-centric banks to enter and quickly steal market share. These challenger entities are doing so largely through highly tailored and slick customer offerings. These digital offerings allow for rapid adaptability. They enable offerings to be quickly changed or configured in order to rapidly adapt to external market factors. For example: interest rate changes.

By contrast, traditional banking institutions still operate ‘mainframes’ and complicated legacy architecture. This is complex and costly to change and update.

Compliance and governance should be seen as a critical part of procurement’s purpose. However, it is imperative that it is not allowed to dominate thinking, neglecting the broader value of IT procurement. It’s crucial now more than ever that IT procurement proactively seeks to redefine its role. It must focus on being more than just a function that enforces compliance and process. Rather, it must be a valued thought partner to the IT function that guides and enables transformation and drives greater efficiencies.

Below are some of the key challenges that IT procurement professionals may face within financial services:

Complexity requirements

There is a broad range of evolving services in FS. In turn, this results in wide ranging requirements for technology to deliver. This is invariably coupled with a broad and diverse set of stakeholders with competing objectives and agendas. These stakeholders can often be in conflict with each other. This can lead to two key issues. Firstly, a long list of suppliers who provide the same or very similar core capabilities. Secondly, the over adoption of some platforms and deploying the wrong technology for the wrong reasons. Both outcomes will result in a higher cost base. And, in the latter instance particularly, sub-optimal performance and a high supplier concentration risk.

Processes, policies and regulations

Tight process and governance is a must-have in all FS organisations; regulators such as the Financial Conduct Authority (FCA) in the UK exist to protect individuals, businesses and the economy, and organisations need to evidence compliance. There is a risk, however, that processes and policies become a dominant focus of IT procurement. This, in turn, can lead to a negative perception or the function being seen as a barrier to transformation.

Suppliers

Suppliers can always be challenging regardless of the sector. In particular, however, there’s often a heightened level of incumbent supplier dependency within FS. This makes them especially tricky to manage. This supplier dependency is largely driven by complex legacy architecture and integration. Unchecked, it creates a scenario where suppliers understand that it would take years to move away and a resultant position of higher leverage for the supplier. Add to this diverse and competing stakeholders and requirements, as well as the perception of FS organisations being “cash rich”, and suppliers will often see the opportunity to increase their revenue via expanding their product offerings, or applying increases to cost on current contracts.

To that end, below are five essential tips for any financial services IT department to help manage this challenging environment.

1. Align with technical categories

Due to the large and diverse nature of FS organisations, it’s highly beneficial to align spend by category technology type. It’s important not to purely align to stakeholders as this will

significantly reduce consolidation and rationalisation opportunities. Aligning by technology also presents further opportunities for procurement to leverage organisational scale and build up SME knowledge within each category. For each category, understand what your renewal pipeline is and ensure that you align this with the technology roadmap and strategy. This will enable key priorities and a strategic sourcing approach to be defined.

Given the digital transformation challenge that many FS organisations face, a long-term

view is critical to avoid running into contract renewals with embedded suppliers with little

leverage and opportunity to influence. Appropriate planning and strategy (and time to do so) is key to ultimately ensuring successful negotiations that strike the right balance of long-term commercial protection vs unlocking value.

2. Build relationships and be willing to flex

It’s imperative that collaborative relationships are established with both ‘on the ground’ stakeholders and decision makers. This is about understanding the organisational objectives but also being proactive in presenting opportunities, risks and potential actions to address. What is particularly important and valued within FS is the ability to flex and work with stakeholders to approach each situation in the best way possible, acknowledging that in many circumstances market tenders may often be of little value. This doesn’t mean that formal tenders are redundant, far from it, but where long-term cost certainty of a current platform is the priority, it is essential to consider other ways of approaching the negotiation and generating leverage.

The ability to offer alternative approaches such as benchmarking and understanding how to leverage this alongside supplier organisation objectives are key to ensuring that IT procurement is seen as a solution-based enabler, even in challenging unavoidable single source scenarios.

3. Understand and objectively challenge requirements

Given the complexity of the technology landscape within FS, there will often be a gap between aspiration and reality, which can lead to over-buying or shelfware. Given this, it’s critical that requirements receive appropriate challenges and are objectively pushed back on. This is not a case of simply saying no, but rather providing a commercial interpretation of the situation and playing back potential options or approaches. It’s important to remember that this area of thinking often won’t be the priority or core competency of a given IT function who will predominantly be focussed on fulfilling a business requirement in the best way possible. It is therefore IT procurement’s responsibility to provide healthy and collaborative challenges.

4. Own the negotiation and know how to do it

Given the complex nature of infrastructure within FS organisations, IT is rarely negotiated in circumstances where an incumbent solution can be easily and cheaply swapped out. Incumbent technology platforms are often deeply embedded whilst investment in new technology is usually seen as critical to digital transformation (with a specific technology often pre-determined or highly favoured).

When considering negotiation approaches in this context, an essential starting point is establishing a minimum baseline of requirements and focussing on this as a priority – noting the often misalignment between aspiration and reality. Only once you have achieved an appropriate outcome on your baseline requirements should further conversations be entertained with suppliers. Given the often-complex nature of potential requirements, suppliers will often present over-scoped proposals based on what they see as the opportunity, badged as client requirements. It’s critical to not let suppliers drive the requirements but rather start from a minimum baseline of established requirements, whilst also starting to build a good understanding of the suppliers’ objectives.

Finally, whilst IT procurement should own the negotiation, this doesn’t mean going it

alone. Senior stakeholder relationships should be leveraged appropriately to arrive at the desired outcome, influenced by clear, insightful and influential briefings from IT procurement. This ensures that key messaging is delivered consistently.

5. Master the art of effective communication

To effectively act as a strategic thought partner to the IT function, it’s key that all of the great work and due diligence undertaken by IT procurement is communicated in a clear and concise manner. This may be done verbally. Often, when it comes to senior executives and decision makers, mastering the art of compelling written communication is key. This is the case both in terms of encouraging a decision to move in a particular direction or seeking support.

Rather than providing rigid bullet point summaries outlining key terms, benefits and risks, it’s important that IT procurement has the ability to clearly articulate the scenario, the practical options that are available, and most importantly an informed and objectively considered recommendation.

Final thoughts

In conclusion, now more than ever, the value that a high-functioning IT procurement can add cannot be undervalued. 

In a sector with ever evolving regulatory requirements and highly digital agendas, it’s essential for FS organisations that procurement acts as the commercial interpreter and advisor, guiding IT leaders through the process and helping to foster a collective focus on unlocking value and driving optimal outcomes.

Mark Reddy, Global Director of Growth – Finance, Spend, and Governance at OneAdvanced, explores how to boost procurement productivity.

Productivity is a national issue. According to a recent Gallup poll, as much as 90% of the UK workforce is currently disengaged and under-productive. This costs the UK 11% of its GDP each year – equivalent to around £257bn. That’s a massive problem for the country as a whole, but also for every single organisation that seeks to achieve growth, secure market share, and remain competitive as it pursues its business goals.

Increasing productivity is, therefore, the key to unlocking success for individual organisations and the UK at large. There are lots of areas where organisations need to make productivity gains. However, procurement is undoubtedly one of the most important places to start. When an organisation can identify and implement ways to reduce spend and increase efficiency, this can lead to improved return on investment (ROI) and optimises every penny spent. 

More effective procurement processes can therefore achieve more for less. By doing this, procurement frees up budgets. This means the company can spend money in other functions and benefit the overall organisation. These may include attracting and training high-quality talent, upgrading technology, or investing in their R&D for a more innovative, attractive product base. Without money, none of these strategies can be properly initiated.

One of the biggest challenges for organisations seeking to achieve higher productivity in procurement is that they are being held back by existing legacy systems. These stifle any attempts to grow, ensuring the organisation can’t adapt to rapidly-changing environments and will struggle to remain competitive.

Identifying legacy technology

The basic definition of legacy is outdated technology that still serves an important role for the business. That doesn’t necessarily relate to age as some older IT is still very much fit for purpose while certain newer solutions may already be obsolete. To identify legacy technology, look for technology that the vendor no longer supports or which is no longer available to purchase. This means any issues that arise will not be easy to fix, potentially disabling procurement processes and costing the organisation dearly.

Also, legacy technology may be incompatible with other, more recently acquired solutions, negating the value of investing in them. Identifying whether it’s time to upgrade comes down to assessing efficiency. And if competitors are using more efficient procurement tools, they will be forging ahead with increased productivity.

Choose suitable upgrades


If increasing productivity is the objective, then in an ideal world, organisations would be managing all their functions, including procurement, using the latest, most powerful digital solutions.

But many businesses are not in position to implement a wholesale upgrade of all their technology architecture. Instead, many choose to explore ways to evolve and transition from their legacy systems by phasing in next-generation solutions. This may help with budget, as well as reducing downtime and disruption, although best in class providers can enable the transition with little or no interruption to business as usual. These vendors will work with their legacy technology, integrating updated IT with a staged approach that best meets budget and other requirements.

One approach involves organisations identifying the most crucial processes in the procurement function first – whether that be sourcing, contract management, or supplier management, and successively implementing the solutions and seeing the greatest benefits most quickly.

Managing the deployment of new technology

Having found a procurement solutions provider that understands the specific needs and requirements of your organisation, its experts should work with your procurement team, ensuring that everything is in best order before beginning the transition.

It is absolutely crucial that this includes getting organisational data into a good state. Data is arguably an organisation’s most important asset, next to or on a par with talent and it must work effectively for the organisation. If not managed correctly, poor quality data will slow everything down.

The processes include checking accuracy, identifying missing data, establishing ways to sort, categorise, standardise, and validate the data while ensuring compliance with data protection law. 

Supporting the fight for talent

The procurement talent shortage is well documented and the battle to secure the best people is an ongoing one. Technology empowers already overstretched teams. However, it’s also a powerful tool for attracting new talent into your organisation. 

Many businesses are waking up to the importance of the employee value proposition and the need to offer a full package comprising more than just financial remuneration. The chance to work within a tech-first team and advance personal knowledge and skills in data, automation and AI is far more appealing for candidates than a paper-based procurement system.

The cost of inaction

It’s not necessarily a technology’s age that defines it as being “legacy.” It’s likely that legacy technology will be primarily on-premises, implemented prior to widespread cloud adoption. Of course, some on-premise technology is highly effective and appropriate to the organisation, but in many cases it is out of date and holding organisations back from achieving their productivity goals. On-premise technology can be very expensive to run and maintain, and often hampers attempts to scale, strangling any growth ambitions. 

Increasingly, organisations are seeing the real value in taking subscription-based cloud technology, that is scalable, secure, and accessible. Cloud-based procurement solutions help professionals do their jobs more easily, with greater flexibility and enhanced security standards which are crucial for protecting valuable data. Their inherent scalability provides for more future-proof strategies, and helps maintain connectivity with other forward-thinking supplier and customer businesses.

Procurement is a business-critical function, where failure to effectively manage and control spend can make or break an organisation’s financial health. Effective procurement has other impacts too, including helping to elevate (or not) reputation, driving sustainability by using more local and ethical suppliers. Powerful procurement solutions enable organisations to pivot quickly when disruptions happen in the supply chain, so they can continue to serve their customers reliably, thus they can potentially transform the customer experience, driving greater satisfaction, leading to increased sales.

From legacy to the next generation 

When embarking on the transition from legacy to next-generation solutions, it is crucial that organisations put in the hard yards with their data to create a powerful dataset. This can provide procurement professionals with important, actionable insights, and accurate data analytics that drive decisions around trends, forecasting and more. 

These will reduce spend, save resources (including valuable employee time), and drive increased productivity. Budgets may be tight, and while some productivity gains often come in a series of small changes, effective digital transformation in procurement can very quickly bring big wins, powering the organisation forward towards success.

The Danish toymaker has committed to using more eco-friendly materials, phasing fossil fuels out of its plastic bricks by 2032.

Lego has announced plans to remove all fossil fuels from its bricks by 2032, sourcing its plastic from renewable or recycled sources instead. The announcement comes just over a year after the company axed plans to make its bricks from recycled plastic bottles, saying that the process of sourcing, recycling, and remanufacturing the bottles did not reduce its carbon footprint

The Danish toy maker currently makes its plastic blocks from an oil-based material called ABS, which the BBC reported recently is not biodegradable, in addition to posing challenges for the recycling process. 

This is the latest development in the company’s attempts to decarbonise its products, despite making them from plastic. Currently, Lego manufactures its resin using a “mass balance approach”, which combines “both virgin fossil and renewable and recycled raw materials, such as used cooking or plant oils,” to create its bricks, according to the company’s website.

Lego announced that it procured approximately 22% of the plastic used in its bricks in H1 2024 from renewable and recycled sources. This reportedly represents a 12% increase year on year. 

“By doing this, the company aims to help accelerate the industry’s transition to more sustainable, high-quality materials,” stated a press release from the company.

Lego manufactures approximately 70 billion elements per year.
Lego manufactures approximately 70 billion plastic blocks, or elements, per year.

A blueprint for better procurement?

Around the world, organisations looking to switch their materials procurement out for more sustainable options have struggled to find ways to balance an increased emphasis on ESG with the ongoing need for revenue and profit growth. Lego — one of the world’s simultaneously profitable and plastic-dependent companies — may provide an example of how to move forward. 

Despite highlighting that its goal of eliminating fossil fuels from its bricks will raise the cost of procuring resin by 70%, Lego has said it will absorb the cost without passing it on to its customers. Lego products will remain the same price, despite the more eco-friendly materials increasing spend further up the value chain. 

“With a family-owner committed to sustainability, it’s a privilege that we can pay extra for the raw materials without having to charge customers extra,” Lego CEO Niels Christiansen told Reuters. He added that he hoped the decision to procure more sustainable materials that make the (approximately) 70 billion pieces Lego sells every year will “help accelerate the industry’s transition to more sustainable, high-quality materials.”

A Collective Fashion Justice report finds British fashion brands are woefully underperforming in the fight to reduce emissions in their value chain.

Just two weeks ahead of London Fashion Week, a new report from industry ethics advocacy group Collective Fashion Justice (CFJ) has highlighted a troubling lack of progress in the British fashion industry’s decarbonisation efforts. 

As the report notes, the “window of time left to curb total climate catastrophe is quickly closing” and, while there is “no doubt” that the fashion industry is a major contributor to the climate crisis, the CFJ’s argues that brands in the UK aren’t doing enough to curb their impact on a planet already feeling the effects of the climate crisis. 

Fashion Council brands falling short of science based targets

The CFJ found that less than 4% of British Fashion Council member brands have published any public climate targets whatsoever. Even fewer of those targets align with the science-based targets set out by the Paris Agreement. 

Science-based targets are those that align a business’ sustainability efforts with goals and benchmarks laid out in the Paris Agreement in 2016 — a legally binding agreement between 195 nations to keep global heating beneath 2 degrees Celsius. The scientific community has highlighted the fact that the agreement is not aggressive enough to curtail global heating. Despite the widespread agreement from the scientific community that the Paris Agreement’s science-based targets fall short of what is necessary to effectively combat climate change, over 96% of the British Fashion Council’s member brands have failed to take the necessary steps to align themselves with them. 

Of the 206 BFC member designers and brands assessed just 7 have a published climate target (less than 4%). Only 5 have a science based target aligned with the Paris Agreement (2.4%). The industry has, the CFJ argues, failed to meaningfully invest in combating its environmental impact, adding that government policy has failed to necessitate that investment.

“This finding is an embarrassment for an industry that considers itself one of the most creative and innovative in the world.” — Collective Fashion Justice

Degrowth, materials, and decarbonisation: Solutions to fashion’s carbon disaster

The report proposes three solutions to the issue: a combination of degrowth, decarbonisation, and a new approach to responsible materials production. The CFJ notes that scientific data ties 38% of industry greenhouse gas emissions to irresponsible raw material production, “particularly those derived from ruminant animals and fossil fuels.” 

A dramatic reduction in animal-derived materials like leather and cashmere would, the CFJ argues, result in a substantial reduction of greenhouse gas emissions — specifically methane. They also note, however, that fossil fuel-derived materials also have their consumption reduced, according to the UN’s Intergovernmental Panel on Climate Change. 

“Animal-derived materials must not continue to be green-washed and ignored,” argues the CFJ, but rather have their usage reduced according to science-based targets. The CFJ advocates for responsibly replacing animal-derived materials with bio-innovation. The report emphasises that the rearing of animals for both food and fashion is the leading driver of anthropogenic methane (32%) and responsible for 16.5% of total greenhouse gas emissions.

Greenhouse gases in spring? How original

According to Vishal Patel, VP of Product at cloud-based procurement software vendor Ivalua, “The pressure is on fashion brands to implement and track sustainable practices across the clothing production process, from converting raw materials in factories to finished products on the shopfloor.” 

He acknowledges that, with major fashion brands potentially dealing with as many as 50,000 suppliers across hundreds of different regions, it’s “extremely difficult to accurately track their suppliers’ green practices and near impossible to track beyond tier 1 and 2 suppliers.” Considering Scope 3 emissions are largely responsible for an organisation’s carbon footprint, this is a major challenge that lies ahead of the fashion industry, but it’s not one that it can afford to avoid, argues the CFJ. 

“This isn’t a question of whether or not brands want or feel morally obligated to act. There is no future of fashion on a dead planet: no supply chain remains untouched by the effects of climate change,” admonishes the report. “If the British fashion industry wants to be taken seriously it needs to set and follow through on science-based targets that prevent climate catastrophe, aligned with the Paris Agreement and ensuring a net-zero 2050, with substantial progress made in the coming years.” 

Patel adds: “To help keep track of emissions and hit ESG targets, fashion brands need to take a smarter approach to procurement to carefully select suppliers, effectively assess their environmental impact, and identify opportunities to work with suppliers to meet sustainability requirements.”

Venki Subramanian, Senior Vice President of Product Management at Reltio, explores how CPOs can restore trust in fragmented ESG data.

Today’s Chief Procurement Officers (CPOs) are under unprecedented pressure to ensure their organisations meet increasingly stringent environmental, social, and governance (ESG) reporting requirements

As global regulations tighten and stakeholders demand greater transparency, the quality and integrity of ESG data have become critical. However, many CPOs grapple with a significant obstacle: fragmented data scattered across disparate systems. 

This data disarray threatens the accuracy of ESG reporting and poses substantial risks to compliance and reputation. To rise to the challenge, CPOs must take decisive action. They need to find ways to unify and streamline their data management processes, transforming fragmented ESG data into a trusted, strategic asset that drives sustainable business practices and builds stakeholder trust.

The stakes are high. Failure to do so could lead to serious repercussions including potential fines and reputational risk in the marketplace.

The urgency of ESG compliance for CPOs

CPOs are acutely aware of the growing impact of ESG regulations on their operations. The rapid increase of regulatory frameworks, especially for businesses that source supplies and operate internationally, has reached a critical point. The EU’s Corporate Sustainability Reporting Directive (CSRD), which became law in early 2023, exemplifies this trend. It mandates that all major and listed companies—including EU subsidiaries of non-EU enterprises—must disclose detailed information about their ESG impacts. The clock is ticking: CSRD will apply to reports published in 2025 for the 2024 fiscal year. This new reality intensifies the need for full transparency into supply chains. Achieving this means ensuring robust data management to support the accurate ESG assessment of suppliers.

The challenge of fragmented data in supplier and procurement systems

The problem, however, lies within the vast troves of enterprise data. Siloed, fragmented and generally untrustworthy, the information that CPOs need to generate ESG reports is in disarray.

Fragmented data across supplier and procurement systems is a pervasive challenge that hampers enterprise operations’ efficiency, accuracy, and effectiveness. As organisations increasingly prioritise ESG reporting, the consequences of fragmented data have become more pronounced. It is not just a luxury anymore; having trusted data is crucial to meeting the needs of the growing complexity of regulatory risk. The average enterprise uses 446 applications that are largely disconnected from one another, resulting in data silos and multiple versions of the truth, according to Gartner. 

One of the most immediate consequences of fragmented data is the lack of comprehensive visibility into the supply chain. Limited visibility into supplier performance is a major challenge, primarily due to data being dispersed across multiple, unconnected systems. The lack of visibility hinders decision-making as procurement teams struggle to access reliable, up-to-date information on supplier compliance, risks, and performance metrics.

Navigating the complexities of ESG reporting

As CPOs refine their procurement processes, they must tackle supply chain data management simultaneously. ESG regulations demand new types of data about suppliers maintained to a higher standard of accuracy and completeness. 

Unfortunately, too much supplier data is currently siloed, inaccurate, or incomplete, which jeopardises the ability to measure ESG compliance effectively. The ultimate goal of advancing sustainability and good governance within procurement processes is admirable, but the workload is immense. 

CPOs and their teams must identify which suppliers have advanced CSRD practices while assisting others in improving their processes. This cannot be a mere checkbox exercise; it requires ongoing collaboration, guidance, and assessments to embed CSRD principles into contracts and continuously evaluate the risks within the supply chain—whether related to child labour, environmental damage, or other critical issues.

The urgent need for modern data unification

The case for data unification and management across supplier and procurement systems is clear. By consolidating data into a single, coherent system—such as through Master Data Management (MDM) solutions or with targeted data products—organisations can achieve a unified view of their supply chains. 

This improves visibility and decision-making and ensures that ESG reporting is accurate and comprehensive, reducing the risk of non-compliance.

Given the need for agility and effectiveness in CSRD reporting, the choice of data management and unification solutions is critical. Modern, cloud-based solutions offer distinct advantages. These include open application programming interfaces (APIs) that simplify and accelerate the integration of internal and external systems. CPOs should also seek MDM platforms that leverage AI and machine learning to automate data quality checks. Doing so will further streamline the process.

To get a 360-degree view of the supply chain, supplier data must be enriched with ESG and compliance data from third-party sources such as Dun & Bradstreet, OneTrust, Bloomberg, and others. 

That is why CPOs should seek out cutting-edge 360 solutions that offer out-of-the-box integrations to third-party data providers and pre-packaged, industry-specific data models and configurations that are highly tailored to supplier data with the goal of quickly getting results. 

These solutions can dramatically reduce implementation time and accelerate time-to-value for organisations. CPOs should also look for data unification platforms that offer easy low-code integrations with upstream systems, such as supplier onboarding portals and downstream systems for payment and risk management, to have a fully integrated solution to manage their supply chain.

The benefits (beyond ESG reporting)

The benefits of having a single source of data truth extend beyond ESG reporting. Accurate and consistent data in supplier and procurement systems can streamline new supplier onboarding and enhance product pricing and production planning. 

Whether driven by ESG requirements or not, unifying supply chain data will provide CPOs with the clarity needed to make their supply chains more efficient, cost-effective, and resilient.

Shannon Kirk, Global Director of Legal Industry Solutions at Icertis, explores how tackling supply chain disruption can be mitigated with contract intelligence.

The spring and summer months mark a time of high alert around the world. In the U.S., East coast states have just entered the dreaded hurricane season, while the West Coast is deep into fire season (currently, there are over 70 active wildfires across the U.S.). Not even Europe can escape the weather; with record high temperatures wreaking havoc, experts estimate the economic impact to be upwards of $10 billion. 

Weather-related events have lasting impacts on all aspects of our day-to-day lives, whether it be school closures, power outages, insurance claims, or even supply chain disruptions. In fact, early predictions expect supply chain disruptions to cost companies as much as $100 billion globally this year alone.

Each year, these events serve as a stark reminder of the critical role supply chains play in modern business and how far-reaching these disruptions can be on a global level. 

Despite best efforts, supply chain disruptions happen all the time; whether through natural disasters, geopolitics, shifting regulations, or economic instability, the supply chain is sensitive to change. Therefore, businesses must have a modernised contracting solution in place to help mitigate risk. 

Managing supply chain disruption begins with contracts

Every supplier relationship is governed by a contract, making contracts one of the most powerful data sources to gain visibility and insights into potential supply chain weaknesses. 

When disruptions occur, the impact can vary across industries. Airlines may experience grounded flights; retail might face disruptions at the point of sale; and manufacturing could see production lines come to a halt due to delayed delivery of critical components, resulting in costly downtime and potential revenue loss.

So, who actually bears the cost of lost revenue when a disruption occurs? Well, the answer should be found in the contract. 

Contracts are the foundation of commerce, governing every dollar flowing in and out of an enterprise and acting as the single source of truth for business relationships. No matter what side of the transaction, sellers need to know what they’re entitled to, and buyers need to know what to expect. That’s why ensuring contract language, such as required terms and clauses that respond to supply chain disruption, is critical. 

The complexity of modern supply chains

Modern supply chains consist of hundreds of suppliers across a range of geographies. This complexity results in the management of hundreds of thousands of contracts, likely written in different languages, adhering to local regulations, and stored in clunky and disjointed systems as PDFs. 

The sheer volume of these contracts makes it increasingly challenging for businesses to map the full ecosystem of relationships and ensure that the intent of their commercial agreements is fully realised. 

Poor contract management can cost companies nearly 9% of their bottom line. This is a significant loss that AI-powered contract management solutions can help prevent. In a recent survey, 44% of CPOs reported leading AI adoption efforts, recognizing the increasing importance of AI in the procurement function.

The power of contract intelligence 

Contract Lifecycle Management (CLM) is one key area where CPOs see the value of AI. Traditionally, procurement teams managed contracts manually in disparate, disconnected systems, hindering agility and quick responses to disruption. However, by digitising these data goldmines and applying AI, automation, and machine learning, organisations can enhance visibility, standardise processes, and unlock insights across their hundreds of suppliers.

Contract intelligence, a modern approach to CLM, not only helps businesses respond to crises but can also enable proactive measures within contracts to help maintain continuity. For example, if a particular supply chain route is at risk due to a natural disaster, AI can help quickly detect potential supply chain failures and identify tertiary suppliers as alternatives, ultimately mitigating potential delays. 

For example, the semiconductor shortage attributed to the pandemic and exacerbated by extreme weather and the Russian invasion of Ukraine highlights the vulnerabilities within complex global supply chains. Although the chip supply chain has largely stabilised, the lingering effects underscore the challenges inherent in relying on specialised suppliers. 

This situation emphasises the need for businesses to diversify their suppliers and turn to contracts as critical sources to manage risks effectively. Implementing AI-powered contract intelligence can provide better visibility into their supply chain dependencies, proactively secure alternative sources, and help maintain business continuity.

The future of CLM

As recently as a decade ago, CLM was nothing more than a repository of scanned documents. Today, AI has completely revolutionised the CLM space, transforming contracts into dynamic resources that guide how businesses operate with their suppliers. Gone are the days of signing a contract and just forgetting about it. Now, contracts serve as a living data source to mitigate risk and manage compliance. 

By connecting millions of contracts and infusing their data into core operations, businesses can create rich pools of AI-powered insights to inform better decision-making, increasing the pace of business, and positioning the company to thrive despite supply chain challenges.

Gemma Thompson, Senior Consultant for Strategy and Growth at Proxima, answers our questions on the evolving state of risk and resilience in the procurement sector.

2024 is proving to be a challenging time for the procurement and sourcing sector. Despite the fading effects of the COVID-19, a new era of seemingly “perpetual disruption” offers no respite for CPOs and their teams. 

Proxima is a global procurement and supply chain consultancy based in London. One of their senior consultants, Gemma Thompson, writes regularly about the ways in which CPOs can prepare to meet the constantly unfolding challenges facing their industry. We sat down with her to ask some of our most pressing questions about risk, resilience, and the future of procurement. 

In the wake of the pandemic and the end of the drought in Panama, what are the major threats to procurement and sourcing resilience affecting the world right now? 

Although many organisations are still navigating the ongoing impacts of the pandemic and the Panama drought, headlines are waning. In their wake is a mass of geopolitical uncertainty and trade disruptions.

We’re in the midst of the biggest election year globally in history, and the ripple effects are far felt. Ongoing tensions between major powers like the US, China, and Taiwan threaten unpredictable sanctions regimes that could place supply chains at risk of disruption and inflated costs.

Trade wars of tariffs and taxes fuel uncertainty for business leaders trying to build resilience into their supply chains.

Building true resilience in today’s supply landscape requires organisations to think broader and consider more than ever before. So, the greatest of all threats would be ignorance, or inertia— Gemma Thompson

Further uncertainty can be attributed to ongoing conflict around the world. As supply networks pull parts of the globalised world closer together, regional conflicts present a risk far wider reaching than the originating countries.

Proven by Russia’s invasion of Ukraine and the impact on food and energy, exacerbated by the attacks on the Red Sea and the targeting of commercial ships in response to the ongoing conflict in the Gaza Strip.

Six months on, Maersk reported that the ripple effects on maritime shipping and global supply chains have intensified, highlighting that these threats will impact procurement strategies and sourcing resilience for a while to come.

Increased transit times through rerouting trade, increased associated costs and resources required, and capacity shortages all significantly impact decision-making.

In a cliché of a perfect storm, geopolitics and conflict are not the only threats to procurement and sourcing resilience, though. Organisations face a series of balances to strike—the transition to low-carbon to achieve a net zero future while protecting costs involved in navigating natural disasters, investing in technology innovation while protecting against increasingly sophisticated cyberattacks and vulnerabilities, and managing costs and margins while facing labour shortages from production through to delivery.

Building true resilience in today’s supply landscape requires organisations to think broader and consider more than ever before. So, the greatest of all threats would be ignorance, or inertia.  

Some industry experts believe we’ve entered an age of “perpetual disruption.” Are they right? 

They’re not wrong. The reality is that a whole network of supply chain vulnerabilities was bubbling away under the surface, and the pandemic was the boiling point.

What’s happened since is an inability to get the lid to stay back on, because now that we see those vulnerabilities, we must deal with them. Yet at the same time, we are faced with an era-defining reconfiguration of global trade driven by serious geopolitical events. With no crystal ball for knowing where the jigsaw pieces will land, “perpetual disruption” seems appropriate.

The other contributing factor is that even if organisations are not directly involved in an event themselves—be it trade wars, conflict, natural disasters, or other—they will likely be impacted by the ripple effects. Port congestion, logistical delays, material shortages, and economic volatility continue to evolve as events play out.

However, as with most market trends, the focus and impact will ebb and flow. While it’s a little early to imagine a stable global market, pockets of resilience at a regional level, as organisations look to onshore or nearshore operations, could start to pave the way forward.

There is a philosophical debate to be had around the concept of perpetual disruption or if this is just an evolution of normalised trading conditions. Whatever the outcome (of that debate), the reality is that in seeking sufficient levels of control, business leaders must take a proactive, strategic approach to sourcing resilience.

How are risk and resilience models being used to drive organisational growth?  

Integrating resilience into their long-term strategies enables organisations to weather more storms with minimal impact on profitability and operations. Building response capabilities to unforeseen circumstances in advance and enabling faster, data-informed decision-making helps organisations adapt to change quickly and seize new opportunities.

By embedding these practices, effectively managing risk, and investing in resilience through robust sourcing strategies, appropriately skilled teams, and technology, the organisation feeds into its competitive advantage—positioning itself ahead of others that might not be as mature in the risk and resilience realm.

At a more practical level, building resilience allows you to deliver the best to your customers. Be the organisation that follows through on your SLAs and promises like the next-day delivery, not the one that sends an apologetic email due to delays. Sometimes, it’s unavoidable, but your best bet for organisational growth is to ensure you’re as prepared for those instances as possible.

Are there any technological solutions that promise to help ease these pain points? 

Some technologies that have been around for some time are now having their moment in the spotlight, like Blockchain, automation and robotics, artificial intelligence, and machine learning, as practical use cases become more apparent throughout supply chain management. Namely through providing transparency and security, increasing productivity, optimising demand forecasting and route planning, and enhancing quality control and predictive maintenance.

At its broadest level, the next-generation supply chain will be architected using many proven, new, and emerging technologies to deliver the transparency and agility that we have been speaking about for some time now.

Revolution or evolution? It doesn’t really matter; this is simply how things will be done from this moment forward, and tech firms are starting to see the demand, which enables investment on their side.

For example, a game-changing innovation for visibility and predictability is Digital Twins. Creating virtual replicas of supply chains allows organisations to simulate and analyse different procurement and sourcing strategies to test resilience before implementing and committing significant costs and resources. We’ve seen pioneers do this, and soon will come the time for the mass market.

“Business leaders must consider the appropriate technology for their strategy and budget and leverage its functionality to ease their specific pain points” — Gemma Thompson

At a more detailed level, if we look at how to use technology to improve how risk is managed in your supply network, the options available will depend on your organisational risk appetite and the risks at play.

Some providers use blockchain technology to automate and streamline risk management during onboarding processes by scraping the market for compliance information. Other technologies specialise in certain supplies or categories that can scan for specific vulnerabilities, such as cybersecurity within IT or regulatory compliance within HR.

Across the end-to-end supply chain, emerging technology enables the tracking of products from origin through to customer, as mentioned above. This can be at a component or finished goods level as programs mature, but it is that technology that can predict risks and alert buyers to pivot supply arrangements.  

Business leaders must consider the appropriate technology for their strategy and budget and leverage its functionality to ease their specific pain points. 

Anything else you’d like to add? 

Often, risk gets a bad rap. The context of conflict and crises frames risk in a negative light, yet knowing your risks can drive positive results. 

Business leaders should see risk as a golden thread running through operations to protect and improve resilience and profitability. Significant financial and operational impacts can be avoided when managed effectively and by leveraging the right tools and technology.

Rising demand for a “wave” of AI-enabled devices slated to hit the market in Q3 could make it challenging for IT procurement teams to secure the devices they need.

Surging demand for artificial intelligence-enabled devices could pose a major challenge for procurement teams in the second half of 2024. According to a new report by Probrand, the launch of the next generation of AI computers is one of several factors likely to trigger higher than typical levels of sales.

IT device demand surges

Probrand identified several contributing factors that could make it more difficult for procurement teams to secure the IT equipment they need. These include replacement purchases due to the loss of support for Windows 10 products in October 2025; periodic product refreshes to replace emergency purchases made during the Covid-19 pandemic; the heavy discounting on old market stock by vendors wanting to clear a path for new stock; and an increased supply of AI-powered devices, including Microsoft’s Copilot+. 

Ian Nethercot, supply chain director at Probrand, commented: “As more AI-powered devices enter the market there is going to be a surge in supply, which will create increased competition between vendors, who will be under pressure to shift their existing stock. In the last week alone, we’ve seen additional discounts of between 5 and 10% in certain categories, including laptops.”

He added: “The supply chain is also showing more signs of improved stability, which is building confidence in the market. It’s encouraging vendors to be more transparent with buyers over what deals are available, and offer more flexibility in the way they can purchase stock. For example, many vendors are now giving organisations the option to ringfence and reserve products in advance. This means IT buyers can be more strategic. They can seize the deals available to them now and acquire stock for future deployment.’’

Probrand advises that, as the market transitions to the next-generation of PC, there will be a short window of opportunity that will allow buyers to stretch their IT budgets further – if they can be strategic in their purchasing behaviour.

The AI computer era

Microsoft, along with other computer manufacturers, has spent the past year pushing the introduction of new computer hardware that’s compatible with running AI applications, like Copilot, locally. The idea is that, rather than rely on the internet and massive, power-intensive data centres to execute generative AI commands, local AI-enabled PCs will be able to execute more AI commands within the laptop itself. 

According to data gathered by Canalys, electronics manufacturers shipped 8.8 million AI-capable PCs in Q2 of 2024. Defined as desktops and notebooks that include a chipset or block for dedicated AI workloads, such as an NPU, these devices made up around 14% of all PCs shipped in the quarter. Canalys’ research expects that figure to rise to 18% of all shipments for the whole of 2024. With all major processor vendors’ AI-capable PC roadmaps now well underway, Canalys notes that the stage is set for a significant ramp-up in device availability and end-user adoption in the second half of 2024 and beyond, in line with Probrand’s predictions. 

“The wider availability of AI-accelerating silicon in personal computing will be transformative, leading to over 150 million AI-capable PCs shipping through to the end of 2025,” said Ishan Dutt, Principal Analyst at Canalys.

However, the integration of AI hardware into personal computers (or any devices, for that matter) has not been seamless. Delays, obsolete devices under a year old, and doubts cast over the functionality of AI-powered applications like Copilot have all raised questions over whether massive spending on generative AI is justified yet — or even whether it ever will be.  

“Rose-tinted predictions for artificial intelligence’s grand achievements will be swept aside by underwhelming performance and dangerous results,” Darren Acemoglu warned in a recent article for WIRED

Private equity firm Vista Equity Partners has acquired Jaggaer, a procurement automation software organisaition.

The procurement sector continues to face the twin challenges of an increasingly volatile supply chain landscape and a widespread shortage of skilled professionals. In order to close the existing skills gap and increase efficiency, investors are turning more and more to technology and cutting edge solutions.

Organizations can spend more than 70% of their total revenue on procurement, making it important to use developing technologies to increase efficiency, cost savings and competitive advantage. As a result, procurement platforms that bring new levels of oversight, automation, and analysis to the source-to-pay process are drawing in an increasing amount of capital investment.

Procurement automation aims to remove the need for the kind of slow manual tasks usually associated with the spend management process. Not only can it save teams time by reducing menial work, but it can also reduce costs, saving companies money while providing more accurate insights and happier suppliers. 

Vista acquires Jaggaer

Today, private equity investment firm Vista Equity Partners, which focuses on enterprise software, data and technology focused businesses, announced the acquisition of Jaggaer, an enterprise procurement and supplier collaboration software, from its owner, UK-based private equity firm Cinven. Neither Vista nor Jaggaer confirmed the exact terms of the deal. However, Reuters reported in May on rumours that the deal could be worth as much as $3 billion.

Jaggaer provides configurable source to pay and collaboration software for direct and indirect procurement processes through a single, unified platform. The company’s current model provides cloud-based procurement automation technology to large pharmaceutical corporations, including AstraZeneca, Unilever, and Merck KGaA. It also serves customers in other industries including large industrials firms and insurers, according to Reuters.

Jaggaer’s AI-enabled solutions help make purchasing more cost effective, better organised, and its digital tools help companies automate sourcing, spend management, contracting, eProcurement, invoicing and supply chain visibility for a diversified group of more than 1,400 customers around the world.

Executive reflections

“This new partnership with Vista underscores Jaggaer’s strong momentum and the compelling value our intelligent software delivers by helping our customers manage and automate complex processes while enabling a highly resilient, responsible and integrated supplier base,” said Andy Hovancik, CEO of Jaggaer.

Michael Fosnaugh, Co-Head of Vista’s Flagship Fund and Senior Managing Director, explains that Vista’s decision to acquire Jaggaer was rooted in the fact that “Jaggaer provides a mission critical platform that enables its customers and partners to streamline global supply chain and procurement processes, lower costs and improve visibility.” He added that Jaggaer’s products “serve a large addressable market benefiting from durable growth tailwinds, including customers’ increasing desire to unify direct and indirect spend management and realise the benefits of AI. Jaggaer is well-positioned to capitalise on these demand trends given its leading capabilities across source-to-pay workflows.”

“Jaggaer’s comprehensive solution enables customers to manage all procurement activities from an intuitive platform that harmonises and optimises disparate spend data,” said Sam Payton, Senior Vice President at Vista. He also pointed to the quality of Jaggaer’s “high performing leadership team,” whose “demonstrated commitment to operational excellence” was a big part of why Vista purchased the company, and spoke to “a bright vision for the future of AI-powered spend management.” He added: “We’re excited to support an organisation that cares deeply about their customers, partners and mission.”

Mark Boswell, Director at BearingPoint, delves into procurement’s role as a driver of sustainability within the organisation.

Sustainabiliy is becoming a bigger part of business’ agendas. Increasingly, organisations are focusingon how to deliver and accelerate their environmental, social, and governance objectives.  There are many dimensions to sustainability. Tackling climate change is just one piece of the puzzle. It also includes ending poverty and addressing social needs like education, health, and equality. 

Organisations must address all aspects of sustainability, rather than focusing solely on their immediate impacts on sustainability and climate change. Achieving these goals and objectives is crucial, with procurement playing a pivotal role in this success.

Sustainability agreements and summits

The UN’s 17 Sustainable Development Goals are a good guideline for what sustainability encompasses. The last one of these is “Partnerships for the Goals”, which focuses on how governments can work together with the private sector and civil society. The yearly UN Climate Change conferences demonstrate how important collaboration is to delivering on the Paris Agreement

The COP summits are examples of collaboration on a macroeconomic level, but there is also a benefit to businesses having a strategy for collaborating on sustainability on a smaller scale, within their own networks of suppliers and partners

Scope 3 Emissions

According to the UN Global Compact, Scope 3 emissions* comprise more than 70% of a business’ carbon footprint. Organisations must collaborate with suppliers throughout the value chain to ensure an accurate understanding of Scope 3 emissions. They must then ensure appropriate actions are implemented which will reduce Scope 3 emissions, helping to achieve sustainability targets.

Influence 

Businesses can promote sustainability with their supply base through the same criteria they use to evaluate tenders, such as requesting ESG certifications. This approach fosters a sense of urgency around sustainability and compels suppliers to consider their environmental and social impacts. By embedding sustainability criteria into the tender evaluation process, businesses set a clear expectation that suppliers must meet high environmental and social standards.

Procurement has the ability to have a great deal of impact on supplier selection through the creation of purchasing strategies. These strategies, when developed in collaboration with internal stakeholders, ensure that purchasing decisions are aligned with the organisation’s sustainability and climate goals. Engaging with suppliers to drive positive change and promoting innovation and transparency throughout the supply chain further amplifies this impact. By doing so, procurement helps mitigate the risks associated with missing regulatory obligations and shareholder commitments.

To effectively implement these strategies, it is essential for procurement to work closely with departments such as Corporate Social Responsibility (CSR), Legal, Finance, and Operations. This cross-functional collaboration ensures a cohesive approach towards sustainability goals, aligning procurement decisions with the organisation’s broader sustainability and climate objectives. Such integration enables a unified effort in achieving sustainability targets, ensuring that all departments are working towards the same goals.

Moreover, procurement can play a pivotal role in encouraging suppliers to be more transparent about their sustainability practices. By fostering a culture of transparency and requiring suppliers to report on their sustainability practices and progress, procurement not only promotes accountability but also enables the organisation to track and report on its own sustainability achievements. This transparency is crucial for building trust and demonstrating the company’s commitment to sustainability to all stakeholders.

Helping suppliers gain visibility and reduce emissions 

In addition to promoting transparency, procurement can also support suppliers in gaining visibility of their CO2 emissions and collaborate with them to reduce these emissions. By working together, procurement and suppliers can identify and implement strategies to lower their carbon footprints. Ensuring suppliers are respectful of the environment is further reinforced by gathering their environmental certifications and policy documentation. This verification process ensures that suppliers adhere to recognised environmental standards and practices.

Procurement teams play a crucial role in supporting suppliers’ sustainability transition. They can support bringing in external experts, particularly in start-ups and SMEs, to offer advice, benchmarks, and new technology to help deliver sustainability objectives. This cross collaboration supports suppliers in achieving their sustainability objectives and ensuring compliance with legislation.

By integrating these later practices, procurement departments can significantly contribute to the sustainability objectives of their organisations. Through strategic supplier selection, fostering transparency, and supporting emission reduction efforts, procurement drives positive environmental, social, and economic outcomes, ultimately helping the organisation achieve its sustainability goals.

Direct materials

In the manufacturing or consumer goods sectors, procurement teams can play an additional role, working with suppliers to provide direct materials to design more sustainable finished products.

To collaborate successfully with suppliers on sustainability, businesses need a clear strategy, which should address questions like which processes and tools to use, and which suppliers to focus on. Once the strategy is defined, any sustainability initiatives will also need to be project managed.

Final thoughts

Sustainability is only going to become more important in the coming years. Taking carbon emissions as an example, the 2023 UN Emissions Gap Report concluded a large possibility global warming will exceed a 2°C or even 3°C temperature rise by the end of the century, well above the 1.5°C target. Delivering on sustainability goals is not something businesses can do in isolation, and procurement will be key to success.

Martin Walsham, director of AMR CyberSecurity, examines the importance of the Shared Responsibility Model (SRM) in cloud security and its implications for procurement processes.

The Shared Responsibility Model (SRM) is crucial for cloud security, delineating the roles and responsibilities between cloud service providers and their customers. In the procurement sector, understanding and implementing SRM is essential for ensuring security and compliance when selecting cloud services.

The Need for Shared Responsibility in Cloud Security

SRM suggests that cloud providers are responsible for the security of the cloud infrastructure, while customers must secure their applications and data within that infrastructure. This clear division of responsibilities helps manage risks and ensures both parties are accountable for their specific roles.

For procurement professionals, SRM is vital in evaluating and selecting cloud services. It provides a framework to assess which security measures are managed by the provider and which must be handled internally. This clarity is essential for mitigating risks and ensuring comprehensive security coverage.

SRM delineates the security obligations between cloud service providers and their customers. It ensures there are no gaps in security responsibilities, which can otherwise lead to vulnerabilities.

And of course, by delegating certain security responsibilities to cloud providers, organisations can reduce the costs associated with managing and maintaining their own security infrastructure. Procurement teams can negotiate service agreements that include robust security measures, ensuring more cost-effective and efficient security management.

Background  

Cloud-hosted IT systems provide numerous advantages, enabling organisations to scale quickly, without the upfront costs of data centres and hardware infrastructure. They also deliver access to a wide variety of turnkey services and applications.  

Historically, an organisation was responsible for all of its data centre security – including the physical security of the data centre and the room, management and security of physical servers and networking devices, along with the operating systems and applications that reside on them and user administration.  

In a cloud environment, a shared responsibility model is developed so the cloud provider is responsible for some things, the customer is responsible for others, and they share responsibility for other aspects.  

SRM is fast becoming a foundational concept in cloud security management practices, growing in importance as organisations increasingly migrate their workloads, data, and applications to the cloud. It is a recognition of the need for a clearer understanding of who is responsible for securing the various components of a cloud environment. This understanding is crucial for an organisation’s effective risk management, compliance with regulatory requirements and trust in cloud services.  

Where does responsibility sit? 

The exact demarcation of responsibility will depend on the cloud services used by the organisation and the cloud hosting service provider.  

Depending on the type of cloud service (such as SaaS, PaaS, or IaaS), the provider and the customer may have distinct levels of responsibility for different aspects of the cloud environment, such as hardware, infrastructure, data, applications and settings.   

The general principle is that the customer should delegate as much security responsibility as possible to the trusted cloud provider, which has the expertise and resources to effectively manage security. However, an organisation should always retain some responsibility for their data, endpoints, accounts and access management.  

Advantages of SRM in Cloud Security

SRM defines the security roles of both providers and customers, reducing the risk of misunderstandings that could lead to security gaps. Procurement teams can use SRM to ensure that all necessary security controls are in place and that responsibilities are clearly outlined in service agreements.

SRM allows organisations to adapt their security strategies as they scale cloud deployments or adopt new services. This flexibility is crucial for maintaining robust security as business needs and technologies evolve.

Note that before procuring cloud services, it is essential to conduct thorough risk assessments. Understand the potential impacts of data breaches and identify the controls needed to mitigate these risks. Ensure that you clearly define both the cloud provider’s and your organisation’s responsibilities.

Evaluate the cloud provider’s security measures through due diligence. Verify that the provider effectively implements the controls they are responsible for. Additionally, ensure your organisation has robust processes to manage the controls it is responsible for.

By clearly defining roles and responsibilities, SRM fosters a collaborative approach to security. Procurement can leverage the expertise of cloud providers while maintaining control over critical data and applications.

Benefits of SRM for Compliance and Innovation

SRM also helps organisations align with regulatory requirements and industry standards by providing clear guidelines for security practices. This alignment not only ensures compliance but also builds trust with customers and partners.

And by focusing on securing data and applications rather than managing infrastructure, organisations can take a more proactive approach to security. This shift supports business objectives, enabling innovation and growth within a secure cloud environment.

Incorporating the Shared Responsibility Model into procurement processes is essential for robust cloud security. It ensures clarity, accountability and flexibility, allowing organisations to effectively manage risks and comply with regulations. By leveraging SRM, procurement professionals can enhance their organisation’s security posture and support business innovation.

By adopting SRM, organisations can confidently navigate the complexities of cloud security, ensuring their digital assets are protected in a collaborative and compliant manner.

Martin Walsham is director of AMR CyberSecurity.

Kim Russell, Head of Procurement Transformation at OCS UK, explores how supplier codes of conduct can do more than just demonstrate compliance.

The integrity and sustainability of supply chains are under increased scrutiny in today’s global marketplace. According to McKinsey, 70% of companies believe a supplier code of conduct significantly improves their risk management and compliance efforts.

Although this is undeniably important, these codes and practices are not just about following compliance. At their heart, they are about demonstrating ethical, sustainable and socially responsible practices across every facet of the supply chain. 

How have supplier codes of conduct evolved?

The nature of the supplier code of conduct has evolved significantly over the past decade. This evolution has been driven by changes in ESG reporting requirements and legislation. Today, businesses must take these requirements into consideration if they are to foster ethical and sustainable partnerships. For example, the introduction of the 17 Sustainable Development Goals (SDGs) in 2015 marked a pivotal shift. The SDGs brought increased focus to measures intended to address the climate crisis, social inequality, and promoting ethical economic growth. 

Much of this change has been driven by a number of government-backed legislation. These include the Companies Act 2006 (Strategic Report and Directors’ Report), Regulations 2013 and the EU’s Non-Financial Reporting Directive, which was brought into UK law in 2016. These regulatory changes have urged businesses to develop or re-develop their supplier codes of conduct to ensure continued compliance throughout the supply chain.

What are the key components of an effective supplier code of conduct

Changes in government-backed legislation have driven businesses to rethink their supplier codes of conduct. So, in the current regulatory climate, what makes for an effective one?

Businesses must ensure their supply codes of conduct demonstrate a commitment to ethical, safe and sustainable practices. Not only that, but they must establish that suppliers are equally committed. Essentially, the foundations of what makes an effective supplier code of conduct is built around five core pillars: 

  • Protection of planet and people: The code must prioritise ethical, safe, and sustainable practices to ensure that both internal and external stakeholders are safeguarded. 
  • Clarity and completeness: The code must be clear, concise and comprehensive – covering areas such as ethics, anti-bribery, conflicts of interest, legal compliance, data protection, human rights, labour practices, health and safety, environmental laws, and sustainability.
  • Consistent with international standards: Aligning with standards like the ETI Base Code, ILO’s International Labour Standards, or the UN Global Compact can ensure that expectations are consistent and manageable for suppliers. 
  • Effective communication: Organisaitons must effectively communicate codes of conduct clearly to all suppliers and require them to communicate upstream.
  • Enforceability: Backed by corresponding policies, codes of conduct should provide assurance that suppliers can and will adhere to the code, making it enforceable through non-negotiable contractual obligations. 

Sustainability is a vital cog in the supplier code of conduct machine

Sustainability considerations that sit within the supplier code of conduct are no longer optional. With businesses under the spotlight regarding their societal obligations, incorporating environmental and societal impact into their supply chains is crucial. Corporate Social Responsibility (CSR) initiatives, which includes sustainability, are vital for building trust and loyalty among customers.

For instance, the UK government’s pledge to be Net Zero by 2050 underlines the importance of sustainability in procurement. By fostering supplier partnerships that support Environmental, Social, and Governance (ESG) goals, businesses can demonstrate continuous action and commitment to meeting these targets.

Leveraging technology to continuously improve

Technology is becoming an increasingly important and heavily utilised tool to ensure ethical and supplier practices are followed. Organisations can use technology, such as analytical and performance tracking software. This technology allows them to monitor and track suppliers’ performance against the principle laid out in the code of conduct. 

Additionally, leveraging automation of data capture and collection processes reduces time and human-induced errors associated with manual data processing. Not only that, but it can allow for real-time alerts to flag any compliance violations or risks as they arise. This then allows for the swift resolution of compliance issues. Research from the CIPS revealed that 58% of UK manufacturers experienced a supply chain disruption in the past 12 months. By leveraging technology to identify and mitigate risks against the supplier code of conduct, businesses can continue working to ensure their suppliers are following ethical and sustainable practices. 

What does the future hold?

Looking ahead, supplier codes of conduct must adapt to regulatory demands and mandatory disclosures in order to advance the ESG agenda. Transparency, compulsory ESG and sustainability ratings, and visibility into the origins of materials will become increasingly important in the years ahead. Future supplier codes of conduct must be more collaborative and they must focus on responsible, ethical, and sustainable procurement. 

Kim Russell leads on Procurement Transformation and Integration for OCS UK&I. She has 25 years’ experience delivering procurement strategy, process improvement, strategic sourcing, and stakeholder management. Kim is passionate about breaking down barriers to sustainable procurement, driving efficiency, improving supplier relationships, and simplifying procurement for all.

Despite moving in the right direction, the British Chamber of Commerce has warned that too few public procurement contracts find their way into the hands of SMEs.

The UK’s public procurement sector is starting to address the lack of contracts awarded to small and medium-sized enterprises (SMEs). However, a new report from the British Chambers of Commerce (BCC) and data provider Tussell argues that progress is too slow, causing small businesses in the UK to miss out on the majority of almost £200 billion in annual spending. 

The 2024 BCC’s SME Procurement Tracker

According to the BCC’s SME Procurement Tracker for 2024, only 20% of direct procurement spend from the wider public sector (including the central government) went to SMEs in 2023.

The BCC’s SME Procurement Tracker powered by Tussell – now in its second year – is the market’s benchmark source for reporting on how well the government is supporting small businesses by doing business with them.

The report reveals that while absolute public spending directly with SMEs has grown over the past 6 years, SMEs only accounted for about a fifth of overall spending last year. The figure remained unchanged compared with 2022 (20%) and only increased slightly over 2018 (18%).

Based on open procurement expenditure data published by public bodies for transparency purposes and then analysed by Tussell, the value of reported procurement expenditure by the UK Government in 2023, was £194.8bn.

Local government leads the way in working with SMEs

Local governments had the highest procurement spend directly with SMEs last year, both as a share of total procurement spend (34%) and in absolute terms (£24.1bn). Public sector spending with SMEs varies across different sectors. The Health and Social Care sector earned £11.9bn in direct public sector revenue in 2023, with this accounting for 34% of total public spend in the sector, up from 29% in 2018. £4.0bn was spent on public sector spending with SMEs in education, training and recruitment.

Within the central government, the Department for Culture, Media and Sport spent the highest proportion of its procurement spend directly with SMEs in 2023. DCMS spent 29% of its procurement total (equivalent to £256m). The Department for Education spent the highest absolute amount directly with SMEs, amounting to £2.0bn in 2023, or 25% of its total procurement spend.

Jonny Haseldine, Policy Manager at the British Chambers of Commerce said:

“While it’s welcome the value of SME procurement contracts is continuing to increase, government deals remain out of reach for too many businesses. It is vital that public bodies always consider SMEs when tendering contracts. Central government can learn lessons from local authorities who are consistently spending more on SMEs deals. We’d welcome further devolution of decision making to allow more procurement contracts to be awarded at a local level.”

Energy-focused SaaS company Enervus believes their BidOut acquisition will help customers streamline the RFx creation process.

Texas-based energy industry software-as-a-service (SaaS) platform provider Enverus has announced the acquisition of BidOut, a Houston-based startup that uses generative artificial intelligence (AI) to automate elements of the request for anything (RFx) process. 

It’s the latest in a long line of procurement and supply chain organisations looking to integrate generative AI into the procurement process for its potential to automate significant portions of the procurement professional’s workflow. 

However, the announcement comes at a fraught time for the sector as hype gives way to trepidation. AI chip-maker NVIDIA’s share price continues to slide, and investors in Google, Microsoft, and OpenAI have begun to question the viability of sharply rising Cap-Ex over the coming years with no profitable practical applications in sight. Nevertheless, AI spending still continues to be considerable.

What is BidOut and what does it do? 

Enverus has described BidOut as “the industry’s premier AI-powered procurement platform”. The company’s press team has also called the acquisition marked “a significant milestone” for Envervus’ business automation offerings. 

BigOut’s generative AI-powered offerings help procurement teams to more easily and quickly source bids from multiple suppliers. Traditionally a labour-intensive process, Enverus claims that, by using AI, BidOut’s solutions dramatically accelerate the request process. BidOut was founded by 2020 and is backed by capital investment from Ascent Energy Ventures & Leazar Capital among others. Since launching, BidOut has rapidly expanded its customer base, leading to their recent acquisition. 

What is RFx? 

In procurement, RFx means “Request for anything”. The exact nature of what’s being requested can vary dramatically throughout the lifecycle of a procurement project. 

An RFx refers to a formal and structured process executed in a document form. It’s used by organisations and businesses to acquire information, proposals, quotes, and bids from various potential suppliers. It could refer to a request for proposal (RFP), request for quotation (RFQ), request for information (RFI), or something else.  

Procurement SaaS synergy 

Enverus pointed to the synergy between BidOut’s RFx platform and Enverus’ existing Source-to-Pay solution. It argued that the purchase presents “an exciting opportunity” for the energy industry. By bringing together BidOut’s buying capabilities with Enverus’ solutions, users can now manage their entire procurement process in a single Source-to-Pay platform, they say. The integrated offering will also reputedly enhance decision-making, save costs and time. Enverus added it will also improve compliance and supplier management, ultimately making the procurement process better and enhancing supplier relationships.

“The acquisition of BidOut marks a transformative milestone in accelerating Enverus’ vision to become the foremost end-to-end provider of business automation solutions for the energy industry,” stated Manuj Nikhanj, CEO of Enverus. “Currently, Enverus partners with more than 450 buyers and 40,000 suppliers, facilitating more than $250 billion annually in digital invoicing for our customers. By integrating BidOut’s cutting-edge technology into our expansive network, we will immediately enhance value for our clients with our complete Source-to-Pay solution. This strategic acquisition underscores Enverus’ commitment to driving efficiency and technological advancements across the energy sector.

“As Enverus integrates BidOut’s products and services into our existing suite, we anticipate customers across all the verticals we serve will truly benefit. This investment will not only accelerate product development and innovation, but these enhanced offerings will help define some of our customers’ futures,” said Jeff White, general manager of Business Automation at Enverus. White will lead the integration of BidOut into Enverus’ platform.

Lucy Harding, Global Head of Odgers Berndtson’s Procurement and Supply Chain Practice outlines the critical concerns boards want their CPOs to address.

The COVID-19 pandemic brought unprecedented levels of supply chain disruption, fundamentally altering the procurement landscape. As companies grapple with these disruptions, the role of the CPO has never been more important. Beyond managing supply chain chaos, procurement is now seen as a key enabler of growth, a mitigator of inflationary pressures, and a driver of significant value creation.

As we move into the latter half of 2024, CPOs are faced with a number of new pressures that compound the already challenging market conditions of recent years. These conditions have not only persisted but have, in some cases, intensified. Topics like ESG standards, DEI initiatives, and right shoring strategies remain key concerns. But in addition, boardroom conversations increasingly pivot to cost management, strong relationships, and digital capability within the supply chain.

Below, I explain what boards are demanding from their CPOs in this dynamic and challenging era.

1. Driving down costs

In an environment where most businesses face no or low growth, cost has become a strategic concern for boards. They expect their CPOs to prioritise cost reduction while maintaining supply chain reliability.

This means identifying efficiencies and negotiating better terms without jeopardising the stability and resilience of supply chains. Boards are looking for CPOs who can deliver significant cost savings as part of their strategic mandate.

2. Cultural and objective alignment

Boards seek CPOs who align with the company’s culture and strategic objectives. This involves fostering strong internal and external relationships to drive value creation and achieve business goals.

A CPO who understands the broader business context and leverages this insight to create impactful change is highly valued. Boards want leaders who can integrate seamlessly with the company’s ethos while steering procurement toward strategic success. Findings from Deloitte’s recent CPO Survey, produced in partnership with Odgers Berndtson, show this type of collaboration is currently the number one strategy for delivering value.

3. Leveraging advanced technology

Boards expect CPOs to utilise advanced analytics and AI to optimise procurement processes. By harnessing data-driven insights, CPOs can make better decisions and drive performance improvements. A key aspect of this technological leverage is enhancing traceability across the supply chain, ensuring greater visibility and accountability.

Boards want tech-savvy leaders who can integrate cutting-edge tools to elevate procurement efficiency and effectiveness. Many CPOs are well underway, with Gartner reporting 58% of procurement leaders are implementing, or plan to implement, AI in the next 12 months.

4. Ensuring supply chain resilience

Given the persistent supply chain disruptions, boards expect CPOs to manage risks effectively and enhance supply chain resilience. This requires regularly assessing global sourcing strategies and maintaining robust supplier relationships.

While supply chain disruption has eased since its height in the pandemic, Deloitte’s analysis shows an upward trajectory in disruption across supply chain, logistics and raw material costs from the beginning of 2024. This therefore remains a front-of-mind challenge for boards, who seek CPOs who can proactively address risks and ensure the continuity and reliability of supply chains in the face of ongoing challenges.

5. Integrating ESG initiatives

ESG considerations are now integral to procurement strategies. Boards look for CPOs who can incorporate sustainable practices and manage Scope 3 emissions, aligning procurement goals with broader ESG targets.

Sustainability regulation has also increased more broadly this year with the ISSB’s global disclosure standards and the EU’s Corporate Sustainability Reporting Directive, mandating detailed sustainability reporting from companies. As a result, sustainability competence has become non-negotiable when hiring new CPOs, reflecting its critical importance in today’s business environment.

Essential capabilities for modern CPOs

To effectively address the multifaceted demands of their role, CPOs must master several key capabilities. These include reducing costs while maintaining supply chain resilience, aligning procurement strategies with the company’s broader cultural and strategic goals, and utilising advanced technology for enhanced decision-making and supply chain visibility. Additionally, CPOs need to bolster supply chain resilience through proactive risk management and embed ESG initiatives into procurement processes to meet sustainability objectives.

Ultimately, the business is looking for outcomes, which means CPOs need to be business first, procurement second. Boards prioritise financial performance, and successful CPOs understand this. They see themselves as part of the business leadership and feel empowered and motivated to solve whatever the business problems are at the time.

As a CPO, this requires alignment, adaptability and owning the status of leader – traits that are crucial for strategic success and highly sought after by boards.

Olivier Berrouiguet, CEO at Synertrade, explores the potential for procurement to be a driver of sustainable practice within the organisation.

As businesses across the globe strive to become more sustainable, it is clear that ESG practices are no longer a luxury; they are a societal obligation. At the core of the transition to ethical and environmentally positive operations is supply chain visibility and responsible sourcing. This shift is driven by a growing recognition that long-term success relies on transparent business practices.

A 2023 Bloomberg survey revealed that 92% of respondents planned to increase their ESG data spending by at least 10%, with 18% planning an increase of 50% or more throughout the year. In addition, 44% of respondents also shared that their ESG data strategy was centred around acquiring a competitive advantage. 

Procurement teams play a crucial role in this transformation. By leveraging ESG data, they can make informed decisions that enhance sustainability, reduce unnecessary waste and drive innovation throughout the business. As data availability continues to rise, its value will increase in tandem, presenting procurement departments with enormous opportunities for growth they must capitalise on.

Ensuring Environmental Excellence

For organisations monitoring their environmental impact, regular audits should be conducted on internal and external operations. These checks are carried out to ensure compliance with changing environmental standards and to identify opportunities to reduce carbon emissions and waste at each stage of the product life cycle, from material extraction to production and distribution.

Evaluating sustainability extends beyond the core business, including partner and supplier selection. Establish criteria incorporating variables such as energy efficiency, carbon footprint and the usage of renewable energy to compare organisations, guaranteeing relationships formed with companies with aligned values. 

Organisations should strive to futureproof sustainable procurement and investments by implementing scalable policies that increase long-term viability. These strategies should address potential supply chain disruptions, the development of products and services, and changing consumer preferences. Operating with these practices in mind enables organisations to work far more efficiently while limiting their environmental impact.

Streamlining Social Strategies

Integrating ethical considerations into social strategies is essential for building a responsible and inclusive business. Procurement teams should ensure suppliers and partners uphold high corporate social responsibility standards. This involves assessing suppliers for their adherence to fair labour practices and commitment to diversity, equity and inclusion. 

Social strategies extend to procurement teams supporting employees and the wider organisational community. Partnering with suppliers who have strong social values, such as a local community focus or employment opportunities for minority groups, can have a large impact on staff and other internal stakeholders. Procurement teams can leverage these initiatives to elevate their social values as a business. 

Ethical procurement has gained significant traction in recent years. Increasingly, areas such as inclusive hiring practices, supportive working environments and growth opportunities have become more valuable within the business. If procurement teams don’t prioritise these factors, it can damage business reputation and hinder organisational development.

Global Governance Guidelines

Governance encompasses a company’s internal policies and decision-making processes, requiring accurate and responsible procurement practices. As regulations evolve, procurement teams face the challenge of staying compliant amidst shifting legislation; Supplier Relationship Management (SRM) plays a key role in supporting this. 

By providing real-time insights, SRM software helps procurement teams navigate and adhere to these changes. It streamlines compliance by automating documentation, tracking regulatory changes, and ensuring procurement practices align with the latest legal standards.

Governmental guidance includes several different business areas, such as the management of personal data, inventory levels, supplier contracts and more. To ensure compliance with legal bodies and maintain organisational integrity, procurement teams must regularly review and evaluate these guidelines. SRM software facilitates this ongoing evaluation by providing regular reports that enable procurement teams to stay ahead of the changing initiatives. 

Embracing Sustainable Procurement

The responsibility for incorporating ESG into business operations doesn’t fall to a single individual or department. Increasingly, it is a collective effort that requires the active participation of stakeholders inside and outside the organisation.

Ultimately, incorporating sustainable procurement calls for continuous collaboration across all business areas.

Looking ahead, it is clear that the integration of ESG principles will continue to shape the future of procurement. Companies that embrace this approach will significantly improve their reputation. This in turn will result in business growth and long-term success, while also contributing to creating a greener, more sustainable future for all.

The GCC procures 85% of its food requirements from overseas, making food security a key challenge in a time of worsening climate disasters.

Three quarters of a billion people struggle with food insecurity and hunger. A grim new report from the United Nations on the State of Food Security and Nutrition in the World argues that the global fight against hunger and malnutrition has stagnated in recent years.

Malnutrition rates are worse than they were 15 years ago. One in 11 people faced a situation last year when they could afford or access food. In Africa, that figure becomes one in five. 

The production, procurement, and distribution of food is a global, humanist issue. And some parts of the world are better prepared to face it than others. 

A newly released new report from CZ Advise lays out the challenges facing food procurement in the Gulf. It also presents some potential ways forward for GCC states in a world where supply chain disruption is increasingly the norm, rather than the exception.  

Food (in)security in the Gulf 

Thanks to vast reserves of oil wealth, Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) are generally counted among the more food-secure nations by the Global Food Security Index. The index creates its ranking based on the availability, affordability, quality, and safety of food supplies in a country. 

However, the region lacks control over its food production, remaining highly dependent on imported foods from beyond its borders.

Approximately 85% of GCC countries’ food is imported. This proportion rises to 90% for cereals, and almost 100% of rice is imported. This overdependence on foreign production creates significant vulnerabilities in the CGG nations’ food supply chains. The vulnerability of these systems was conveniently demonstrated during the COVID-19 pandemic just a few years ago. 

Food security in the GCC is largely an artificial construct. This is especially pertinent considering the populations of GCC nations largely comprise migrant workers. The dramatic social and economic inequality that permeates many Gulf states means that disruptions to food supply chains can and will impact the GCC’s most vulnerable populations, who exist with few rights and little semblance of a social safety net. 

The GCC’s most vulnerable populations are the most at risk 

Supply chain disruptions, price fluctuations, and geopolitical tensions in exporting nations all have the potential to hurt the Gulf and its most vulnerable. 

While CZ’s report is quick to note that “There is no such thing as a country which is entirely food secure,” some nations, like those in the GCC are more at risk than others. More poignantly, that risk is only going to increase over the decades ahead, as the worsening climate crisis disrupts agricultural yields, threatens biodiversity, and throws supply chains into disarray. 

Ironically, the crisis has been exacerbated by the burning of fossil fuels largely extracted from the GCC states. But, again, it won’t be the wealthy native citizens of the GCC that suffer; in the UAE specifically, Human Rights Watch notes that migrant workers make up 88% of the country’s population — a subset of UAE residents who face systemic exploitation and abuse. These abuses of UAE-based migrant workers have also been linked more broadly by Human Rights Watch to climate-related harm.

In recent years, the GCC nations have made decent strides towards enhancing their food security. This has been achieved through a combination of factors. They include augmenting port operational capacities, bolstering food storage, and beneficial government subsidies for food enterprises. However, CZ notes that “Achieving food security domestic production is improbable for the GCC. Therefore, the GCC countries must undoubtedly continue to rely on diversified global food import strategies to ensure food security.” 

Looking to Southeast Asia and Brazil to meet food needs 

CZ argues that food imports from Southeast Asia and Brazil will play a crucial role in GCC food security. Shifting where the GCC’s food comes from, they argue, will diversify the region’s food supply chains away from single-supplier systems. For example, the overwhelming majority of rice imported by GCC states is grown in India. That nation is currently battling its own agricultural woes as a result of climate change. 

Southeast Asia, CZ’s report points out, “is a significant producer of various agricultural products such as rice, fruits, vegetables, and seafood.” The proximity of Southeast Asia to the GCC, coupled with established trade routes, allows for timely and cost-effective transportation of fresh and processed food products.

The report adds that Brazil, “as one of the world’s largest agricultural exporters, is another vital partner. Brazil’s vast and productive farmlands yield substantial quantities of grains, meat, poultry, and sugar.”

A new report from the SBTi has called the majority of carbon credit schemes “ineffective” as a way of tackling Scope 3 emissions.

Achieving corporate emissions reduction targets throughout the supply chain could become significantly harder thanks to a new stance by the Science Based Targets initiative (SBTi) on the use of carbon credits. 

The SBTi is the world’s de facto authority on sustainability regulations. The organisation develops standards, tools and guidance which allow companies to set greenhouse gas emissions reductions targets. These targets intend to keep global emissions “in line with what is needed to keep global heating below catastrophic levels.” If the targets are adhered to, the world should theoretically be on track to reach net-zero by 2050 at worst.

Despite earlier announcing support for the expansion of carbon credits, the SBTi has called the practice largely ineffective in a new review of third-party studies.

The review, published at the end of July — a month which contained the hottest week in recorded history, and China’s hottest ever month — noted that “various types of carbon credits are ineffective in delivering their intended mitigation outcomes.” Not only that, but widespread use of carbon credits by corporate entities had the potential to actively stall other, more concrete, sustainability reform

U-turning on carbon offsets

This represents a significant about-face from earlier this year, when the SBTi announced plans to allow the expansion of environmental attribute certificates, such as emissions reduction credits, as a way of tackling scope 3 emissions in corporate supply chains. 

The announcement drew widespread criticism, both from outside the organisation and from scientists working within it. 

Climate finance campaigner Paul Schreiber publicly threatened to resign from the SBTi’s technical advisory group in April unless the board reversed its position, saying that“I will not be part of a standard-setting process that is a potential cover for a greenwashing operation,” he said in a statement. The SBTi’s staff issued an open letter, expressing deep concern with the plans, and reportedly calling for the resignation of the organisation’s CEO and board members. Last month, SBTi CEO Luiz Amaral resigned from the SBTi, citing personal reasons.

The problem with climate offsetting schemes — like those that allow companies that emit fewer greenhouse gases to sell their carbon credits to polluters, allowing those corporations with dirtier supply chains to claim lower emissions, or even carbon neutrality — is that they provide a smokescreen for organisations’ failure to meaningfully address emissions. 

The organisation’s latest review appears to be at least partially in line with offsetting sceptics’ assessment of the practice at last. The SBTi’s U-turn on carbon credits isn’t complete by any means, though. Alberto Carrillo Pineda, Chief Technical Officer, SBTi said in an interview with Bloomberg that he hopes the review will bring “a more nuanced approach” to the debate. He adds that people on either side of the debate currently have “very entrenched, very polarised positions.”

What does this mean for tackling Scope 3 emissions in the supply chain?

Scope 3 emissions account for, on average, 75% of a company’s carbon footprint. However, because the supply chain lies outside organisations’ direct control, finding ways to reduce carbon emissions is a challenging prospect. However, despite presenting a “major challenge when it comes to corporate decarbonization,”  according to the SBTi, they also represent “the greatest opportunity.” 

The scope 3 discussion paper explores three scenarios. These scenarios simulate ways in which environmental attribute certificates, including carbon credits, could be useful to meeting science-based target. However, the three scenarios it outlines related to carbon credits “do not include offsetting emissions… the priority remains the direct decarbonization of the value chain.” They add that carbon credits cannot be an effective substitute for emissions reduction.

Sue Jenny Ehr, Interim CEO of the SBTi said in a statement that “Targets are the first step to decarbonization and it is important that the SBTi conducts a comprehensive process to revise the Standard to help companies take the lead on climate action and drive down emissions.”

Hyper over generative AI in the procurement sector is at an all time high, and could mean real productivity gains in as little as two years.

Generative artificial intelligence (AI) is unquestionably the technology most loudly and obviously impacting the procurement sector (indeed, many sectors) in 2024. 

AI powered by large language models (LLMs) has been touted by McKinsey as the secret to new forms of value. It will supposedly empower content generation, enabled synthesis, augmented engagement, and accelerated software planning. Of course, many leaders in the procurement sector (and out of it) are skeptical. They argue that generative AI might be “a great toy” that’s “good to play with”. However, they also say their day-to-day work remains unchanged. 

Is generative AI the once-in-a-lifetime technological disruption people selling it claim it to be? Or, is it a flash in the pan headed the way of dinosaurs, crypto scams, and the metaverse? 

The peak of the hyper cycle 

Unintuitively, the closer you get to the peak of a hype cycle, the harder it is to see where you’re going to land. The more generative AI dominates the conversation, the more money gets spent on it. The waters get muddier. It gets harder to see if we’re headed for a bubble bursting or a gentle glide into sustainability. 

Gartner, however, remains optimistic. ”GenAI can already enhance many different workflows in procurement and 73% of procurement leaders at the start of the year expected to adopt the technology by the end 2024,” says Gartner’s Kaitlynn Sommers, “this  level of adoption, along with promising use cases, such as contract management, means GenAI will rapidly move through the Hype Cycle and reach the Plateau of Productivity at a faster rate than is typical for most emerging technologies in procurement.”

In the last 12 months, use cases for generative AI have rapidly expanded, as has the availability of generative AI tools. More capabilities are being added by vendors across the sourcing and procurement landscape every month, according to Gartner. 

Early examples of procurement and sourcing applications include contract management, sourcing, and supplier management. Down the road, Gartner also expects use cases to include supporting supplier performance management, P2P and analytics.

Third party LLMs support adoption

Of course, a major barrier to generative AI adoption is a potentially high cost of entry. However, as time goes on, procurement technology vendors are integrating third-party LLMs into their offerings. These can provide more affordable access to GenAI capabilities in line with digital process support. Third party LLMs can adapt to provide recommendations and support based on organisations’ data and an individual’s procurement role, such as category manager or buyer.

“The window for building competitive advantage through early adoption of GenAI in procurement is narrowing,” said Sommers. “Despite this, procurement technology leaders should remain aware of the obstacles to successful implementations, notably in the areas of data quality and integration of GenAI with their current systems.”

Burges Salmon’s new research argues that businesses must with their procurement processes and supply chain to meet compliance targets.

Scope 3 emissions are quickly emerging as the defining challenge for organisations looking to achieve meaningful sustainability goals. Now, new data gathered by UK law firm Burges Salmon suggests that compliance failures within the supply chain are threatening to undermine efforts to tackle accurate Scope 3 emissions reporting, and therefore wider efforts to decarbonise companies’ value chains.

Scope 3 emissions disclosure

Scope 3 refers to emissions resulting from assets not owned or controlled by the reporting organisation, but that the organisation’s value chain affects. This type of emissions are, according to the US EPA, more than 11 times higher than a company’s operational emissions, and usually equate to more than 90% of its greenhouse gas emissions. 

Driven by increasingly strict legislation, companies are working to develop more stringent and accurate protocols for tracking and disclosing their Scope 3 emissions. 

While many companies are working to develop the application of robust ESG standards into everyday operations, Burges Salmon’s report warns that, across the Energy and Utilities, Technology, Built Environment, Transport and Healthcare sectors, exists a level of unpreparedness that could spell serious problems for the country’s green ambitions. According to the report, 32% of all businesses surveyed are completely unprepared to meet their ESG supply chain disclosure obligations. Among those, only 29%, fewer than 3 in 10, believe their organisation fully understands the legislative and regulatory landscape governing ESG corporate disclosure.

Disclosure is an essential first step toward supply chain decarbonisation

Michael Barlow, partner and Head of ESG at Burges Salmon, commented: “UK companies must first prove their commitment to ESG by complying with a range of mandatory disclosure obligations. Ensuring business partners meet ESG standards requires investment, resources and constant monitoring, and it is clear from our research that most companies still have some way to go.”

Specifically, it seems that larger organisations are the ones struggling to report the environmental impact of their purchasing and supply chain operations. Burges Salmon’s report found that only 45% of large organisations confirmed that they have a dedicated team that deals with ESG related matters. Similarly, only 43% of respondents in those companies reported that their organisation fully understands the legislative and regulatory ESG risks their supply chain may give rise to.

By contrast, evidence from the research shines a light on small and medium sized businesses as those able to provide greater levels of influence in successfully meeting their ESG compliance obligations, with 75% of respondents from this group claiming their organisation fully understands the legislative landscape.

“A small organisation might have more limited disclosure obligations and can be quite on top of it. For large organisations, obligations are more complicated, particularly if they operate across different jurisdictions. What’s more, if ESG teams are too remote from day-to-day operations, there is a danger that ESG remains on the periphery of business priorities” adds Barlow.

The UK NAO has criticised government public procurement, calling for a crackdown on the way public money is spent.

A new report by the National Audit Office (NAO) has criticised the “decentralised” structure of Britain’s public procurement process. 

Public procurement in the UK dominated by framework agreements 

According to the report, entitled Efficiency in government procurement of common goods and services, the UK government is missing out on opportunities to get better value for the money it spends. It contends that the government could “significantly improve” the value for money it gets when purchasing goods and services.

The report, released earlier this week, highlighted the rise in use of framework agreements throughout UK public sector procurement. 

Under the current system, public and private sector organisations bid against one another to secure government contracts. Thousands of these agreements are competed over each year. The winners receive contracts for everything from road repair to providing critical medical supplies. Many of these frameworks are hosted by small contracting authorities like health trusts or academy schools. However, they are operated by private companies. Consequently, the NAO report calls into question the ability for a privatised public procurement sector to create real value for money for the government. It warns that the UK government is experiencing a “missed opportunity for greater efficiency”. 

A framework agreement comprises a preapproved list of suppliers that locks in some of the compliance-related details in advance. The logic behind using them is that it relatively easily allows work to be awarded to trusted suppliers, or facilitates a short bidding session between listed companies. 

The use of procurement frameworks has risen to dominate UK public spending, with between 8,000 and 12,000 public authorities spending around £125 billion per year through them. UK ministers reportedly lack oversight of the frameworks or their providers. 

These providers also charge fees for their services, leading to the government spending £25 billion on Crown Commercial Service (the largest provider, which manages over 200 frameworks for the government) alone in the 2022-23 financial year.  

Procurement is “fragmented” 

According to the NAO, the current system is fragmented, which prevents the government from acting as a single buyer. This, the report warns, “resulting in duplication of effort and increasing bidding costs for suppliers.”

Josh Elster, CFO of YardLink, explores the need for a new way to approach credit risk in procurement for the construction sector.

The UK construction sector finds itself in a difficult position. Data from the Insolvency Service reveals that construction firms accounted for 17.3% of all insolvencies in England and Wales in April 2024.

This has created a perfect storm that’s rocking the entire construction supply chain. The instability has placed the relationship between procurement teams, contractors, and suppliers at a critical juncture. 

While trust, based on legacy relationships, might once have been valuable currency, that isn’t the norm today. Cash flow has regained its throne as king — and managing credit risk is imperative to those navigating this storm. 

The trouble starts with legacy communication methods

Historic relationships have been the lifeblood of the construction sector since its inception. The relationships between contractors’ procurement teams and their supplier networks run deep. Yet, even the most solid bonds are straining under the weight of the current economic climate. As cash flow constricts, evaluating credit risk more stringently is essential.

By objectively assessing the creditworthiness of potential partners, contractors can start identifying (and avoiding) potential partners at high risk of defaulting on payments. This evaluation reduces the risk of bad debt and inconsistent cash flow. Getting this wrong can be a critical error.

Yet, this evaluation is difficult to carry out manually. Legacy relationships have created overreliance on manual communication methods such as phone calls, text messages, and emails. When it comes to accurate and efficient credit risk evaluations, these outdated processes give rise to human error through misheard details over the phone, typos or lost paperwork, leading to inaccurate credit risk assessments. Furthermore, chasing down financial information, verifying it with multiple sources, and keeping everyone informed consumes valuable time and resources and delays engaging with potential trade. When business processes are too long-winded and inefficient, shortcuts are made, and with that, poor decision-making.

It’s time for change.

Embracing digitisation as the solution

Research is essential when evaluating the credit risk of potential partners. In construction, oftentimes, procurement managers are speaking to different entities that fall under a larger company. At the most basic level, contractors must understand which entity they are invoicing and therefore bear the credit risk. While the group might be well-funded, it can collapse specific entities. This makes it difficult to receive payment, which potentially leaves procurement managers with a bad debt write-off. 

But the research doesn’t end there. Contractors should also look at financial statements, paying close attention to the Balance Sheet. It’s also worth looking at up-to-date Companies House filings as well as the background of the Directors at the entities they are considering working with, particularly when working with SME or micro-size entities. This is where using online credit referencing agencies becomes essential. They integrate with financial institutions to provide access to real-time financial information, eliminating delays or inaccuracies caused by outdated or self-reported data. 

Tightening their credit risk criteria and processes is the next step. By standardising the credit application process and ensuring it includes financial statements, bank references, and trade references, companies can access a clearer picture of the financial health of potential partners. While this sounds like a lot of paperwork, the more this information can be transferred and stored digitally, the less burdensome it is. 

Making more informed decisions reduces the risk of payments defaulting later down the line, bad debt and inconsistent cash flow. 

Internal credit and better understanding of risk

Companies might also consider implementing an internal credit scoring system based on financial health indicators. Such measures could help to streamline the evaluation process and remove subjectivity from decision-making. Digitised credit risk services and tools can help monitor and assess risk continuously. In a rapidly changing landscape, it pays to be ahead of the game when you might need to collect payments from a failing business.

Making accurate credit data more accessible drives efficiencies throughout the business, too. This can expedite approvals for credit lines, streamlining the onboarding process and reducing delays in project execution. 

By better understanding credit risk, contractors can negotiate better payment terms and manage their cash flow more effectively. The more confidence and trust that can be built with a supplier through smooth financial operations and reliable cash flow, the more likely you are to see extended credit terms. 

Entering a new era 

We can navigate the current storm by acknowledging the detrimental impact of outdated processes and manual communication on construction industry procurement. 

Automating credit risk data and evaluation, and embracing technology to gain transparency over the supply chain, are essential steps in revitalising the industry. Through prioritising cash flow, implementing digital solutions, and fostering collaboration, suppliers and contractors can pave the way for a more resilient future.

Jack Macfarlane, Founder and CEO of DeepStream, explores the challenges to developing a sustainable procurement strategy.

Research shows that some consumers are willing to spend 9.7 percent more on sustainably sourced or produced products.

This significant and growing consumer awareness about sustainability makes sustainable practices not only crucial but a baseline standard for any business wishing to gain and maintain customer loyalty. 

But achieving sustainability is complex, especially when balancing the diverse needs of customers, suppliers and regulatory bodies.  

The imperative of sustainable procurement  

Sustainability is transforming from a moral imperative to a strategic requirement for business success. As a result, procurement teams must seamlessly integrate environmental, social and ethical factors into their purchasing decisions and overall supply chain management tactics.   

Sustainable procurement considers the entire lifecycle of products and services, from sourcing and manufacturing to distribution and disposal. Nestlé’s procurement strategy exemplifies this approach, achieving a 13.5% reduction in greenhouse gas emissions since 2018. 

Through supplier collaboration and regenerative agriculture, focusing on diverse cropping, biodiversity, collective actions, soil health, and water security Nestle has also achieved a 15.3% cut in methane emissions.  

[Editor’s note. We feel it is important to highlight that Nestle was named among the world’s worst plastic polluters in 2020. It was then named among the world’s top three plastic polluters in 2022. And again this year when the company was found to account for approximately 3% of Earth’s plastic waste.]

By 2023, 15.2% of raw materials were from regenerative practices, aiming for 20% by 2025. Additionally, the company’s renewable energy use in operations has risen to 91.9%.  

This holistic strategy minimises environmental impact, supports fair labour practices, and ensures transparency and accountability. 

The challenges and benefits 

While 97% of supply chain professionals value sustainable procurement, only 67% have successfully weaved it into their operations.

This indicates that significant challenges must be addressed. These include the complexity of assessing suppliers, the higher upfront costs of sustainable options, and the necessity for detailed data to inform decision-making. 

Challenge no. 1 — Complex supply chains 

Large multinational corporations often have intricate and established supply chains. This makes it difficult to ensure consistent sustainability practices across diverse regions. Different regulations and standards and cultural attitudes to sustainable issues create inconsistencies among suppliers. This makes implementation and compliance across the board a considerable challenge requiring careful diligence.  

In addressing these challenges, procurement teams are best equipped when they employ robust monitoring tactics, prioritise transparency and maintain compliance with all regulatory requirements. If successfully implemented, these strategies will ensure sustainability goals are met and no aspect of the supply chain is overlooked.  

Challenge no. 2 — Initial cost investment  

The transition to a sustainable supply chain often involves significant expenses. These include including retraining staff, modifying production lines and ensuring compliance with environmental regulations and certifications as they evolve. Investing in research and development to find or pioneer sustainable alternatives adds to the financial burden. 

Generally, smaller businesses struggle with the high upfront costs often associated with more sustainable options. By contrast, larger corporations can more easily afford these investments.  

However, technological advancements are gradually making sustainable alternatives more accessible and cost-effective. Innovations like enzymatic recycling, although initially expensive, have promising potential to reduce costs in the long term as the supply of recycled materials becomes a self-sustaining feedstock for the circular economy on which it is built.    

Challenge no.3 Stakeholder buy-in and employee satisfaction  

Securing stakeholder support for sustainable practices can be challenging, as some stakeholders may prefer familiar methods and be wary of the higher initial costs or upfront investment costs and the short-term financial impact these can have on a business. 

However, research shows one in five workers would reject a job at a company with poor sustainability credentials, highlighting the importance of sustainability in not only meeting environmental goals but also in maintaining a competitive edge in the labour market by attracting and retaining motivated, environmentally conscious employees. 

Furthermore, Skills Dynamic reports that 99% of supply chain professionals worry about high employee turnover. This is primarily due to pressurised working conditions and nearly a quarter of junior procurement professionals plan to leave their positions. 

Businesses that don’t invest in sustainability practices will be less favourable in the eyes of prospective employees, further exacerbating the ongoing issues of burnout and high employee turnover plaguing procurement today.  

Strategies for effective sustainable procurement  

To successfully integrate sustainability into procurement, organisations need comprehensive strategies that embed sustainability into every aspect of their operations.  

1.  Develop sustainability-focused policies  

Creating robust, sustainability-focused policies is crucial. These policies should outline clear sustainability goals and standards for prospective suppliers, including reducing carbon emissions, minimising waste and ensuring ethical labour practices.  

Additionally, organisations should consider nearshoring and reshoring policies to modify current supply chains to accommodate the reduction of carbon footprints and increase resilience in the face of increasingly common geo-political disruption. 

Effective policies also involve monitoring and auditing existing suppliers to ensure compliance, driving consistent sustainability practices across the organisation’s supply chain.   

2. Implement transparent processes 

Digitalisation is an effective way to facilitate transparency throughout the procurement process. Using digital software and centralised systems to log and review all activities, contracts and transactions promotes accountability and helps detect discrepancies between sustainability policies and real-time actions or identify unethical practices.  

Enhanced transparency allows a business to cultivate a culture of trust and integrity. This culture permeates both the organisation and relationships with external stakeholders. This reinforces its commitment to sustainability goals and claims. 

3. Pre-evaluate suppliers 

Incorporating sustainability criteria into supplier evaluations ensures alignment with organisational sustainability goals. Evaluations should assess suppliers based on their environmental impact, ethical labour practices, and overall sustainability performance.  

A structured pre-qualification process helps identify suppliers that meet both technical and financial criteria, supporting the organisation’s sustainability objectives. 

The procurement function’s influence over the business continues to grow, but tension with stakeholders remains.

Over the past four years, the relationship between procurement and the rest of the business has changed. Procurement teams have faced a series of increasingly common complex challenges, starting with the COVID-19 pandemic and progressing to armed conflict, genocide, droughts, rising energy prices, and runaway inflation. Now, a pivotal year in many democratic countries threatens to rewrite the core tenets governing global trade. 

Maintaining cost containment and supply chain continuity in the face of these challenges, and more, is changing the role of procurement within the wider business, according to a new report from SAP and Economist Impact.

“Historically, procurement teams have not been granted the same access to strategic decision-making as other departments,” writes SAP’s Baber Farooq. “They’ve been limited within the scope of the supply chain and forced to make choices based on company policy. That is finally shifting as procurement executives have more input in long-term company planning.”

Indispensable procurement

CPOs are having to contend with an environment of “permanent crisis”, as dirsuption becoems the norm rather than the exception. As a result, procurement teams are increasingly being seen as a “key value function” as opposed to a “simple support function”, according to Klaus Staubitzer, CPO and head of supply chain at Siemens.

A key indicator of procurement’s increasing importance as a business enabler is the function’s ongoing shift from the finance department and into the purview of the COO. 

CPO reporting is pivoting towards COOs. This year, 44% of the procurement teams surveyed by Economist Impact resported to their company’s COO. This is compared with just 26% in 2023 and 34% in 2022. Just 23% still report to the company’s CFO. 

Friction with stakeholders

Procurement is generally becoming more strategic in the way it relates to and works with stakeholders. However, the report argues that procurement teams have “considerable room to improve” when collaborating with other departments. Three quarters of executives agreed that procurement collaborates effectively with the business on issues of strategic importance. This is a 53% jump over last year. However, a much smaller portion of those surveyed (18%) have high confidence in procurement doing so — a 10% drop. Just 14% had high levels of confidence in the application of procurement insights across the organisation. “Procurement has yet to gain the full trust of stakeholders in this area,” the report notes. 

“Procurement has often operated in this bubble that was in service of its own goals as opposed to in service of the goals of the wider business,” Philip Ideson, founder of Art of Procurement, told Economist Impact, adding that he believes this is one of the biggest issues preventing procurement from bringing more value to the organisation.

While large scale organisations have traditionally had the upper hand in procurement, new data from McKinsey suggests that technology may be levelling the playing field.

Technology may be changing conventional wisdom surrounding the way that organisational scale relates to procurement. Traditionally, larger functions working for larger organisations, buying larger amounts of goods and services with bigger budgets, had an easier time of it. 

That’s not to say that size doesn’t matter. However, new data from McKinsey highlights a developing trend. McKinsey found that smaller organisations are leveraging smart procurement strategies and new technology to keep up with, and in some cases outperform, organisations with economies of scale on their side. 

Better procurement means better business outcomes 

According to McKinsey’s procurement benchmarking survey, the last two decades of data draw a clear line between greater procurement maturity and better business performance. Procurement has always been good for the bottom line. “That link still holds today,” write the report authors. 

Despite a climate of intensified disruption, McKinsey’s latest dataset indicates that “companies with top-quartile procurement maturity have EBITDA margins at least five percentage points higher than their less mature peers.” 

Continuing, the reports authors note that smaller organisations with higher levels of procurement maturity — strongly linked to higher levels of digitalisation — are outperforming their larger rivals. 

Does size still matter?

The report notes that, because sectors like car manufacturing and consumer products have been focused on procurement reform for longer, they have a higher percentage of companies with strategic, mature procurement functions that have spent years leveraging sourcing as a source of competitive advantage. “Over the years, however, we have found high-performing procurement organisations in almost every industry,” they add.

They admit that while, across multiple sectors, “the highest-performing companies in our benchmarks tend to be large organisations, where the volume of purchases makes it easier to justify investments in advanced digital infrastructure and specialised capabilities,” recent “changes in the technology landscape are eroding the advantages traditionally enjoyed by larger organisations.” 

They identify the fact that “sophisticated analytics tools and data platforms” have become cheaper and more accessible through cloud based or modular deployments. “This makes it faster, cheaper, and easier for organisations of all sizes to access the digital capabilities they need,” they add. “For the small businesses in our data set, this shift could be transformative. Improving their data analytics engine would reduce the number of procurement laggards in this group by 8%.”

The rising importance of procurement is boosting industry-wide demand for software platforms that can support decision-making and operations.

The nature of procurement is changing. Increasingly, business leaders are recognising the potential for procurement to be more than a dated back office function. Procurement functions are being recognised for their potential to deliver resilience and strategic wins for the business

“Supply chain disruptions have made the business landscape far more complex and risky in the last few years,” observes Robert Stapleton, partner and Business Outsourcing Services lead for ISG. “Companies need an effective procurement system to navigate these changes.” 

However, according to a new report by Information Services Group (ISG), the evolution of procurement into a more strategic capability is changing the ways that chief procurement officers (CPOs) and other procurement leaders think about software. Increasingly, the ISG found, procurement leaders are “seeking platforms that enhance procurement efficiency, adaptability and data-driven insights.” 

Procurement software needs are evolving 

According to Stapleton, procurement teams need more capable management platforms than have so far been provided. A more complex procurement function demands a “solid, holistic procurement software platform,” he explains. 

Procurement teams need to find ways to make more strategic decisions in increasingly challenging conditions, the ISG found. 

Ongoing economic uncertainty is driving enterprises to prioritise cost containment across the entire organisation. As a result, features like spend consolidation, automated negotiation tools and the ability to optimise supplier performance are increasingly prized by CPOs looking to invest in digital transformation. Companies are also reportedly prioritising tools that help streamline workflows, reduce administrative overhead and demonstrably deliver a quick return on investment.

The increasing complexity of procurement processes, combined with  growing volumes of procurement data are creating more demand for automation. According to the ISG, software that automates repetitive tasks is particularly sought after. Automation can reduce the chance of human error. It can also give procurement experts more time to focus on strategic initiatives, the report finds. 

Naturally, interest in the potential of artificial intelligence (AI) is widespread in the procurement sector. “The next logical step is autonomic decision-making by procurement software itself, especially given the shortage of skilled labour in this field,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This could be the greatest disruptor that emerges from AI.” 

Almost 80% of UK businesses have or are planning to implement generative AI in their procurement and supplier management processes.

The potential for generative artificial intelligence (AI) to unlock new efficiencies and capabilities for procurement teams is a matter of widespread enthusiasm in the industry. However, challenges like poor data quality and inadequate governance may be holding back adoption. 

A new study by Ivalua found that the majority of the UK’s businesses are exploring generative AI’s potential to transform procurement and supplier management. Just under a quarter (24%) of businesses have deployed Generative AI tools in the last 12 months, and another 55% are either in the process of implementing or are considering implementing generative AI over the coming year. Just 19% of companies surveyed said they had no plans to adopt. 

The study also found that organisations that have adopted generative AI tools saw a 44% reduction in manual processes across the procurement and supply chain function. Organisations are most commonly applying the technology for task automation (69%), internet research (67%), document analysis (59%), and content creation (48%).

“Generative AI represents huge productivity gains and resource unlock for procurement,” Vishal Patel, VP of Product at Ivalua, commented. “But to succeed, careful change management and education are required to show employees Generative AI will enhance their role rather than replace it. With employees on board, businesses can focus on harnessing Generative AI to eliminate routine and time-consuming tasks while focusing on higher-value activities. But another key barrier remains – addressing a lack of progress on digitisation.”

Digital transformation hurdles slow Generative AI adoption 

Despite widespread enthusiasm for generative AI, adoption in the procurement sector faces some significant hurdles. Specifically, digital transformation has progressed slower in procurement than in other fields. This, according to Ivalua’s research, is hampering generative AI adoption in procurement. 

On average, organisations say they’ve digitalised 48% of procurement processes, compared to 45% in 2019. The report holds up the following as key reasons behind this lack of digital transformation initiative that’s impacting generative AI adoption.  

  • Poor data quality: 22% of procurement leaders cited poor data quality as a challenge to adopting Gen AI in the procurement and supply chain function.
  • Lower technical skills among teams: More than a quarter (28%) of procurement leaders say user resistance is a top challenge to adopting Gen AI, which suggests a lack of digital skills or technical confidence will hinder progress.
  • Lack of guardrails and processes: One-third (33%) of procurement leaders are concerned their team is using Gen AI tools without their knowledge, which is why nearly seven-in-ten (68%) agree they need to put more guardrails in place to ensure the accuracy of Gen AI outputs.

“Businesses need a solid data foundation for procurement and supply chain teams to effectively harness AI to improve efficiency and contribute to effective and timely decision making. But the lack of progress in digitisation and common data challenges suggest there is a significant gap to be bridged before Gen AI can deliver more strategic value,” added Patel. “Most procurement leaders agree that if their organisation doesn’t embrace Gen AI in procurement, they will lose out on cost savings and broader value creation opportunities. So, businesses must act now to digitalise and close the technology and data gaps in their procurement function. If not, they will struggle to measure up against AI-powered competitors, potentially losing customers and market share.” 

Decarbonisation regulations are contributing to a generational reorganisation of the ways in which supply chains and the procurement process works.

There are many reasons why organisations everywhere are taking a long, hard look at reorganising their approach to procurement. Overly complex supply chains, increased geopolitical risk in certain parts of the world, and the increasing instability created by the worsening climate crisis are all among the forces pushing chief procurement officers (CPOs) and supply chain managers (SCMs) to rethink the shape and scope of their value chains. 

Of course, to some degree, supply chains exist in a constant state of self reinvention. However, the changes we’re seeing in the industry now suggest that a more profound, generational reorganisation is taking place.  

Supply chain unpredictability was expected to fade along with the effects of the pandemic. However, even going into 2022, SCMs were preparing themselves for “extremely unpredictable supply chains” with “very long” lead times. 

Nearshoring, protectionism, and environmental resilience 

In 2024, it’s becoming remarkably clear that the problems facing procurement and supply chain teams aren’t going away. There’s a difference between a few years ago and today, however. Today, CPOs and supply chain leaders are increasingly taking steps towards implementing “fundamental, structural change”. This change, however, will demand “significant capital investment and subsequent corporate restructuring.” 

In particular, shifts in the regulatory landscape around emissions are driving a rise in nearshoring for procurement. Moving the procurement process closer to home is increasing in popularity. Nearshoring like this is a way to “reduce significant risks like long lead times, tariffs, and exposure to geopolitical tensions.” 

In Europe, for example, the European Union’s Carbon Border Adjustment Mechanism (CBAM) is disrupting long-standing practices  where companies based in the EU move carbon-intensive production to regions with more lax climate policies. Significant new taxes on imports are prompting organisations to bring the more carbon-intensive elements of their supply chains closer to home where there are fewer regulatory blind spots in which to hide. 

“Climate change is a global phenomenon whose impacts get propagated throughout the economy,” argues Ivan Rudik, an associate professor at the Dyson School of Applied Economics and Management at Cornell University. “If supply chains don’t get reshaped as a way to deal with global warming, the impacts on the economy will be much worse.”

This combination of increased climate risk and stricter regulations is driving the structural, far-reaching reorganisation of supply chains. As a result, higher volumes of trade in localised areas will become more common. Procurement will undoubtedly look very different in a few years from now compared with the state of the sector just a few years ago, as the sector undergoes a “reversal of the multi-decade journey to globalisation” that defined the pre-COVID economy. 

Barter has been used throughout history when traditional procurement breaks down, but does it still have a place in modern purchasing?

When economies falter, and customary systems of trade start to collapse, public and private organisations can find themselves cut off from vital goods and services. In these circumstances, these organisations sometimes turn to barter as a replacement for currency-based purchasing. 

But how effective could bartering be as a tool for modern procurement teams? 

When financial systems break down… 

Of course, it’s worth mentioning that modern discourse on the nature of barter and its place in economic history has largely moved on from the fantastical conceptions of a pre-coinage barter economy imagined by economics textbooks.   

“Historically, [economics textbooks] note, we know that there was a time when there was no money. What must it have been like? Well, let us imagine an economy something like today’s, except with no money. That would have been decidedly inconvenient! Surely, people must have invented money for the sake of efficiency,” writes David Graeber in Debt: The First 5,000 Years. “The story of money for economists always begins with a fantasy world of barter.”

Pre-money societies, Graeber posits, functioned in a much less rigorous this-for-that way than modern economic systems. People with a surplus of, say, shoes, wouldn’t go out and try to use shoes to barter for their bread, milk, and farm equipment. Instead, people in a community would share surplus production freely, under the assumption that other members of the community would share their own surplus production and care for one another. 

However, while barter economies that recreate modern economic systems — minus the money  — never existed historically, that doesn’t mean that there aren’t persistent examples of bartering in historical and modern procurement ecosystems. 

Bartering and economic instability 

While the current economic landscape isn’t facing anything like the meltdown experienced during the Great Depression of the 1930s, disruption is more common than ever. Geopolitical tensions, the looming climate crisis, and economic pressures have the potential to conspire to undermine the ability for organisations to procure the goods and services they require. 

Under such circumstances — skyrocketing inflation, loss of access to credit, etc. — the mechanisms underpinning global finance become (even more) disconnected from the physical assets and services they represent. At times like these, new (old) systems historically step into the gap, as people look to exchange goods and labour for the things they need to survive. 

Individuals and organisations adoptb artering systems when financial systems of money and debt fail. 

While this happens more readily at the individual or community level, there are historical and modern examples of this happening at the national level. As public procurement professionals in challenging times, today’s CPOs could consider the potential for bartering to bridge economic gaps that money can’t cross. 

Global and local barter economies in the Great Depression 

“Reversions to simpler types of economic organisation are not uncommon in times of economic stress,” notes an article published in Nature in 1933 at the height of the Great Depression. 

During the Depression, when systems of credit collapsed and money wasn’t readily available, barter economies developed at both the global and local levels. In 1931, Nature notes that a “small exchange was opened in Salt Lake City to facilitate the barter of unemployed labour for surplus farm produce.” Money had functionally become disconnected from the value of labour and goods, and the replacement system spread rapidly to many parts of the country, covering “a wide range of trades and professions” just two years later. Individual labour markets based on a barter system (although this was quickly replaced by an ad hoc system of promissory notes called “scrips”) weren’t confined to the small scale. The Depression was a global event that left nations, not just individuals, unable to participate in finance (or procurement) in the traditional sense. 

In September of 1932, the Wall Street Journal reported that, “Following the lead of the United States and Brazil, which traded wheat and coffee, Germany has begun to obtain coffee in exchange for coal, Danish cattle for agricultural implements, and Russian petroleum for electrical machinery.” Additionally, Bloomberg notes that Argentina bought railway equipment from Spain with foodstuffs, Turkey bought guns with figs, and the UK sent coal to Finland in exchange for cut timber. Germany dye manufacturers accepted  720 carloads of wheat as payment for longstanding debt from the government of Hungary. 

This is public procurement on a national scale using the barter system. And the practice hasn’t ended, even in the 21st century. 

Public procurement bartering in the 21st century 

Embracing a barter system might seem antiquated or foolish in a modern economy defined by international currencies and global supply chains. Modern economies are so interconnected and complex, economists argue, that finding the necessary “double coincidence of wants” to facilitate a barter is nigh impossible compared to the less sophisticated economies of the past. 

Nevertheless, the past twenty years are full of examples of public procurement teams wheeling and dealing when financial systems failed to serve as a medium of exchange. 

In 2005, Thailand and China reached a trade deal that saw the former swap 100,000 tonnes of dried Thai longan fruit for Chinese armoured vehicles and weapons. This wasn’t first time the Thai government tried to buy weapons with agricultural produce. The previous year, during visits to Stockholm and Moscow, then-president Thaksin suggested trading Thai chicken for Russian or Swedish fighter jets, saying “They both have wings and they can both fly.” 

The Thai government is still doing this. Earlier this year, the country’s defence minister was reportedly eyeing up a deal to use 150,000 tonnes of rice to partially fund the purchase of a frigate from the Chinese navy

Just last year, Egypt’s government announced plans to enter into a barter agreement with Kenya to maintain the importation of Kenyan tea amid a dollar shortage in Egypt’s federal reserve. Under the arrangement, Egypt’s government procures Kenyan tea, while has the freedom to choose what it wants to import from Egypt. This year, Iran and Sri Lanka reportedly started trading crude oil for tea

When does bartering make sense for public procurement? 

While bartering on a large scale seems like an easier, simpler method of exchange, compliance issues and the need for a double coincidence of wants makes it a niche solution—especially as major companies and governments are unlikely to enter into the kind of surplus economy that actually pre-dated currency-based financial systems. However, in times of economic uncertainty, barter-based procurement is an option that procurement professionals would be foolish to discount altogether. 

“Given increasing pressures to contain costs, purchasing personnel need to be creative and find new ways to aggressively control costs,” argued researchers in the International Journal of Purchasing and Materials Management in 1994. They add that domestic barter provides a unique alternative approach to cost recovery and that “purchasing and materials management professionals can utilise domestic barter as part of their cost containment initiatives and simultaneously add value to their companies’ product or service offerings.” 

According to an article in Mint, new digital tools could be unlocking a new age of bartering. “Today, bartering has made a comeback using techniques that are more sophisticated to aid in trading, for instance, the internet.” Digital tools are overcoming many of the traditional limitations of bartering, like geography and market size. “Today, bartering is global,” Mint notes, adding that this sort of trading usually takes place in online auctions and swap markets.

Given the rise in platforms and digital marketplaces for procurement (both public and private), could it be time to reevaluate the potential for bartering to evolve into a larger part of modern procurement? 

The ability to quickly change workflows without input from IT staff could make low and no-code programming a powerful procurement tool.

Procurement teams are operating in a landscape defined by rising costs and increasingly common disruption. In this climate, CPOs are still facing pressure to not only contain cost, but unlock the strategic potential of their procurement departments

Increasingly short-staffed procurement teams need to find a way to provide their organisations with the resilience and agility needed to thrive in the current market. Procurement professionals need to be able to see more of their value chains than ever before. Not only that, but they need to be able to act on that visibility, and act quickly. 

One tool emerging as a potential solution is low code (or no-code) programming.  

Breaking free of the IT department with low and no-code 

In a recent survey, an overwhelming percentage of experts (97%) said that putting the ability to build or adjust workflows in the hands of non-technical end users would have a positive effect on their efforts to modernise the supply chain and procurement process. 

Conducted by GEP, the survey and subsequent report found that low and no-code development allowed organisations to “integrate citizen developers who drive change in a cost-effective and agile way,” into their efforts to digitally transform procurement. 

Low-code and no-code development has gained significant momentum recently. While the trend was gathering momentum already, the COVID-19 pandemic accelerated adoption. The strategy is crucial across multiple industries, as it allows individuals with domain expertise but no software engineering background to enhance business agility. 

Low-code and no-code solutions allow procurement professionals without coding or UX design skills to build a platform that can collect quotations from vendors and suppliers, compare offers, seek internal approvals, and award purchase orders based on customisable metrics. 

“Low code does not aim to replace traditional coding,” GEP’s report stresses. However it can leverage the expertise of “a broader range of people.” As a result, procurement organisations can “adapt and iterate quickly in response to external changes and competitive demands.” 

Low-code and no-code solutions are becoming increasingly popular. The global market for no-code development platforms was worth approximately $12 billion in 2020. Thanks in part to the pandemic, the market is forecast to grow to around $65 billion by 2027.

Cities and governments are underutilised the potential for public procurement to drive innovation and promote competition.

City governments have the potential to be catalysts for innovation, which would benefit their citizens. 

There is fairly widespread awareness of the failure of public procurement to cultivate and attract innovation. According to the OECD, 81% of OECD countries have developed strategies or policies to support innovative goods and services through public procurement. However, public perception and traditionally risk averse behaviour limit the engagement of innovative firms in public sector tendering. 

According to Sam Markey and Andrew Watkins in a blog post for the World Economic Forum, “this is bad news for taxpayers who miss out on potential improvements to public services.” However, there are opportunities for public sector procurement departments to redress this lack of innovation in public procurement. 

Public procurement lacks competition and innovation

Annual city government procurement budgets account for more than $6 trillion around the world. In total, 8% of the world’s GDP is spent by public procurement teams buying from private sector suppliers.  

Public spending has the potential to be a huge force for innovation. Governments have the potential to push private sector companies to invest and invent new solutions to social, environmental, and logistical problems. 

For example, in Norway, ferries are a large part of the country’s transport infrastructure. Therefore, they are largely operated as public services. A regional government initiative required that all new ferry contracts favour low-emission technologies over traditional diesel engines. As a result, electric-powered ferries are commonplace and the sector’s emissions have been reduced by 95%. Simultaneously, costs have also been slashed by 80%.

By leveraging the scale of public procurement, governments can drive the private sector to innovate. As such, it can be a force for the betterment of citizens’ lives. 

Public procurement of innovative solutions 

According to the European Commission, the public sector is wasting its potential to use its purchasing power to act as an early adopter of innovative solutions which are not yet available on a large scale commercial basis.

This public procurement of innovative solutions, when implemented, provides a large enough demand to incentivise industry act. Private sector firms invest in commercialising the solutions at the quality and price needed for mass market deployment. 

This enables the public sector to be a modernising force. It can make public services better, deliver better value for money solutions and provide growth opportunities for companies in the private sector.

Jack Macfarlane, Founder and CEO of DeepStream, highlights the significance of financial efficiency in procurement, the difficulties associated with manual cost optimisation and how digital solutions can effectively tackle these challenges.

Procurement teams are always on the lookout for innovative strategies to streamline their operations and boost financial efficiency and outcomes. 

However, this task can be challenging due to the inherent inefficiencies that often exist in long-established manual processes. A straightforward remedy to these issues lies in controlling expenditures via e-procurement tools. 

Utilising digital platforms allows procurement specialists to enhance their cost-saving abilities and streamline processes. 

The importance of financial efficiency 

Procurement is a fundamentally important function of any business. Its aim is to procure goods and services in the most cost-efficient manner. Done properly, this ensures business expenditure aligns with the overarching financial goals. Ideally this results in the company’s longevity and success. 

Economic pressures shed a stark light on the importance of cost-efficiency for businesses. With inflation currently standing at 3%, it makes sense that procurement teams are prioritising cost optimisation in 2024. A recent survey revealed that 65% of procurement teams in the UK consider cost control their most crucial focus. 

It is the ongoing economic uncertainty that is further driving the need for financial efficiency, as global fluctuations and geo-political unrest force businesses to maximise savings and optimise resources to maintain supply chain resilience and stay competitive in a demanding global market. 

Experienced chief procurement officers know that maintaining profit margins can be a make-or-break scenario for any business, big and small. This is evidenced by the findings of The Hacket Group’s 2024 Global Business Services Key Issues report. The report states that 82% of procurement leaders rate “margin improvement and protection” as a critical business objective for 2024.

Digital solutions to beat procurement pain points

To ensure these goals and objectives are achieved, procurement teams are increasingly adopting digital solutions. These solutions are supposed to streamline processes, ensuring greater cost-savings and financial efficiency. By 2027, 70% of procurement teams will have implemented digital procurement solutions. 

These technologies help streamline processes, reduce inefficiencies and cut costs. Pandemic-induced supply chain disruptions, along with global geo-political instability, have highlighted the importance of building agile and resilient supply chains. These disruptions have prompted procurement teams to further prioritise risk mitigation in protecting financial efficiency and profit margins for the sake of business continuity.

Pressure from stakeholders such as investors, customers and regulatory bodies, demands that companies demonstrate fiscal intelligence and caution to enhance efficiency, ensure suitability for partnerships and meet sustainability expectations. 

The challenge associated with traditional cost-reduction techniques

Manual processes are time-consuming and demand significant administrative effort, diverting focus from strategic activities. Tracking and analysing spending patterns manually can be cumbersome, hindering the quick identification and response to trends or discrepancies. This inefficiency also affects transparency. It can lead to inconsistencies in vendor selection and contract management. Not only this, but it can heighten the risk of non-compliance with policies and regulations or, indeed, fraudulent activity.

Human error is a significant challenge, resulting in inaccurate data entry, miscalculations, and missed opportunities for cost reductions. These errors undermine data reliability and lead to poor decision-making.

Relying on manual processes for financial optimisation is outdated and fraught with issues that impede organisational efficiency and hinder cost-reduction strategies in procurement because the absence of a centralised system complicates the consolidation of procurement data across departments

Digital and centralised systems help procurement teams accurately account for all associated costs beyond the initial purchase price and predict demand with precision to avoid overstock or stockouts.

How e-procurement streamlines financial efficiency

E-procurement platforms and software offer substantial benefits for enhancing financial efficiency within organisations. One of the primary advantages is the automation of data, which significantly reduces the risk of human errors and ensures that procurement decisions are based on accurate and reliable real-time data. Beyond this, the move to digitalisation brings multiple additional benefits.

E-procurement tools feature multi-stage response capabilities, allowing users to request new offers at various stages of supplier negotiation. This flexibility enables procurement teams to negotiate better prices and terms, such as delivery dates and lead times, uncovering real-time cost-saving opportunities throughout the procurement process. 

Automated e-auctions simplify the negotiation process, minimising the time spent on back-and-forth communications with suppliers. This efficiency allows teams to secure competitive prices quickly, freeing up time for other critical responsibilities and improving supplier relationship management.

Procurement software offers an efficient and accurate tracking system, providing users with enhanced visibility over their spending. This capability allows organisations to monitor savings achieved from multiple contracts and partnerships, ensuring comprehensive cost-saving measures. General reporting dashboards in e-procurement software provide an overview of request spending and savings analytics. These tools enable users to track data, identify where savings are being maximised, and make informed decisions to further enhance financial efficiency.

E-procurement’s proactive approach includes features like customisable workflows and automated reminders, ensuring timely and accurate processing of procurement activities. This approach streamlines the overall procurement process, driving efficiency and cost-effectiveness. By leveraging these capabilities, e-procurement platforms help organisations streamline operations, reduce inefficiencies, and achieve sustainable cost optimisation. 

Through automation and advanced tools, procurement teams can enhance their decision-making processes, negotiate better deals, and maintain a high level of financial control and transparency.

Data analytics are poised to revolutionise the procurement process, but many CPOs aren’t ready for a data-driven transformation.

The role of procurement has changed. Spurred by an ever more complex supply chain landscape, procurement departments are shifting away from traditional cost containment and purchasing. Now procurement teams are moving towards being strategic relationship managers, sustainability champions, and drivers of technological maturity. 

Procurement increasingly relies on technological solutions to combat its challenges. THese difficulties range from geopolitical disruption to price volatility and a worsening climate crisis. At the same time, helping the business remain cost competitive is still a necessary goal for the function. 

Using analytics, CPOs can revolutionise traditional elements of the procurement process like spend analytics, demand forecasting, and significant portions of the supplier relationship management process. However, in order to effect this procurement revolution, CPOs need to trust their data. 

The procurement revolution runs on data

Procurement is the membranous layer between the internal organisation and its external supplier ecosystem. As such, procurement has access to huge amounts of data. In the procurement function, internal data like demand patterns, spending, budgets, and specifications, meets external information like supplier spend, market insights, and contextual data ranging from weather forecasts to crop reports. 

In order to harness the full potential of procurement, CPOs must tap into their rich reserves of data. Appropriately armed, they can better, more informed decisions that unlock strategic wins for the business. Data—along with the application of AI—can help procurement teams optimise spend and predict demand. In more predictable industries with fairly stable parameters, some experts even believe that bots could replace humans entirely. “For standardised items with highly competitive markets such as transportations or temporary labour, buyers would not need to interfere, leaving bots to make trade decisions autonomously based on predefined objective functions,” McKinsey analysts wrote in a report earlier this year.  

However, there are serious hurdles that organisations looking to leverage data in their procurement processes face. 

CPOs might expect data analytics and the technologies they power to revolutionise every aspect of their procurement function by the end of the decade, but respondents to McKinsey’s survey readily admit that their data infrastructure isn’t ready to support this ambition. Over 20% of procurement leaders said their data suffers from silos and a lack of maturity, with less than 70% of spend data stored in one place. Even those leaders whose systems give them a single source of truth for all spending data admitted that their data wasn’t not cleaned and categorised effectively. 

Before it can revolutionise the procurement process, procurement’s data is in desperate need of improvement. 

Data analytics drive the AI procurement revolution 

By leveraging AI, CPOs can automate significant portions of their category management processes. Demand forecasting and optimisation can become more accurate, which makes sourcing and supply chain management more effective. Supposedly, AI interfaces will allow procurement teams to analyse spending and market data, answering questions about spend exposure created by specific events, cost increases due to oil price fluctuations, or alternative sources for suppliers experiencing difficulties. 

Generative AI may soon be able to automate contract generation and generate data used for risk management training—vital in an increasingly disrupted world. 

The decarbonisation of our economy is a daunting, complex task, and the procurement process is one of the best places to effect meaningful change.

The worsening climate crisis not only poses an existential threat to humanity, but is proving increasingly disruptive to the ongoing operations of global supply chains. Extreme weather events are increasing in frequency. Food insecurity, resource scarcity, and economic pressures all threaten to destabilise global economies

In response to the deteriorating climate, regulatory bodies have introduced increasingly stringent measures to ensure sustainable behaviour. As a result, organisations’ business success is more and more closely reliant on achieving meaningful decarbonisation. “Businesses are now putting sustainability and decarbonisation at the core of their strategy,” notes a new report by Capgemini

Beyond scope 1 & 2 emissions 

Decarbonising a business is a complex process. The greenhouse gases an organisation emits are broadly divided into three categories: Scope 1, 2, and 3. 

  • Scope 1 refers to direct emissions from owned or controlled sources.  
  • Scope 2 relates to indirect emissions—those generated by the purchase and use of electricity, steam, heating and cooling. By using the energy, an organisation is indirectly responsible for the release of any emissions tied to its generation.  
  • Scope 3 includes all other indirect emissions that occur in the upstream and downstream activities of an organisation.

Regulators are increasingly requiring companies to address the impact of Scope 3 emissions. Since an organisation’s Scope 1 and 2 emissions only represent 25% of the whole, while 75% of the total is related to emissions coming from Scope 3, tackling emissions within the supply chain as a whole is a complicated and challenging process. 

Sustainable procurement and scope 3 emissions

A lack of visibility into the procurement process and supplier ecosystem is an overwhelmingly common driver of Scope 3 emissions. According to the Capgemini Research Institute, only 23% of organisations know which suppliers account for most of their Scope 3 emissions. 

In order to redress this problem and drive widespread decarbonisation throughout the supply chain, Capgemini’s report advocates for the implementation of sustainable procurement practices. Sustainable procurement takes a holistic approach to the environmental, social, and governance (ESG) aspects for Scope 3 emissions. 

“Environmental includes the accounting of carbon emissions but also aspects such as biodiversity, natural resources, and pollution. Social looks after ethical, safe, and fair practices. Finally, governance embraces corporate transparency, diversity, and compliance with regulations,” Capgemini notes. “Taking a methodical, small steps approach that embeds key principles of sustainability into the main areas of the procurement workflow – policy, sourcing, contract management, and supplier management – will ensure a robust and achievable operational roadmap to get you there.” 

To meet the growing need for decarbonisation in the procurement value chain, here are four steps that CPOs can use to shape their journey.

The procurement process is increasingly being recognised for its potential to drive carbon emissions reductions with the larger organisation. However, the process is complex and, for many CPOs, there’s no easy way forward. 

This is due to the fact that reducing Scope 3 emissions is particularly difficult. 

Scope 3 emissions account for approximately 75% of companies’ emissions on average. This is according to data gathered by the Carbon Discolosure Project. However, not only do Scope 3 emissions account for the majority of the value chain’s environmental impact, but they are also the most difficult emissions to measure and reduce. The difficulty stems from a lack of trustworthy data. Not only that, but value chain activities lie outside of the organisation’s direct control. 

Despite the challenges, pressure on procurement teams to decarbonise their procurement process has increased over the past few years. There has been mounting pressure to accurately measure emissions in order to submit and validate science-based reduction targets. This presure is driving companies to direct more focus toward Scope 3 emissions, according to Mark Weick, managing director of EY’s Climate Change and Sustainability Services. Nevertheless, he adds, many businesses still find themselves in a “Scope 3 dilemma.”

In order to make meaningful progress towards decarbonising their procurement process, CPOs and business leaders should engage with the following four steps. 

1. Accurately measure the impact 

The first step towards decarbonising the procurement process is accurately calculating your emissions. 

Creating visibility within the value chain is challenging, but implementing reporting standards for your supplier ecosystem, in combination with the right digital tools can help deliver an accurate carbon footprint calculation. 

Once the calculation has been made, the figures must be regularly updated in order to remain valuable.  

2. Triage to minimise severe contributors 

Once the extent of your Scope 3 emissions has been accurately measured, the next step should be to identify and target the most emissions-heavy categories in your value chain. 

The Pareto Principle is a flawed analytical guideline, but provides a good starting point. It is likely that 20% of your value chain is producing 80% of the emissions. Therefore, by identifying the suppliers, materials, processes, and products that make the biggest contributions to your emissions, you can make the largest impact in the shortest amount of time. 

3. Find and pull carbon reduction triggers 

The next step is finding the areas where changes will have the greatest effect. Find the factors in your organisation and ecosystem that trigger the biggest swings in carbon emissions. Volume of product, supplier selection, type of product, and nature of service can all trigger emissions reductions (or increases). 

Examples of triggers could include rewriting an IT policy to repair and refurbish old equipment in order to reduce e-waste. It could pull that trigger even further by ensuring refurbished equipment is then sold or donated. It could also involve purchasing equipment with longer lifespans. Or requiring suppliers to comply with certain sustainability standards within their own operations. 

4. Monitor, iterate, improve 

The final step is to accurately monitor and assess the efficacy of your carbon reduction steps. Then, experiment with new approaches, explore new strategies, and analyse the results. Digital monitoring tools are a useful element of this process, as long as they are updated and leveraged throughout future iterations of the cycle.  

Over time, you will be able to iterate and improve your environmental impact reduction strategy and track your progress towards an ultimate goal like carbon neutrality. This is not a one-time project, however, and it is vital that carbon reduction is conceptualised as a central aspect of your procurement function’s strategy going forward. 

A new report from KPMG identifies predictive analytics, generative AI, supply chain disruption, and ESG criteria as the factors shaping procurement’s future.

It’s a time of radical change for the procurement sector. Not only is procurement itself transforming to become a more strategic part of the overall business, but industry trends are changing the shape of the sector from the outside as well. 

A new report from KPMG breaks down the “numerous forces” that are conspiring to change the “future trajectory of procurement.” WIth procurement teams facing uncertainty on multiple fronts, the report argues that procurement teams should “brace themselves for a myriad of potential scenarios.”

Primarily, the trends shaping the future of the procurement sector, according to KPMG include: the heightened risk of supply disruption, the impact of technologies like predictive analytics and generative artificial intelligence (AI), and increasing ESG and regulatory demands. 

Disruption is the new normal

KPMG’s report, which surveyed 400 senior procurement professionals from a range of industries, found that concern over the increased likelihood of supply chain disruption is becoming an increasingly common fear. Of the executives surveyed, 77 % told KPMG that risk of supply disruption is a critical external challenge.

Geopolitical tensions are mounting in multiple regions. As a result, a retreat from globalisation, and conflict in certain parts of the world are impacting food markets and energy prices and deterring trade routes. 

According to KPMG’s report, these disruptive pressures are putting a strain on supply chain resilience. As a result, many organisations are being forced to rethink their sourcing strategies as they try to reduce the risk of shortages and rising prices. Strategies like nearshoring and China-plus-one are expected to significantly reshape supply chains in Asia and beyond over the coming years. 

AI, analytics, and digitised supply chains 

According to the executives surveyed, predictive analytics and generative AI are the two technologies most likely to have a major impact on procurement functions over next year and a half. Robotic process automation was a distant third. 

However, despite widespread consensus that AI and analytics are essential to the next phase of procurement’s evolution, many executives also cited limited data and insights as their top internal challenge. KPMG’s report argues that this indicates an urgent need to invest in this area.

Sustainability, ESG, and tightening regulations 

Increasingly, procurement is emerging as one of the key areas for sustainability reform as the conversation shifts towards Scope 3 emissions. Companies in Europe, in particular, are facing stringent regulatory and reporting requirements, with just under two-thirds of KPMG’s respondents arguing that increased regulatory and ESG demands will heavily influence strategic sourcing in the next 3–5 years. 

According to KPMG, businesses must demonstrate that their manufacturing and supply chains are not only low-carbon and environmentally friendly, but also provide adequate pay and conditions for workers. 

Steve Green, Business Development Manager at Genetec investigates hidden risks in the supply chain and how to avoid them.

Technology is advancing at an exponential rate. Now, advances in AI and analytics mean devices will likely expand their functionality and capabilities well beyond the date of their original procurement. 

That means that for any IT-related investment, it’s not enough to focus solely on traditional factors such as the legality, functionality, suitability, and cost of the product itself at the point of purchase. It’s just as important to understand the viability, trustworthiness and any likely risks that could result from association with its manufacturer and suppliers for the entire predicted lifetime of that product.  

This is particularly relevant to the realms of video surveillance and the Internet of Things (IoT). Increasingly, governments are tightening regulationsto prevent the ongoing use of devices associated with human rights abuses or that present an unacceptable level of cybersecurity threat

Supply chain blind spots

According to the Cyber Security Breaches Survey 2024, commissioned by UK cyber resilience to align with the National Cyber Strategy, just 11% of businesses assess the risks posed by their immediate suppliers. In a predominantly digital age, that is deeply concerning. 

It suggests there is not enough emphasis on the origin of devices responsible for the breaches or manufacturers who made them. Without this, how can any organisation ever hope to demonstrate compliance with its own commitments to uphold the highest standards of cybersecurity and ethics in procurement? 

If they don’t appropriately audit and document these issues, how can organisations possible identify the technical, financial and reputational risks of selecting one manufacturer over another?

Risk management in procurement

Risk can never be reduced to zero, so it must constantly be reassessed based on an organisation’s activities, sensitivities, and risk tolerance. These risks will manifest in several different forms, some of which the procurement function can actively control and others which it can only react to. With the appropriate forethought, however, organisations can idenitify many of the most likely risks in advance. They can therefore take steps to reduce, mitigate or transfer the risks before disruption strikes. 

For example, when evaluating any IoT related ‘smart’ device or solution, cybersecurity must be a key consideration. Organisations could reduce risk by stipulating that they will only consider working alongside suppliers who have achieved relevant accreditations and who submit themselves to regular third-party penetration testing. 

They could then look to mitigate this further by doing their own due diligence of the cybersecurity track record for each tender response. Finally, they may choose to transfer some of the remaining risks by revisiting the organisation’s cyber insurance coverage. 

Building bridges between IT & procurement 

As outlined above, a growing threat is that of scheduled upgrades increasingly leading to the adoption of ‘smart’ IP connected devices, requested and managed by departments other than IT. These devices no doubt provide valuable new functionality. However, they also come with additional responsibility for their on-going management that organisations need to consider.  

Responsible procurement professionals have a duty to ensure they bring in the right individuals from across the business to ensure their appropriate evaluation. This is where the proactive involvement of the IT department becomes so vital. It brings much needed familiarity and expertise with the process of ensuring a product is viable. With the involvement of the IT team, it’s much easier to determine if a product can be securely and cost-effectively adopted over a multi-year period. It therefore puts procurement professionals in the best position to take an informed view of which of the presented options are in the best long-term financial interests of the business. 

‘Digital asbestos’ & CCTV blind spots

Technology used for video surveillance and physical security is many organisations’ biggest blind spot. This is because these cameras typically make up the largest software system deployed within a business not managed by IT. Internally, man organisations still think of security cameras as the “closed-circuit” analogue devices that were in circulation 20 years ago. 

Consequently, as a society we have witnessed, and continue to see, the widespread adoption of insecure cameras and other IoT devices. These devices are manufactured by state-owned companies with strategic interest in exfiltrating data, intelligence or intellectual property from rival governments, private businesses, and individuals. This is especially true when the country and the companies in question have a widely demonstrated and well-documented set of cyber risks associated with them. 

In the UK, the Central Government has banned devices manufactured by Chinese state-controlled companies on national security grounds. And yet, organisations across the public and private sectors continue to deploy these devices at scale. That isn’t sustainable or wise.  

Of course, we shouldn’t blame procurement professionals for the purchasing decisions taken before these risks became widely known. It’s the same as asbestos several decades ago. Today, however, the risks are known and documented. Procurement professionals have a duty to stop adding to the problem and take steps to mitigate the risks. As with asbestos, the first step once the dangers were clear, was to no longer add to the problem. The second was to put plans in place to deal with what had been put in place by an earlier generation. 

Final thoughts

No procurement leader wants to be the person who ignored the warning signs and forced the organisation into “buying cheap, buying twice”. Or even worse, exposed the organisation to damage from which it was unable to recover. Price is of course an important factor, but the true goal should be to achieve value. 

The Procurement function has never been more important in terms of building the culture, people and processes needed to ensure buying decisions are taken that are in the best long-term interests of the business. For procurement professionals, and those sat around the boardroom table, it all comes down to understanding the risks, accepting responsibility and having the determination to invest

Gender equality in public procurement is currently a missed opportunity with the potential to improve living standards for all genders.

A report from the European Institute for Gender Equality (EIGE) asserts that current public procurement spending represents “a missed opportunity.” 

According to the EIGE’s new study, public procurement has the potential to leverage public spending in a way that results in a fairer allocation of economic resources between genders. Effectively implementing such a policy would, the report argues, improve living standards for both women and men. 

Public procurement and gender equality 

Public procurement in the European Union (EU) is a massive economic phenomenon. Authorities in the EU spend roughly 14% of the bloc’s GDP on public procurement. This amounts to approximately €2 trillion per year. 

According to the EIGE, the sheer size of public procurement in the EU means the process is “of high economic importance.” New regulation could, the EIGE suggest, take advantage of public procurement’s status as a “powerful instrument for influencing market relations and competitiveness.” 

Until now, however, regulators have largely seen and treated public procurement and gender equality as two distinct issues. This is especially true of industries where the public sector is the market’s principle buyer. These include energy, transport, waste management, defence, information technology, and health and education services.

The EIGE report notes, however, that links between the two issues are absent at almost every level, from national governments to the EU as a whole. They believe this represents a missed opportunity for the EU, as public procurement has the potential to be “an important transformative lever for social issues and in particular gender equality.” Not only this, but a lack of gender parity in public procurement is an economic pain point for the EU.  

The case for gender-responsive public procurement

The EIGE argue that the extent to which businesses owned and operated by women are under-represented in tender competitions and contract awards means that public bodies are missing out on a large segment of the market that may offer value for money and innovation in public service delivery. 

Gender-responsive public procurement (GRPP) is a gender mainstreaming tool advocated by the EIGE that promotes gender equality through public procurement. “GRPP is procurement that promotes gender equality through the goods, services or works being purchased,” explains the report. 

Gender equality has strong, positive impacts on GDP per capita, which increase over time. Therefore, economists argue that gender equality is a relevant lever for catalysing economic growth. Increased gender equality, the EIGE estimates, could lead to an increase in EU GDP per capita of 6.1–9.6 % by 2050, amounting to EUR 1.95–3.15 trillion. GRPP could contribute a significant part of this, as it helps to tackle structural inequalities at both a national and pan-EU level.

From Scope 3 emissions to data quality, here are some of the biggest challenges procurement teams will face as the decade continues.

The nature of the procurement function is undergoing a radical transformation. Additionally, the ways in which procurement is being perceived from outside the department are also changing. More and more leadership teams are looking to procurement to solve increasingly challenging problems. 

CPOs are finding themselves a valuable part of the C-Suite, important decision-makers within the corporate hierarchy. Hervé Le Faou, CPO of Heineken, said late last year that “Fundamentally, the CPO is evolving into a ‘chief value officer,’ a partner and co-leader to the CEO who is able to generate value through business partnering, digital and technology, and sustainability, which are new sources of profitable growth in a shift toward a future-proof business model.”

Procurement teams are expected to be sources of strategic value creation, drivers of digital transformation, and the first line of defence against disruption in an increasingly volatile world. It’s a far cry from the somewhat transactional, cost-conscious back office role the function performed just a few years ago. And, with responsibility and importance, comes a raft of new challenges. 

According to data gathered by KPMG in April, the current procurement landscape faces a diverse array of challenges, from tightening ESG restrictions to the uncertain (but undeniable) impact of generative AI. These trends are already creating new headwinds for procurement teams, and they’re likely to develop further as the decade wears on, not to mention be joined by others that are only now starting to emerge. 

1. Risk management 

The profound disruption to the global supply chain caused by the COVID-19 pandemic has receded, but it has left behind a world obsessed less with the idea of “just-in-time” than “just-in-case”. 

Market fluctuations resulting in cost-spikes, material shortages, and delays, are all going to be front of mind for procurement teams this year. However, internal issues like siloed departments, inefficiencies, and fraud also have the potential to prevent procurement from living up to its potential. Procurement’s role in managing third party risk is going to increasingly place the function at the heart of organisations’ response to potential threats. Leadership teams will expect CPOs to find answers and ways around these dangers. 

2. Transparency and data quality

Whether from an ESG perspective or simply a desire to shock-proof your value-chain, attaining good, plentiful data about your supplier ecosystem and the market forces that affect them is a high priority and a daunting challenge for procurement teams. 

The consequences of poor quality internal data trickle down into the decision-making process, and could cause the business to lose out on crucial opportunities. Likewise, a poor understanding of your suppliers and their activities could cause Scope 3 emissions to skyrocket, and even involve organisations in practices that damage brand reputation or result in the purchase of inferior quality products. 

KPMG’s industry survey found that implementing data analytics procurement leaders view implementing data analytics as the single most important activity they would engage in the next 12–18 months. However, respondents also cited limited data and insights as their top internal challenge, “indicating an urgent need to invest in this area.”

Organisations are awash in a sea of disorganised data, and the growing influence of generative AI looks ready to make this problem worse before it gets better. 

Generative AI has rapidly become the most widely-discussed (not to mention heavily invested in) technology in multiple industries. While many organisations are keen to explore the potential for generative AI to automate functions, create new sources of value, and do any number of other things, the technology has the potential to have just as many negative effects on the industry as good ones. 

3. Regulation, compliance, and Scope 3 Emissions  

Whether tied to sustainability reporting or the movement of goods across international borders, the global regulatory landscape is becoming more stringent, and the penalties for violation more severe. 

Procurement teams need to stay abreast of fast moving compliance landscapes, ensuring they (and their suppliers) are up to date with changing requirements lest they have their operations disrupted and potentially face costly fines. Automation and AI have a role to play in this process, potentially monitoring, analysing, and completing compliance documentation without the need for tedious manual work. 

Many organisations, especially in Europe, face increasingly strict regulatory and reporting standards regarding ESG. KPMG’s survey found that 66% of respondents believed that these growing regulatory and ESG demands would heavily influence strategic sourcing decisions over the next 3-5 years. 

Businesses must increasingly demonstrate that their production and supply chains are low-carbon, environmentally friendly, and ensure fair wages and good working conditions. This trend spans various industries, with financial services and government sectors facing intense scrutiny. 

Supply chain disruptions are the new normal, and finding ways to add resilience to the procurement process is every CPO’s priority.

Over the last several years, it’s undeniable that the pace and impact of disruptions felt by global supply chains has increased. From the COVID-19 pandemic, a looming recession, and the increasing severity of the climate crisis to war in Ukraine and genocide in Gaza, disruption feels more like the norm than the exception. 

In the 2023 Gartner Balancing Sustainability and Resilience Survey, researchers found that 53% of supply chain and procurement leaders reported their supply chains were facing disruptions half of the time or more often.

Procurement plays a more vital role than ever in helping organisations combat disruption, but risks can’t be avoided if they can’t be identified. In this article we have organised the 9 most common causes of disruption procurement faces today.

1.  Human Error

Procurement requires a great deal of repetitive, error-prone work. Human errors in manual processes can lead to purchasing mistakes such as incorrect factory orders, resulting in unnecessary costs. In addition to delays and increased costs, human error can incur additional penalties as the result of breaches in compliance, not to mention the long term potential reputational damages. Repeated mistakes amplify the financial impact, emphasising the need for accuracy in purchasing, logistics, and inventory management processes. Upgrading to technologies with built-in automation can minimise such errors and associated expenses.

2. Economic, political, and environmental factors

Global events like armed conflicts or economic sanctions can affect supply chains. In just the last few years, the number of disruptions to agriculture and manufacturing from climate crisis-related events has risen, in addition to geopolitical conflicts. Diversifying suppliers, nearshoring supplier ecosystems, and scenario planning can help businesses respond to such challenges.

3. Lack of contingency plans

Companies must plan for worst-case scenarios by monitoring suppliers’ financial performance to identify those at risk of going out of business and reducing dependence on them. Diversifying supplier pools and reducing reliance on politically unstable countries can help mitigate supply chain risks. Additionally, taking care over the quality of internal and external data, as well as implementing a vendor management system, can help mitigate this risk. 

4. Security Threats and Corruption

Cyberattacks like ransomware can cripple procurement operations just like any other part of the company. Procurement, as a highly porous department with lots of contact with outside entities and potentially tens of thousands of interactions per day, is particularly vulnerable. Investing in information security solutions and cyber insurance can mitigate this risk. Procurement is also one of the most common breeding grounds for corruption and fraud. Ensuring rigorous oversight of the procurement process with mechanisms for independent auditing, as well as centralised data management practices to encourage transparency can help reduce the risk of fraud.

5. Flawed forecasting

Inaccurate demand plans can lead to underproduction or overproduction due to stale data, potentially resulting in unsold inventory, product markdowns, and reduced profit margins. Manual forecasting processes without sophisticated demand planning applications may contribute to overestimation of demand.

6. Internal business changes

Reorganisations or key personnel departures can lead to the loss of institutional knowledge, disrupting procurement’s ability to function efficiently. Also, a great deal of deal-making and supplier management still relies on interpersonal connections, which can be severely damaged by staffing challenges. Standardising procurement processes and automating tasks can mitigate disruptions caused by upheaval and turnover.

7. External business changes

Acquisitions or workforce shortages at supplier companies can disrupt the procurement process. Diversifying supplier pools and adding alternative sources can help mitigate disruptions.

8. Pricing fluctuations

Raw material shortages, demand spikes, or natural disasters can lead to price increases. While procurement can’t control these factors, they can plan for them. Stockpiling, diversifying supplier networks, and chasing efficiencies wherever possible can cushion the blow when prices skyrocket.

9. Transportation delays

Delays in transportation due to weather, labour strikes, or breakdowns can disrupt supply chains. Although transport problems have eased compared to previous years, delays remain common.

Jon Gill, VP EMEA at Spinnaker Support, analyses the changing nature of the CPO role, and explores how procurement leaders can beat the odds in an increasingly challenging field.

Being a procurement manager has never been more challenging. You’ve had to become the ultimate multitasker: securing the best prices, finding reliable suppliers, and now steering the strategic decisions that will define your organisation’s future.

So, what sparked this shift in your role? You have Enterprise Resource Planning (ERP) systems—Oracle and SAP – to thank.

Transforming ERP is a generational challenge

These systems are vital for integrating and managing core business processes, yet their inflexibility and high maintenance costs present novel challenges to corporate IT everywhere. As businesses strive for greater agility and efficiency, procurement teams are central to transforming ERP systems from static, costly burdens into dynamic assets that boost business growth and operational efficiency.

As a procurement manager, you’re at the heart of transforming these ERP systems into flexible, valuable assets that not only support growth but also adapt to changing business landscapes. Your mission? To ensure these critical systems don’t become financial sinkholes, while ensuring that your systems keep pace with necessary innovation initiatives and evolving business demands. Every pound saved or cleverly renegotiated is funnelled back into your company, fuelling innovation and sharpening your competitive edge.

Navigating the complexities of ERP systems, you’ve likely considered third-party software support as a game-changer. It’s the buzz in the industry—a strategic move that promises innovation, functionality, and substantial cost savings. Partnering with a tech-savvy ally who intimately understands your systems and is dedicated to your company’s growth sounds like a winning formula, right?

But here’s the reality check: some businesses aren’t jumping on board with the idea of taking their ERP support and maintenance away from the vendor’s contract. And to make matters worse, ERP vendors themselves are actively discouraging it. They paint a bleak picture, highlighting concerns about security, compliance, and access to cutting-edge products.

So, when you’re advocating for third-party software support to drive innovation, save money, and ensure the stability, security, and compliance of your ERP systems, you need to be armed with the facts.

Managing risks while driving innovation

As a procurement manager, your role increasingly involves bridging the gap between IT departments and strategic business needs. IT teams often lean towards the safer route, preferring the predictability and stability of established ERP vendors like SAP and Oracle. Their concerns? Potential disruptions, security risks, and the upheaval of adopting a new support model.

However, this reliance on traditional vendor support introduces hidden dangers. It locks your organisation into the vendor’s ecosystem—tied to their upgrade schedules and captive to their pricing strategies—restricting your ability to innovate and adapt. This can divert your business from pursuing avenues that better align with its strategic ambitions.

Consider the situation with Birmingham City Council. The cost of the council’s move to a new Oracle ERP system was initially projected at £20 million but escalated to around £100 million due to unforeseen complexities and the need for a highly specialised software instance that ultimately could not be delivered effectively. This example highlights the significant risks and costs that can accrue when projects are not carefully managed and tailored to the specific needs of an organisation.

Adapt, don’t start over

More importantly, this case teaches us an important lesson: migration and large-scale projects are not the only paths to innovation. Sometimes, the key to adding strategic value lies in supporting and improving current systems rather than replacing them entirely. This approach not only avoids the risks of vendor lock-in but also enhances operational flexibility, allowing organisations to adapt more dynamically to changing needs.

How can your business achieve this? With third-party software support. This alternative doesn’t just mitigate risks—it propels innovation. Third-party providers maintain and optimise both current and legacy systems more effectively. This prevents the disruptive upgrade cycles imposed by traditional vendors. They specialise in custom solutions tailored to the unique needs of your business. By doing so, they enhance system performance, and ensuring ERP systems are responsive to your strategic goals.

Moreover, third-party support addresses interoperability issues and customisations often overlooked by standard vendor support. This reduces operational disruptions and offers a more stable transition experience during system upgrades. Financially, opting for third-party support results in substantial cost savings in both the short and longer terms as these services come at a more competitive price than traditional vendor support contracts, and also allow your organisation to avoid costly, non-essential upgrades and migrations especially as systems age. These savings can be redirected towards strategic initiatives, enhancing your competitive edge.

Convincing your C-suite to transition to third-party support involves shifting the narrative around risk. It’s about highlighting that the real danger lies in sticking with a roadmap from a vendor which might not match the company’s direction – or ambitions. The potential for stifling innovation and operational agility is a significant threat.

Tackling security and compliance as a CPO

Security and compliance are critical, and they are often cited as reasons to remain with a vendor’s in-house support. Yet as vendors shift focus to newer software, support for older systems diminishes. This exposes businesses to increased cybersecurity risks and regulatory compliance challenges. Third-party software support can help with this, too.

Third-party providers are not limited by a product lifecycle. Their priority is to secure and maintain the ERP systems you rely on, regardless of their age. This proactive approach ensures that your systems stay up to date with the latest security measures. Not only that, but is also aligns them with evolving compliance standards without forcing costly upgrades.

By choosing third-party support, you ensure your ERP systems are secure, compliant, and perfectly aligned with both current regulatory demands and your organisation’s long-term strategic objectives.

For procurement managers ready to advocate for third-party software support, the key is demonstrating how this option turns perceived risks into strategic advantages.

This move can safeguard your company’s future, ensuring that your ERP systems evolve in line with your business needs. Not just according to a vendor’s agenda. 

AI chatbots and other supposedly “easy wins” for procurement could be about to cost the sector billions in misallocated funding.

Generative artificial intelligence (AI) exploded into the public consciousness in early 2023. Since then, the technology has attracted vast amounts of media attention, controversy and, crucially, investment. Now, tech companies are struggling to bridge the gap between hype and reality. Between the billions upon billions of dollars spent to bring AI to market and the reality that it may not be the game-changer it’s being sold as. Increasingly, it appears as though it might be a very expensive, complicated, ethically flawed, and environmentally disastrous solution in desperate search of a problem.

“AI chatbots and image generators are making headlines and fortunes, but a year and a half into their revolution, it remains tough to say exactly why we should all start using them,” observed Scott Rosenberg, managing editor of technology at Axios, in April. 

Nevertheless, Generative AI is seeing huge investment across virtually all sectors. In the procurement market, the technology is on track for substantial growth. Market projections estimate the value of AI in procurement to soar to more than $2.2 billion by 2032. 

Can we use AI for procurement?  

In January, Gartner found that 43% of procurement leaders were planning to implement the technology within the next 12 months. It’s worth noting that this investment in generative AI lags slightly behind the supply chain function in general. However, it’s still close to half of alll CPOs planning to buy an AI tool. Maybe a slower approach for the industry as a whole wouldn’t be such a bad thing. 

It’s likely that AI will have applications that are worth the price of admission. One day. 

Its problems will be resolved in time. They have to be; the world’s biggest tech companies have spent too much money for it not to work. Nevertheless, using “AI” as a magic password to unlock unlimited portions of the budget feels like asking for trouble. 

As Mehul Nagrani, managing director for North America at InMoment, notes in a recent op-ed, “the technology of the moment is AI and anything remotely associated with it. Large language models (LLMs): They are AI. Machine learning (ML): That’s AI. That project you’re told there’s no funding for every year — call it AI and try again.” Nagrani warns that “Billions of dollars will be wasted on AI over the next decade”. Applying AI to any process, including procurement, without more than the general notion that it will magically create efficiencies and unlock new capabilities carries significant risk. 

Tom Whittaker, director at independent UK law firm Burges Salmon, warns that “Use of AI in procurement requires clear purpose. Purpose drives the design, development and deployment of an AI system, how it will be incorporated into existing systems and processes, and how those responsible for the AI system measure performance and legal compliance.” 

Without clear intention and thoughtful execution, AI risks becoming a multi-million pound albatross around a procurement department’s neck. 

The problem with AI chatbots and other “low hanging fruit” 

According to GEP, AI represents a broad array of “low hanging” fruit for the procurement sector. These low hanging druit include “automating invoice processing, optimising spend with AI and augmenting capabilities through AI chatbots.” Companies looking to drive quick value from AI can supposedly exploit these options to save money and easily increase efficiencies. 

But is that true? 

Let’s talk about chatbots. The technology has struggled to perform as a replacement for human customer service reps.

In the UK, a disgruntled DPD customer—after a generative AI chatbot failed to answer his query—was able to make the courier company’s chatbot use the F-word and compose a poem about how bad DPD was. 

In the US, owners of a car dealership were horrified when their AI chatbot started selling cars for $1.

After Chris Bakke, who perpetrated the exploit, received over 20 million views on his post, the car company announced that it would not be honouring the deal made by the chatbot. It argued that, because the chatbot wasn’t an official representative of their dealership, it didn’t have the authority to offer discounts. 

Evangelists for the rapid mass deployment of AI to the procurement sector seem all too ready to hand over vital processes like contract negotiation to AI that can, without much difficulty it seems, be convinced to sell items worth tens of thousands of dollars for roughly the cost of a chocolate bar.

Set to come into effect in October 2024, will the Procurement Act succeed in making the procurement process more flexible for UK businesses.

UK procurement leaders face pain points ranging from rising costs to geopolitical uncertainty. The ability to be agile and adaptable is separating successful organisations from those in danger of failing. 

 “More than ever, CPOs require agile procurement processes and enabling systems to adapt to changing market conditions,” says Tom Whittaker, director at independent UK law firm Burges Salmon

However, the current regulatory framework surrounding procurement in the Uk creates headwinds for procurement teams. “More than ever, CPOs require agile procurement processes and enabling systems to adapt to changing market conditions,” says Whittaker. According to him, this is something the Procurement Act 2023 seeks to facilitate. The Act will ‘go live’ in October this year and will likely have a significant impact on UK procurement.

Will the Procurement Act increase agility for UK organisations? 

The Procurement Act 2023 aims to reshape the regulatory landscape underpinning the UK’s procurement sector in several major ways. These range from reworking supplier selection to changing the ways that tendering works. The aim, reportedly, is to open up public procurement to new entrants such as small businesses and social enterprises. Ideally, this would allow them to compete for and win more public contracts.

According to Whittaker, “A key challenge for CPOs under the existing regime is the ability to design agile procurements that can adapt to changing stakeholder requirements.” He admits that the Procurement Act will still maintain some limitations. However, Whittaker notes that the new legislation will provide a clear framework for such changes during the procurement process

“Conditions of participation (previously selection criteria), tender requirements and award criteria can all be amended or refined at various points under the new regime,” he says. “There will be significantly more scope under the new regime to design a procurement process that fits the specific nature and scope of an organisation’s requirements.” In essence, companies have more leeway to adapt their tender process as circumstances shange around them.

However, while he advises a more agile approach and amending selection criteria in the face of changing circumstances, Whittaker says the process “must always be managed with care.” He argues that “the value this can potentially deliver will depend significantly on the skills and understanding of the procurement professionals responsible for delivering the change.”