I speak with a lot of procurement leaders and, while every individual story is unique, it’s always interesting when you start to see a trend emerge. It’s not a new idea that, in the modern landscape, procurement is evolving to support other business needs beyond cost. However, more recently I’ve noticed a change in the way CPOs are approaching this idea. From biotech to the FMCG sector, procurement leaders are facing more and more challenges.

Whether it’s the latest salvo in the US’ trade war, an extreme weather event, tightening regulations, or a devastating cyber attack, the pressures on modern supply chains are increasing. The terrain is getting more difficult to navigate. As a result, procurement teams are facing more pressure than ever to fulfil their more traditional objective: cost containment. Focusing on keeping the bottom line as healthy as possible amid an increasingly unstable economic environment doesn’t necessarily leave a lot of room for tackling resilience, agility, sustainability, innovation, and every other buzzword on the table—so to speak. 

So, what I’m seeing is procurement leaders taking a more focused approach. In addition to cost containment, CPOs are increasingly working to identify the core values of their business and tailor their procurement strategies to support that.   

In some companies, procurement enables speed, in others sustainability or resilience. Within the luxury goods sector, explains Matteo Perondi, Chief Procurement Officer for Bulgari, it’s creativity and client experience that are paramount. “One of our main values is creativity,” he explains. “We do hundreds of events every year, and each one must feel unique and special to our clients.” I sat down with Perondi at an event held in Paris by the spend management platform Ivalua — of which Bulgari is a client — to learn about Bulgari’s ongoing procurement transformation, and to unpick this idea of procurement as a way to deliver on a business’ core values. 

A real strategic partner 

Perondi joined Bulgari in July 2023 as its CPO, primarily overseeing indirect procurement, which accounts for the majority of the 140+ year-old Italian luxury fashion house’s spend. “Our direct procurement is mostly focused on gemstones, while everything else falls under my scope,” explains Perondi, including events, pop-up installations, storefronts, and everything else that goes into creating high-end luxury experiences for the company’s customers and clients. Even as someone with a remarkably diverse resume, Perondi is quick to point out what a unique environment Bulgari is in which to run a procurement function.  

“I have nearly 20 years of experience creating or transforming procurement organisations from scratch,” he explains. Perondi has worked across the banking, insurance, automotive, large-scale construction — including a project to expand the Panama Canal — and telecommunications sectors throughout his career. “In every company I joined, they always told me, ‘We’re different.’ But after a while, I started thinking—are they really?’” he laughs. 

Bulgari has been a very different story. “When I joined the company, it was something of a bold move for them,” he explains. “Bulgari decided to bring in someone from outside the luxury sector because they wanted to invest in procurement, which historically hasn’t been a strong focus in this sector. Procurement isn’t always seen as strategic—largely because of the heavy focus on revenue and margins.” Bulgari wanted to change that narrative, and hired Perondi specifically with a mandate to transform its procurement function into something that could not only deliver on cost savings, but help to deliver on the business’ core strategic values. 

Perondi, for his part, has something of a unique perspective when it comes to transforming procurement from a tactical, back office function into something far more impactful. “In many companies, procurement is seen as an enabler. They support cost savings, compliance, audits, sustainability, and so on,” he says. “But I didn’t want to just enable. I wanted procurement to be a strategic partner.” 

Understanding the business 

To make that happen, he explains, “I had to truly understand the business. Coming from concrete and steel into luxury was a huge shift.” The learning curve has been steep, reflects Perondi, who notes that it took him some time to adjust to leading procurement in a business with very different values to the industrial settings where he spent his preceding years. “When I first joined Bulgari, I noticed we were using around ten different Michelin-starred catering companies, so obviously I asked why we needed so many because, in a typical procurement mindset, you’d consolidate for efficiency and cost down to one and have them do all of your events.” He laughs. “Someone turned around to me and said, ‘Are you crazy? If we always use the same one, our clients will get bored.’”

Nonetheless, he points out that the lessons learned in other industries do still have value to Bulgari’s procurement process. “There are two things. First, planning. In sectors like automotive or construction, everything is scheduled far in advance. You know when you need a part, and you work backward. That discipline wasn’t common here. So we’ve started building procurement plans: if you need something in October, let’s start preparing in April,” he says. “Second, tools and technology. I came from Vodafone before this, so I was used to digital tools enabling procurement. At Bulgari, I’ve started introducing digital decision-making. It’s not just about cost control—it’s about helping the business work smarter: better supplier selection, smoother communication, and smarter assessment.” 

Sponsoring the transformation

Of course, changing the way things are done in any organisation is a challenge. In an organisation with a long and rich history tied to aesthetics, design, and passion like Bulgari, getting the necessary buy-in to support a procurement transformation was, Perondi explains, vital. “With any transformation project, you need a sponsor—someone inside the business who believes in what you’re doing,” he says, explaining that he was fortunate enough that his first supporter was the former Chief Marketing Officer, now Deputy CEO, Laura Burdese. 

“Considering that marketing is such a major area of spend for Bulgari—ambassadors, events, advertising—this was key,” he says. “She brought me into her team early on, and I started by understanding their needs myself, hands-on. My team was still quite new at the time, so I worked directly with them. I told them: ‘I’m not here to reduce your budget. I’m here to help you buy better. With the same money, you can buy more or improve quality. Let’s do that.’”

Perondi started small with pilot projects, always keeping in mind that change management was going to be essential, slowly building buy-in and proving procurement’s potential to support business creativity and quality. “And it worked. This year, for the first time, I have a shared objective with the marketing team,” he enthuses. “We’ve agreed on at least one common goal that we’ll work toward together—true cross-functional alignment.”

2025 — Procurement in service of creativity  

Creativity demands many things: trust, collaboration and, in particular, agility. “Agility is absolutely necessary for us because, for example, we need to be able to pivot if an event changes due to weather, or if a talent can’t make it, or if a supplier has an issue at the last minute,” says Perondi. “That’s the kind of flexibility we need to support the business’ creative ambitions.” 

2025 is about laying the foundation for Bulgari’s procurement function to be more agile—as well as efficient and digitally-capable. “We’ve fixed a lot of what wasn’t working. Now we’re focusing on performance,” Perondi explains. “We’ll invest more in digitalization, especially tools that support smarter, faster decision-making. I want to implement project management modules that support boutique openings, for example. Behind every boutique is a lot of construction, architecture, and sustainability concerns. It’s a full-scale project.” 

He also plans on growing his team, as well as building stronger bonds with the business, and tracking the value procurement brings to Bulgari, from savings and efficiency to creativity.

To some, 2015 might seem like only yesterday.

But in the case of procurement, the function moves quickly. Today, procurement has taken on a completely different identity from a decade ago. No longer a purely cost-cutting entity, its rise has been driven in part due to an acceleration of advanced digital tools which has been heralded as a ‘game-changer’ for procurement. From organisations going entirely paperless to offering new ways to manage supplier data, the advancement of technology has provided procurement functions with unprecedented time and cost savings that were previously unimaginable. 

In this article, CPOstrategy explores five of the ways procurement has evolved over the past 10 years.

Collaboration with suppliers

A major shift over the past decade has been the importance of developing key, strategic relationships with partners. The days of an alliance being solely regarded as transactional or one-way. In order to succeed long-term, business partnerships need to be built on trust and have a similar outlook on important topics such as sustainability. Success is impossible to achieve alone and on the back of recent geopolitical problems, companies recognise the role good partnerships can play. A good supplier experience can lead to stronger supplier relationships, increased collaboration and increased supply chain performance. 

Digital transformation

One of the biggest shifts over the past 10 years has been the acceleration and maturity of advanced digital tools. With the likes of AI, Big Data, cloud and blockchain all shaking up procurement, CPOs now have a massive opportunity on their hands. The range of tools at a procurement executive’s disposal is staggering and allows for much greater efficiency and cost savings. The latest buzzword to reach the procurement industry is the potential of generative AI and the exponential value it brings. Procurement processes are increasingly becoming more digitalised with the number of procurement software vendors booming in recent years. 

The CPO role

A Chief Procurement Officer has never had to wear so many hats. Gone are the days when procurement professionals were siloed and kept out of the way of the action. Today, they are front and centre of an organisation and help make key decisions. This even extends to where a CPO is located during work hours. Even five years ago, before the COVID-19 pandemic, working from home was rare. However, since then, there has been a major shift in workplace attitudes, and hybrid models have become increasingly popular.

Sustainability drive

No longer simply a ‘nice to have’, there has been a significant emphasis on the importance of sustainability and implementing ESG principles in recent years. While legislation is one reason for this, another is changing customer demands as the world has woken up to the fact that more needs to be done to save the planet. There is also the visibility of extreme climate change such as wildfires notably recently in Los Angeles which caused 170,000 people to evacuate from their homes as thousands of buildings were destroyed. Climate action sits among 17 Sustainable Development Goals to achieve significant reductions in CO2 emissions by 2030.

Greater resilience

The past decade has seen unprecedented ‘black swan’ events unlike ever before. From the pandemic to wars, there has been a number of external disruptions to the global supply chain. It has meant that supply chains and those within them must be agile and keep their finger on the pulse of the latest risks. The pandemic demonstrated the importance of having a backup plan and those with robust supplier relationships are less likely to be impacted. In the tumultuous and ever-changing world of today, procurement professionals must be vigilant and ready to respond. 

As leaders within procurement have found out only too well over the past few years, disruption is an almost daily occurrence. With SaaS inflation pushing your software costs up by 11.3% compared to 12 months ago – for exactly the same contract – and SaaS spend per employee per annum reaching an all time high of $9,100, the majority of procurement leaders are stuck in a never ending cycle of dealing with rising costs out of their control whilst simultaneously trying to be cost efficient and optimise their tech stack. 

Guarding against this requires a SaaS procurement setup that is robust, adaptable, and strategic. One that can secure services that comfortably accommodate both today’s ambitions, and future growth plans. 

To achieve this, companies need full visibility over their entire SaaS procurement processes, from renewal dates, contract terms and usage analytics to pricing benchmarks, peer comparisons and negotiation playbooks. And all the while, they need to be able to see, manage and optimise every procurement process in finite detail. Enter Vertice.

It’s a view that many teams don’t have, can’t get or in some cases don’t even see the value in it. But not having it allows known costs to skyrocket, unknown spending to balloon and procuring new software becomes the Wild West. In the end, you’re stuck with a bloated tech stack full of ineffectual tools on long, costly contracts, and no idea how to control it all. This isn’t enabling the business to grow, it’s actively preventing it.

In an exclusive article with CPOstrategy, Nick Riley, Head of Procurement, EMEA, Jordan Tang, Director of Procurement, APAC, and Michael Keller, Director of Procurement, US, at Vertice explain why procurement visibility is the key to unlocking this, and the disadvantages and real costs to those that don’t provide it.

Why is visibility such an important factor in optimising SaaS procurement for organisations today?

Nick Riley: “You can’t negotiate in the dark. Visibility into your tech stack, how it’s used, and how its cost and make-up compares with similar businesses transforms procurement from reactive firefighting into a strategic function that delivers real business value. Without it, you’re just hoping for generosity and good deals instead of making them happen.”

Michael Keller: “Totally agree. And as you alluded to, visibility comes in two parts – understanding your own environment and also understanding it in the context of the wider SaaS landscape. Having both lays the foundation for not only optimising usage and eliminating waste, but also for getting the right price. You can’t optimise what you can’t see.”

Jordan Tang: “Here’s an example: imagine having total clarity on the proportion of licences you bought in the last contract term that were actually used, then applying that knowledge to the current renewal request, and also having up-to-date intel on the best negotiation strategies and levers to pull with that vendor. That’s the sort of visibility that most procurement teams can only dream of.”

You mention cost savings, but how does a lack of visibility lead to missed opportunities ?

Nick Riley: “It’s amazing how little understanding some businesses have of their SaaS stack. But what you don’t track, you risk overpaying for. Poor visibility means duplicate tools, bloated licences, and auto-renewals slipping through unnoticed. A single blind spot can cost six figures—scale that across an entire SaaS stack, and the waste is staggering. Our data shows that on average as much as 45.7% of SaaS applications are either underutilised or totally unused.  With an average SaaS spend per employee per year at $8.9k, this means $4,094 per employee per year is ‘wasted spend’. That’s a lot of waste!”

Jordan Tang: “SaaS visibility is not just about licences and waste though. It’s also a route to identifying unapproved spend and shadow IT, which isn’t just a cost issue but also a compliance risk.”  

Michael Keller: “And don’t forget overlapping products. When you get totally to grips with your SaaS stack, you inevitably find that you have more than one vendor serving the same purpose. Usually this is because of rogue spend, but not always. Often, vendors have developed and expanded their products to increase their value to their customers, but ended up overlapping with others elsewhere in the stack. If you don’t look for this risk, you’re instantly limiting your ability to spend smart.”

So if SaaS procurement visibility has such potential value, what are the key challenges procurement teams face? Why is it so hard to achieve? 

Nick Riley: “SaaS can be the Wild West – different teams buying tools, no central oversight, and suppliers pushing for opaque terms. Vendors also understandably don’t always make things like usage data readily available. Shadow IT thrives when no one’s watching, making it easy for budgets to leak. Even when data exists, people often scatter it, let it become outdated, or get it wrong.”

Michael Keller: “The biggest challenge always comes back to data. The lack of a central tracking system, or integrations between systems, are major hurdles for complete SaaS visibility. Without these, procurement teams and those negotiating contracts have to rely on guesswork and ballpark figures, which shift the negotiating power to the supplier, not the customer.”

Jordan Tang: “But it’s not just about your own data. You also need external data to benchmark your vendor selection and costs against. A single procurement team will likely only negotiate with its SaaS vendors every year or two. That’s nowhere near often enough to truly understand whether a vendor is the right one for your business and its ambitions, or their drivers, needs, negotiation style, or what prices are possible. There’s just no substitute for external perspective, as well as internal visibility. 

How have you seen the best organisations leverage data analytics to gain better visibility into their SaaS spend and usage?

Nick Riley: “Data turns gut feel into leverage. Benchmarking exposes overpayment, usage tracking highlights waste, and predictive insights stop bad renewals before they happen. The best procurement teams aren’t just negotiating—they’re forecasting, optimising, and outmanoeuvring suppliers.”

Michael Keller: “That’s right. They’re using data analytics to identify usage patterns, uncover hidden costs, optimise contract renewals, and even predict future needs based on real-time insights.

Alongside data, what role does advanced technology play in enhancing visibility and streamlining SaaS procurement processes?

Nick Riley: “The old way—manual tracking, spreadsheets, chasing teams for answers—doesn’t scale. AI and automation surface insights instantly, turning SaaS chaos into control. The best tools don’t just track spend; they predict, prevent, and optimise it.” 

Michael Keller: “Modern procurement technology, and the data and analysis it can provide, has changed not only what is possible, but now also what is expected of effective procurement teams. The top procurement leaders we speak to are not surprised by the ability to track licence use, access benchmarks, monitor workflow performance, or even to understand vendors and the landscape better. Instead, they expect this capability and are more interested in how they can best put this insight to work and identify the biggest opportunities for improvement.”

Nick Riley: “The investment in refreshed/new procurement technology remains a key topic for CPOs but not all businesses are ready for this investment. Vertice has created a self assessment to help companies identify how mature their procurement processes are and provide suggestions for improvements.”

Is visibility in SaaS procurement just a short term play to improve contracts and pricing, or can it contribute to vendor management and long-term strategic partnerships too?

Nick Riley: “Suppliers respect informed buyers. When you bring real data to the table, discounts improve, contract terms get fairer, but suppliers also invest in your success. Strong relationships aren’t built on trust alone—they’re built on transparency, alignment, and mutual growth.”

Michael Keller: “We definitely see the same dynamic in the US. Better visibility ensures you’re making the most out of your relationships with key strategic partners. You’re spending what you should and identifying optimisations, but you’re also able to spot opportunities to try new tools, upgrade to the next tier up, or even beta test new features. And in doing so, you can easily track and benchmark performance based on shared goals, so that when you win, they win.”

The question of visibility always brings concerns around privacy. So how do organisations balance this when tracking SaaS usage across departments?

Nick Riley: “Visibility isn’t surveillance—it’s control without intrusion. The right tools anonymise usage trends while surfacing inefficiencies, keeping compliance tight without breaking trust. Procurement should empower teams, not police them.”

Michael Keller: “There are clear guardrails organisations can put in place, such as anonymising data, implementing role-based access controls, and establishing clear data governance policies to protect user privacy while maintaining necessary visibility.”

If an organisation has neglected visibility in their SaaS procurement processes, what risks would arise, what are the warning signs, and how can they be fixed?

Nick Riley: “When no one owns visibility, everyone loses—overspending, compliance gaps, and security risks pile up fast. Auto-renewals trap companies in bad deals, and shadow IT exposes them to unknown liabilities. The fix? Proactive oversight, structured procurement, and a refusal to let suppliers dictate the rules.”

Michael Keller: “Businesses risk far more than spiraling costs, though that’s a chief concern. If they start seeing an increase in even minor compliance issues or security vulnerabilities as their tech stacks grow, then those are classic signs of procurement not quite having full control over the process. And as we all know, these issues can have their own consequences, whether financial, legal or reputational. Implementing a robust SaaS management strategy with clear visibility in your data—what it’s capturing and who can access it—can help mitigate these issues.”

In your mind, how exciting is the future within Vertice and the wider industry?

Nick Riley: “The game is changing, and we’re leading the charge. Procurement is shifting from a cost-centre mindset to a strategic advantage, and the best executive teams will use it to outpace the competition. At Vertice, we’re proving that SaaS procurement isn’t just a function—it’s a force multiplier for the entire business.”

Michael Keller: “The future is incredibly exciting! The SaaS market continues to grow, and Vertice is at the forefront, empowering organisations to take control of their SaaS spend and unlock its full potential. As a business, we are working with some of the largest businesses globally, helping them optimise their constantly growing SaaS environments. 

“We can see that SaaS price inflation is outrunning market inflation by a factor of more than 4x – and that’s not the only reason that SaaS cost per employee is climbing so high (currently as much as $8.9k for mid-market and enterprises). This alone creates plenty of opportunity for us to deliver extraordinary value for our customers, but add to that our rate of product development, and we are also seeing the number of ways that we can have impact growing rapidly too.”  

Anything else you’d like to add?

Nick Riley: “Procurement is a science in preparation, an art in execution. The teams that master both will win bigger, move faster, and turn SaaS from a black hole into a growth engine. The future isn’t just about savings—it’s about control, strategy, and impact.”

Michael Keller: “Proactive SaaS management, driven by strong visibility, is no longer a luxury but a necessity for organisations looking to thrive in today’s cloud-driven world.”

Jordan Tang: “Negotiation is an art, the more time you have with partners, the higher chance you can generate greater value on both sides.”

Read more about Vertice here.

At the start of April, US President Donald Trump made good on a campaign promise to impose tariffs on US imports in an attempt to revitalise US manufacturing and reset America’s trade agenda. 

The sweeping tariffs included a 10% tariff on all US imports, along with an array of steeper rates for some of the US’ major trade partners, including the European Union, which faced higher rates of 20%, and China (an additional 34% on top of the 20% rate imposed earlier this year), as well as Japan (24%), and Vietnam (46%). These figures have, and continue to, change on an almost daily basis as the Trump administration wheels and deals with foreign powers — operating according to a new doctrine of retribution and reward. “Do not retaliate and you will be rewarded,” the President wrote on April 10th, as the White House paused tariffs for most countries but slapped a steep 125% duty on China. 

There have been other reprieves for cooperative nations and industries. The US implemented a 25% tariff on all foreign-made cars and auto parts, and Trump recently announced his intentions to cushion the impact of auto tariffs by cutting other levies, such as those on steel and aluminium, for automakers. According to the Wall Street Journal, carmakers will be able to secure partial refunds for tariffs on imported auto parts, based on the value of their US car production. 

Nevertheless, the abiding impression in the auto industry — as well as throughout the rest of the global value chain — is that the global economic order established in the wake of World War 2 is in tatters. 

“The global economic system under which most countries have operated for the last 80 years is being reset,” wrote Pierre-Olivier Gourinchas, Economic Counsellor and Director of Research at the International Monetary Foundation (IMF), in a recent article. Pointing out that US and global tariffs were now the highest since immediately before the Great Depression, Gourinchas warns that, “If sustained, this abrupt increase in tariffs and attendant uncertainty will significantly slow global growth.”

For procurement leaders, the current state of affairs threatens to represent a more severe, long-lasting disruption to their supply chains than the COVID-19 crisis. However, the sector is already developing some innovative solutions and strategies to the new era of the Trump Tariff.  

Dealing with deglobalisation: Onshoring isn’t enough 

Trump’s tariffs have inevitably accelerated the deglobalisation trend that COVID-19 kicked off, as organisations race to shift their value chains away from regions affected by the President’s levies.

Onshoring — the process of relocating production operations back to a company’s home turf — is undeniably an effective way to avoid paying tariffs. However, while relocating the supply chain closer to home can decrease lead times, increase control and visibility into operations, and circumvent tariffs, the process is a slow one. The domestic labor markets in industrialised nations like the US — both in terms of available skills and labour costs — mean you can’t just uproot a supply chain from China and move it to the US or Western Europe. 

The economy of the Global North is too dependent on cheap labour from poorer nations. CNN estimated last month that an iPhone manufactured exclusively in the US would likely more than triple in price to over $3500. Not only that, but many goods (especially complex electronics) depend on manufacturing capabilities and expertise that disappeared from the US decades ago. 

Bringing these supply chains entirely back to the US would be a months-long process for even simple operations; doing it for complicated goods like iPhones, data centre infrastructure, and cars could take decades. And that’s before we even consider the raw materials, many of which have processing supply chains that are deeply entwined with Chinese and other tariff-hit nations. 

In short, while the US and other nations caught up in the trade war will likely see a shift towards onshoring and nearshoring, applying these strategies across the board simply isn’t viable. 

When the US imposes tariffs on countries that are home to specialist suppliers, manufacturers will have no choice but to pay tariffs and either absorb the cost themselves or pass those higher prices along to the consumer.

“Many manufacturers have spent decades getting their supply chains to a point where they heavily rely on a small circle of suppliers they regularly work with to minimise touchpoints, keep costs low, and drive efficiencies. The appeal of handing back office supply challenges to tiered vendors was a logical and valuable choice. Unfortunately, with today’s uncertainties, they can no longer afford a hands-off approach,” Phillip Gulley, Co-Founder and Chief Strategy Officer of Cofactr, wrote in a recent article for SupplyChain Strategy. “Manufacturers are now expanding or shifting their supplier networks to mitigate delays and shortages, attempting to ensure production continues at unit economics that still fit existing business models. But manufacturers must go beyond increasing the number of suppliers to mitigate risk—to leverage better optionality they need to diversify geographically and consider where subcomponents are sourced to eliminate single points of failure.” 

Visibility and technology 

Of course, reshaping supply chains in response to tariffs is a complex and potentially dangerous process. As Adrian Wood, Director of Strategic Business Development at DELMIA, recently told SupplyChain Strategy, “Tariffs don’t represent a physical constraint, but cost is a major driving factor in the optimisation of the supply chain and production plans.” Accurate data and expertise allow supply chain teams to experiment with new approaches to supply chain orchestration, but understanding things like at what tariff percentage an organisation can absorb costs to protect margin without having to pass all the costs along to the consumer and impacting demand are “extraordinarily difficult to answer without technology.”

Powered by artificial intelligence and a strong data foundation, Wood advocates for building digital twins of supply chains in order to help companies become more agile and resilient. 

“Even with a precision virtual twin, the complexity of global supply chains and the number of possible business permutations are beyond human comprehension to evaluate and analyse effectively,” writes Wood. “However, traditional AI methods (such as optimization) are now adept and considering competing business priorities to balance supply and demand while considering any number of physical and logical constraints. Used along with the virtual twin model, manufacturing and supply chain leaders can use AI to experience unlimited what-if scenarios to determine tactical responses.” 

How to tackle tariffs in the long-run: It’s a relationships game

While technology can give supply chain leaders an understanding of the decisions they need to make in order to weather tariff headwinds, supply chain resilience is ultimately about relationships. 

“While many believe that tariff changes and their resulting challenges are largely beyond the control of CPOs and supply chain leaders, there is a great deal that can be eased by investing in stronger trade relationships; offering continuity through the chaos,” writes Fayola-Maria Jack, CEO and founder of Resolutiion. 

This, she adds, is because, “in times of crisis, transactional suppliers tend to protect themselves first. The problem with relationships that are purely transactional is that there’s little incentive for suppliers to go the extra mile, and contractual rigidity leaves no room for improvisation.” This rigidity and lack of a strong relationship can result in disruptions ranging from delivery failures and financial penalties to stranded assets. 

“Trust-based relationships, on the other hand, enable flexibility. Strong, strategic partners are not only more likely to renegotiate terms instead of pushing material disputes and perhaps even litigating, but they can also open the door to early intel. Knowledge sharing is a really important part of planning, becoming even more so through tougher times,” she writes, adding that “fostering an open and transparent relationship that shares early signals of disruption will be key.”

The coming months and years will undoubtedly be challenging for organisations all over the world, as economic constraints and political tensions threaten to disrupt supply chains. However, with the right combination of technology, strategy, and relationship management, supply chain leaders stand a good chance of weathering the storm. As Wood notes, this isn’t the first large-scale disruption supply chains have faced in recent years, and it won’t be the last.

“This is not really uncharted territory,” he notes. “Over the last decade, the world has faced many disruptive events: Brexit, COVID, the Suez Canal, geo-political conflicts, climate changes, and so on. Each one is unique in its nature, but they all have similar impacts on supply chains and manufacturing; causing breaks in global supply, extreme fluctuations in demand, and unknown costs and barriers to competing.” Using their experience of the past, procurement leaders can secure a future in the world Trump’s tariffs have built.  

US President Donald Trump appears to be planning to ease the 25% tariffs his government placed on automotive imports to the country in April. According to the BBC, Trump will reduce some import duties on auto parts manufactured abroad when US-based automakers procure these parts to build and repair vehicles manufactured in the US.

“A major victory” 

Commerce Secretary Howard Lutnick described the move as “a major victory for the President’s trade policy by rewarding companies who manufacture domestically,”  in a statement provided to Reuters.

Earlier this month, multiple US auto industry organisations called on the Trump administration to not impose 25% tariffs on imported car parts. The tariffs on the auto industry wer originally supposed to come into effect on May 3rd.

In a letter to the White House from automakers, including GM, Toyota and Volkswagen, the companies warned that levies on the auto industry would “lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive”.

“President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bringing back auto production to the US,” Treasury Secretary Scott Bessent told reporters on Tuesday. “So we want to give the automakers a path to do that quickly, efficiently and create as many jobs as possible.”

Automakers respond

In response to this week’s announcement, GM’s chief executive Mary Barra said the US automaker was “grateful to President Trump for his support of the US automotive industry and the millions of Americans who depend on us,” in a statement to the BBC. Ford also spoke positively regarding Trump’s decision, noting that it would “help mitigate the impact of tariffs on automakers, suppliers and consumers”.

In addition to lifting tariffs on goods used to build cars in the US, the Wall Street Journal also recently discovered that, while cars made outside the country will still be subject to automotive tariffs, the US government will not subject them to further levies like those on steel and aluminium products. 

The move is the latest in a series of unpredictable twists and turns taken by Trump’s trade strategy. Trump has already backpedalled on the higher tariff rates he imposed as part of his “Liberation Day” announcements earlier this month, when he announced his decision to pause higher tariffs on dozens of trading partners to allow time for negotiations.

Global supply chains are once again at a critical juncture. Trump induced tariffs, tighter red tape and global trade disruptions continue to make headline news, and are making supply chains more complex, more costly and more localised.

But while new tariffs are prompting a shift in sourcing locations, trade routes and end destinations, this is far from a new phenomenon for the industry. Issues and blockages occur all the time, especially in today’s fast-changing socio-political and economic climate. What it does highlight, however, is a need for supply chains to evolve in line with their new environment, to accelerate cross-border trade, reduce administrative burdens and enhance industry collaboration to avoid these issues and minimise business risks going forward.

Those that establish business resilience now will have a distinct advantage in maintaining flexibility, compliance, and efficiency in a rapidly changing global trade landscape. Our industry research shows that US supply chain leaders are planning on increasing investment in supply chain technology by 7.5% over the next year. But where do organisations start? And, how do they make sure that the changes they make now will be proof against the next big industry disruption?

Accelerate cross-border trade and diversify sourcing strategies

We’re now seeing a shift towards nearshoring and friendshoring, where supply chains prioritise trade partners least impacted by protectionist measures and tariffs. With US tariffs on Chinese goods increasing, for instance, supply chains will likely pivot to alternative manufacturing hubs, such as Vietnam, India, or Mexico. Of course, recent events have proven that these countries are also at risk of US tariffs. 

Here, US companies may face reduced competition in some industries, but at the cost of higher prices and reduced supply options – which may prove detrimental to several domestic markets and well-established global trade flows. This forces OEMs to absorb the costs or seek alternative sourcing strategies and locations, achieved through building relationships with markets harboring more favorable trade policies, and more accessible supply chains. 

But in doing so, businesses can get tied up in red tape in unfamiliar markets, and struggle to keep up with differing cross border and product compliance regulations. This can be a stressful experience and lead to delays, product seizure, fines and impending reputational damage. Procurement and supply chain professionals in the operation of trade may also face legal action or lose licenses in the process.

Short term fixes 

Many international manufacturers are seeking a short-term fix, rushing through large volumes of trade to the US before tariffs take effect, causing significant strain on already fragile global supply chains. Here, the danger is that manufacturers have cash tied up in unsold stock, a common, and potentially devastating, indicator of overreliance on a single market. Additionally, trade ecosystems are operating beyond capacity, meaning more room for human error, fraud and data breaches, and lost cargo, should it all go wrong. 

Smart procurement officers and organisations need to strengthen supply chain networks and build business resilience to accelerate trade, and navigate congested trade lines, particularly if they are to shift sourcing and end destinations. Many OEMs are already working to restructure supply chains by moving production closer to demand centers, but doing so takes time, agility and investment. 

Reduce administrative burdens and build business resilience

An alarming 67% of supply chain and procurement professionals are concerned about human errors and mistakes in managing global supply chains. Almost a fifth (18%) still use paper-based systems, like manual logs and forms. In the modern world, these processes are no longer good enough. After all, AI, predictive analytics and automation are only as effective as the quantity and quality of the data they’re sitting on. Mapping out, digitising, and making the supply chain ecosystem accessible is key. 

But just knowing where products are isn’t enough. Even if businesses create visibility in their supply chain, they can be left ‘in the dark’ on its status, and without the ability to make actionable changes, particularly in case of disruption. Investing in good data foundations falls down if systems are operating in silos.

Through building in tools like compliance, risk assessment and mitigation planning, demand forecasting and inventory management, into digital supply chains, procurement professionals and supply chain operators benefit from an automated, agile trade ecosystem, helping them to navigate turbulent waters and congested trade lines with relative ease. 

Interoperability

Key to success in doing so, however, is building interoperability into the supply chain ecosystem, making sure that different computerised and automated systems can connect and exchange information with each other at all stages of a product’s journey. Critically, this also means hosting  a network that enables differing IT systems to work together, while integrating digital identification systems, reducing data silos and helping to track goods from warehouse to delivery.

This data is then shared between each trading partner in the supply chain, providing supply chain manager with a real-time oversight of a product’s journey. As a result, supply chain operators can quickly adapt to changes in demand, or if a chain disruption takes place, the problem can be identified quickly, and rerouted to minimize ongoing disruption, reduce business risk, and ensure operational continuity.

Enhancing industry collaboration and staying digitally protected

Organisations need to share data, insights and risk assessments to collectively strengthen supply networks. But many businesses face limited budgets for digital transformation, making investments in cybersecurity and interoperability more challenging.

Without proper data-sharing infrastructures, supply chains risk inefficiencies and increased exposure to fraud and cyber threats, particularly if businesses rush through the process, or try and enforce unfamiliar digital systems on their partners.

Emerging technologies such as blockchain can help mitigate these risks, providing end-to-end visibility and authentication in a time when supply chain fraud is an increasing concern, offering robust security protocols, access controls and audit trails that only permissioned network members can access.

Integrating blockchain security with interoperability strengthens the overall resilience of the supply chain ecosystem, facilitating collaboration and trust between trading partners, reducing bottlenecks and providing data that stakeholders or security partners need to respond to issues in real time. This is achieved through standardising data security practices, minimising vulnerabilities caused by isolated or incompatible systems and enhancing security measures for trade as it moves along its journey.

Adding a layer of strategic thinking

Predicting the future of the supply chain is an impossible task, but we know that trade disruptions, socio-political and economic issues will continue long into the future. What they highlight, however, is an opportunity for supply chains to evolve in line with their rapidly changing environment and build competitive advantage in the same process.

By digitising the supply chain, procurement and supply chain professionals benefit by better informed decisions, and a means to protect against trade disruptions, while also streamlining safe, secure and effective operations. Those that establish business resilience now will have a distinct advantage in maintaining flexibility, compliance, and efficiency in a trade environment that changes each and every day – and ensure that they are ready for the next global trade disruption.

But technology can’t do it all. Once the systems are in place, organizations must maintain safe stock levels, establish alternative transportation routes and diversify sourcing locations to mitigate future impacts. So, when the next delays occurrm, there are clear processes and actions in place so that businesses can resolve these issues in a few clicks.

Diversity, equity and inclusion (DEI) is at a critical juncture. DEI work in the US is subject to an assault by far-right forces, providing a groundswell for the Trump administration’s implementation of a range of measures impacting multiple marginalised communities: migrants, People of Colour, Trans and Non-Binary people, Disabled folks, Women and others. Due to the US’ economic and cultural influence, the assault on DEI in private companies is having global ripples.

However, for those of us outside of the US, we must delink what is happening specifically in that context with what we can do across the rest of the world. Especially here in the UK where our legal and cultural context is distinct.

This false positioning of DEI as somehow unfair to White people, non-Disabled people and Men among other groups is clearly unfounded when we look at the data across company contexts and society more widely. As such, equity and inclusion work remain crucial for companies that value fairness and want all staff to thrive. Instead of retreating in the face of critique, this moment demands that we strengthen our methods: shifting away from symbolic gestures toward structural redesign.

For Chief Procurement Officers and procurement professionals, this means being more discerning about who and what is brought into the organisation to support DEI. When you procure DEI services, you are not just commissioning a programme. You are setting the standard for how your company approaches equity. The stakes are high.

Here is how to do it with rigour.

1. Structural Interventions Over Individualised Responses

A common trap is to invest in individualised responses, like unconscious bias style training, and expect systemic outcomes. Research has shown this type of training is limited in effect based on the fact it misdiagnoses the nature of inequities. Effective DEI interventions to deliver resource efficiency – a priority of procurement leaders – should target the design of your policies, processes and practices as these have scaled impact across the organisation.

If your data shows disabled staff are less likely to be promoted, for example, your colleagues’ first instinct might be to deliver disability inclusion training to line managers. However, a more scaled and cost-effective initial step would be to procure an audit of your promotion policies and role evaluation processes. What rubrics are being used? How is work allocated? How are promotion decisions made? Who makes them? Removing these and other barriers within your promotion processes that hinder equitable progression will permit more equitable outcomes irrespective of the trainability of the person in the process.  

An impactful DEI supplier will help you diagnose root causes rather than simply deliver a solution based on potentially faulty assumptions. It is to redesign the structures that drive inequity at scale. So, seek people who will challenge you to do this.

 2. Intersectional and Issue-Led Approaches

DEI work must reflect the reality of how systems of inequities operate in people’s lives and through organisational structures. That means investing in work that is grounded in intersectionality.

Look for suppliers who help you understand how issues show up for multiple marginalised groups in your data, processes and culture. 

This is what we call an “issue-led approach” in our recent White Paper, DEI Disrupted. This involves shifting the starting point of DEI work from individual identity groups to systemic issues. The power of this approach lies in enabling us to effectively address points of inequity that affect multiple marginalised communities, whilst also attending to the specific barriers a particular group may face. It also helps build coalitions across marginalised communities, as it doesn’t ask any group to wait their turn.

This method is also aligned with the priorities of a procurement leader: ensuring you do as much as possible for as many, efficiently. The benefit with this pivot to mainstream approaches is that it also ensures that inclusion is not superficial or siloed but centred on redistributing access, opportunity and influence at scale.

3. Rigorous Evaluation of Assumptions and Outcomes

DEI is not a hunch. It is a technical change and must be measurable, just like any other core business function. This requires clarity on what success looks like and which outcomes you are seeking. A credible supplier will interrogate your assumptions. They will not accept your hypotheses as a given. They will ask: what data supports this diagnosis? What change are you trying to achieve?

Measurement should focus on outcomes, not just inputs. It is not enough to count how many attended a training, if training is a responsive and valuable solution. What is meant to change as a result? Are more marginalised people to be promoted? Is attrition decreasing for underrepresented groups? These are the markers of impact.

Effective DEI suppliers will guide you to test and iterate your approaches based on data, theory and sound frameworks that do not trend or intuition.

4. Resilience Over Reaction

In DEI Disrupted, we outline how many organisations have relied on reactive and disconnected strategies. These scattergun efforts often appear responsive in the short term but rarely hold up over time.

At a time when DEI is increasingly scrutinised, companies need more than good intentions. They need principled and resilient strategies. Procurement is one of the most powerful accountability measures for ensuring that your DEI work is embedded, rigorous and protected from reputational risk.

The suppliers you engage with signal your values. Are you selecting partners who reinforce shallow narratives or those who support your organisation to build systems-level change? Are you investing in work that is cosmetic or in work that withstands challenge because it is grounded in equity and evidence?

Final Reflections

Procurement is not neutral. It reflects your organisation’s priorities, strategies and theories of change. It is a way of articulating what matters and what does not.

In the current climate, there may be pressure to retreat from DEI. But equity work is not a trend. It is a necessary commitment to fairness and dignity in the workplace. It is not a project that exists outside core business functions. Far from it; it’s central to how you design policies, shape culture and meet your responsibilities as an employer.

When you engage suppliers for DEI work, you are not only making a purchasing decision. You are choosing what kind of organisation you want to be.

Choose the partners who help you ask better questions, uncover deeper truths and build something more enduring than a one-off tick box.

Because equity, when taken seriously, is not fragile. It is foundational.

You can download the Fearless Futures whitepaper here: DEI Disrupted: The Blueprint for DEI Worth Doing.

This month, the details of Trump’s self proclaimed ‘Liberation Day’ finally came to light, with the US President announcing a comprehensive tariff policy, including a baseline 10% tariff on all imports into the US, with 20% imposed on EU imports and significantly higher rates reserved for certain countries accused of unfair trade practices.

While the situation is changing daily, and companies on both sides of the Atlantic are scrambling to assess the impact, it’s a stark reminder of how political decisions can completely upend global trade in an instant.

So far, the fallout has been both swift and widespread; much of the world’s markets have slumped, economists have warned a trade war is looming, and both European and American manufacturers that rely on transatlantic steel and aluminum imports are facing huge uncertainty. 

Impact on the CPO

These tariffs however are not just a manufacturing issue, but an issue that’s already rippling through industries, raising costs and shifting trade patterns. For the world’s Chief Procurement Officers (CPOs) and supply chain leaders, we’re already starting to see a number of challenges emerge, including:

• Budgets issues: triggered by increased costs for imported materials.

• Increased operational complexity: It can be expected that leaders will have to re-evaluate supply chains and make substitutions, reconsider logistics, in addition to adjustments to commercial terms. This will be fraught with difficulties, and required activities should not be underestimated in terms of the time, skill, and resource demand – particularly in the industrial sectors.

• Planning difficulties: It’s hard to plan in a state of flux, certainly one like this. Planning is a critical part of the supply chain, and will certainly be under strain. Clear forecasting and planning are essential to managing the supply chain, and this is going to be very difficult.

• Increased internal pressures: Unfortunately, there is likely to be a keen eye on procurement teams from finance teams and operations teams, and possibly increased scrutiny due to unease around any misaligned sourcing strategies. It’s a very challenging time to navigate.

Countermeasures see trade war heat up

Another key factor at play here is the world’s response to Trump’s decisions. Again, while this is a very fluid situation, we’ve already seen the EU, China and Canada warn the US of countermeasures.

We’re also seeing efforts to bolster local manufacturing through initiatives like the ‘Made in Europe’ campaign, reflecting a growing shift towards protectionism. Efforts to reduce reliance on external markets and counter tariffs may be a valid response, but any tit-for-tat measures can be very unhelpful and just increase trade tensions. It can also lead to retaliatory cycles that have the potential to spiral out of control, causing problems such as:

• Fragmented compliance: Diverging rules across borders that are shifting in a very dynamic way, as countries decide how to respond to the shifts in their own way, will likely further complicate global procurement strategies.

• Reduced optionality: Shrinking supplier pools will be highly probable as trade walls go up. Tariffs can raise prices, soften demand, or spark consumer backlash in B2C sectors. Supply and demand may well materially change in certain sectors.

• Loss of pace: Red tape and uncertainty means cross-border transactions will simply take longer. That’s a lot of pressure on procurement teams who may really struggle to meet business timescales – delaying fulfilment and possibly hurting the customer experience.

The importance of strengthening trade relationships 

While many believe that tariff changes and their resulting challenges are largely beyond the control of CPOs and supply chain leaders, there is a great deal that can be eased by investing in stronger trade relationships; offering continuity through the chaos.

This is because, in times of crisis, transactional suppliers tend to protect themselves first. The problem with relationships that are purely transactional is there’s little incentive for suppliers to go the extra mile, and contractual rigidity leaves no room for improvisation. This can lead to delivery failures, financial penalties, and stranded assets. Worse still, failing to deliver amid disruption doesn’t just impact operations; it erodes brand credibility, particularly in tightly regulated or just-in-time industries.

Trust-based relationships, on the other hand, enable flexibility. Strong, strategic partners are not only more likely to renegotiate terms instead of pushing material disputes and perhaps even litigating, but they can also open the door to early intel. Knowledge sharing is a really important part of planning, becoming even more so through tougher times. So fostering an open and transparent relationship that shares early signals of disruption will be key. There’s also the pro of shared problem-solving; whether it’s co-creating alternative sourcing, joint ventures, or localised production to bypass tariffs, this period will be all about working together closely, and collaboratively. 

The bottom line is that well-managed partnerships mean reduced conflict, fewer disputes, faster resolution, and reputational insulation; again, a key point, considering there will likely be many frequent and unexpected issues on the horizon. The alternative – a breakdown in relationships – can lead to disputes and in some instances expensive, drawn out, brand-damaging court battles. While businesses are much more adverse to court processes these days, we still see prolonged disputes that are just as expensive and culminate in large out-of-court settlements.

Four conflict resolution strategies for CPOs and supply chain leaders

With the above in mind, any strategies that work to strengthen trade relationships will become increasingly important. 

To help manage risk, enhance supply chain resilience, protect corporate reputation, and ensure financial stability through these challenging times, consider the following:

1. Invest in conflict resolution technology: Given that teams are already stretched for resources and businesses are increasingly focused on cost reduction strategies, hiring additional staff to handle conflict is not a viable option for many. Instead, look to invest in effective conflict resolution technology that can handle the heavy lifting. There are advanced tools available that can automate and streamline dispute management, alleviating pressure on the teams, reducing operational costs, and ensuring smoother collaboration between buyers and suppliers. 

2. Introduce pre-contractual clarity: Any ambiguity whatsoever in contracts can lead to disputes and inefficiencies. So, instead of relying on the standard model traditional clauses, ensure contracts include comprehensive dispute resolution clauses and escalation pathways. Clearly defining this upfront helps prevent conflicts from escalating and provides all parties with a structured framework for addressing challenges before they become costly disruptions.

3. Consider third-party solutions for neutral facilitation: When conflicts do happen, emotional stand-offs can stall negotiations and worsen tensions. Neutral, third-party facilitation can help here by cutting through the issues efficiently and objectively. 

4. Adopt scenario-based renegotiation: When under unpredictable conditions like shifting tariffs or supply chain disruptions, rigid, static contracts can fail. As such, data-driven ‘what-if’ modelling is recommended, to reprice contracts collaboratively under different tariff scenarios.

Weathering the immediate storm and beyond

While Trump’s ‘Liberation Day’ tariffs may highlight the importance of strong trade relationships, for CPOs, the challenge isn’t just about navigating immediate disruptions – it’s about building long-term resilience.

As such, it’s important to remember that conflict resolution strategies aren’t just a reactive measure. You should adopt them as a proactive tool for ensuring supply chain continuity, financial stability, and for safeguarding brand reputation. 

Faster paths to resolution means fewer stalled projects, while cost containment strategies help avoid expensive legal battles and material financial settlements, supporting successful commercial outcomes. Embedding these capabilities also supports deeper collaboration, and the building of a shared language of accountability across suppliers, finance, legal, and operations.

With uncertainty set to persist, organisations that prioritise robust trade relationships and proactive conflict resolution won’t just weather today’s storm – they’ll also secure a long-term future in what’s currently looking like an increasingly volatile global market.

In the world of procurement, much attention is given to strategic spend – the high-value purchases that directly impact business operations. Yet, what about the low-value, high-frequency transactions that make up tail spend?

For many organisations, this area of expenditure often receives less focus that strategic spend. Essentially, tail spend comprises small or individual purchases, which tend to be a lower priority for procurement teams. There’s less perceived value versus the effort required to manage them. However, advancements in AI-driven procurement technology combined with the right expertise now provides businesses with an opportunity to better manage and optimise tail spend. With the right technology, procurement can turn tail spend into a powerful strategic asset.

The Nature of Tail Spend

Strategic spend, which typically accounts for around 80% of an enterprises total outlay, naturally commands greater attention. However, tail spend – the remaining 20% – can translate into hundreds of millions, even billions of dollars annually for large enterprises. This often fragmented, decentralised, and unstructured spending can lead to inefficiencies, maverick purchasing, and unoptimised costs.

Customers tell us lack of tail spend visibility is a key challenge they face as a business. Thousands of low-value transactions across multiple suppliers often fall outside standard procurement processes, making it difficult to track and control. Without a structured approach, companies risk losing savings opportunities, duplicating purchases, and increasing compliance risks.

Many businesses are coming to realise that by not actively managing tail spend may result in non-compliance with internal policies and external regulations. Companies may inadvertently work with non-compliant vendors or fail to meet Environmental, Social, and Governance (ESG) objectives. More effective oversight of tail spend helps mitigate these risks – and any financial and reputational consequences.

Unlocking Cost Savings and Efficiency

A more structured approach to tail spend can deliver substantial cost savings and operational efficiencies. By leveraging AI-powered analytics, businesses can achieve savings of 5% to 15% by monitoring spending across departments, consolidating purchases, and fostering competition among suppliers. For a Fortune 500 or Global 2000 company, that can be a significant saving. That a company with a total external spend of $10 billion, for instance. The potential savings from optimising tail spend could exceed $300 million.

AI can deliver enhanced visibility and data-driven insights. These benefitscan allow businesses to improve management of supplier relationships, reduce redundant purchases, and streamline procurement processes. AI-driven platforms, when paired with procurement expertise, can empower organisations to transform supplier matching, compliance tracking, and transaction processing for tail spend – reducing the manual and administrative workload.

Enhancing Compliance and ESG Alignment

Beyond cost savings, optimising tail spend also strengthens compliance and aligns purchasing with broader ESG objectives. Due to the sheer volume of low-value transactions, tail spend often cannot receive the rigorous compliance checks applied to strategic purchases. For many companies, finding ways to more closely manage tail spend helps to reduce exposure to regulatory risks, contract violations, and supplier-related reputational damage.

Enhancing visibility ensures that even low-value transactions align with internal procurement policies, regulatory requirements, and corporate responsibility initiatives. companies find that improving the strategic oversight of tail spend also helps them track compliance for audits, tenders, and internal reporting.

Tail spend optimisation can also support ESG goals by enabling companies to assess the environmental and social impact of their purchases, ensuring alignment with corporate responsibility and sustainability strategies. As stakeholders increasingly demand transparency in supply chain practices, strategic tail spend management helps businesses meet evolving expectations.

Unlocking Innovation and Agility

Unlike strategic spend, which often involves large, established vendors, more effective tail spend management can open access to innovative and agile suppliers by helping businesses to establish relationships with them. Many smaller, niche vendors offer unique solutions that can enhance business operations, drive innovation, and create competitive advantages. 

Many companies tell us they see value in the fact that AI-powered platforms. When used by experienced procurement professionals, these platforms enable them to streamline supplier onboarding, contracting, and management – making it easier for them to vet and engage with innovative vendors. By tapping into these suppliers’ expertise, companies find they introduce new technologies, services, and solutions that enhance their competitive positioning.

The Role of AI and Outsourcing

AI-driven procurement tools, guided by experienced procurement teams, continue to transform the way companies manage tail spend. Advanced AI-powered platforms consolidate supplier data, identify spending patterns, and automate procurement processes. This provides businesses with a centralised and data-driven approach to tail spend management.

Of course, not all organisations can afford to optimise tail spend with their internal resources. To tackle the issue without diverting internal resources, outsourcing this function to a specialist provider can be an effective strategy. Partnering with the right outside provider ensures companies leverage proven procurement expertise, a broader supplier network, and AI-driven analytics to achieve better outcomes. This approach allows businesses to maintain their focus on strategic procurement priorities while ensuring tail spend is handled more efficiently.

A Strategic Opportunity

Rather than being an administrative burden, tail spend presents a strategic opportunity when managed effectively. Businesses that apply the right tools, expertise, and technology, find that they unlock significant value from this area of procurement.

By taking a more structured approach to tail spend companies can turn it into a strategic asset, driving cost savings, compliance, ESG alignment, and innovation. AI-powered solutions and expert guidance can help businesses take firmer control of tail spend, building a source of competitive advantage.

In March, CPOstrategy attended Ivalua Now 2025, a gathering of over 800 procurement leaders in Paris. As is the case with virtually all procurement events right now, two topics dominated the discourse: disruption and artificial intelligence (AI). Whether caused by tariffs, market fluctuation, shifting regulations, the skills shortage, or climate-crisis-driven destabilisation in vulnerable regions of the world, disruption is the risk at the top of every CPO’s agenda — according to a recent Gartner report. Ivalua CMO Alec Saric, who opened the event, began by acknowledging the myriad challenges facing the procurement sector in 2025, reflecting that “on top of everything else that’s been going on, it seems like we now have to contend with weekly changes to trade policies.” The increasingly uncertain sourcing and procurement landscape, Saric continued, is forcing the industry “to assess the impact on our organisations, reassess our supply strategies, and it’s all happening so fast.” 

Ivalua’s newly appointed CEO, Franck Lheureux, echoed the sentiment. “Procurement has never been [this] critical to your organisations,” he said. “I think about the word, and I’m not shy about using it, is chaos.”

Whether to sidestep said disruption or to unlock new opportunities for procurement to create value, generative AI feels like the hopeful counterpoint to discussions of disruption — a way for organisations to mitigate their most pressing pain points and seek new opportunities to elevate the procurement function beyond its traditionally reactive, functional role. Ivalua itself is throwing itself into a fully-committed exploration of GenAI; its founder and previous CEO, David Khuat-Duy, recently handed off the CEO role to long-time Ivalua exec Lheureux, assuming the newly created role of Chief AI Officer in order to focus on unlocking the technology’s potential. 

The AI hype gap in procurement 

However, bridging the gap between the things generative AI’s creators claim the technology can (or, very soon, will be able to) do and what it’s actually capable of, is a matter that the whole sector seems to be grappling with. And not always with a great deal of success, despite considerable financial and human capital investment. 

Saric acknowledged that “I know many of you have already started using AI to some extent and we can be honest: so far, the impact has hardly been transformational.” 

However, he added that, despite use cases being slower to appear than expected, he doesn’t believe that AI is “just another hype technology” like blockchain or the metaverse. Nevertheless, he stressed that “the changes that are taking place, both in terms of their speed and magnitude, are really unbelievable.” 

At Ivalua Now 2025, CPOstrategy spoke to procurement sector leaders from some of the biggest organisations working in the discipline, from consultants to software vendors, to explore the degree to which they’re adopting GenAI. And, more importantly, whether it’s living up to the hype. 

George Nico, Director, Optis Consulting

To what degree is Optis investing in GenAI, and how is it measuring up to your expectations for the technology?

“Just like most organisations right now, we’re still trying to get a lay of the land in terms of what’s working and what isn’t. I can’t necessarily say exactly how much we’re investing, but we’re starting to break off a part of our business to focus on GenAI, specifically. 

“As for how valuable GenAI is proving to us or to our clients? I think I’m going to give you the same answer as a lot of other people: It’s not there yet. 

“Sure, it’s very exciting. Some of the most interesting work that we’re doing now is helping us prepare for when GenAI actually is valuable — we’re starting to think about the use cases work with our partners like Ivalua, who are doing good work building their architecture for AI. But, right now, it’s really just experimenting to figure out what works and what doesn’t.”

Are there any areas where you’re seeing GenAI work particularly well?

“Simple things like note-taking, having it record our calls and being able to answer questions based on those conversations.”

So, mostly efficiency stuff at the moment?

“At the moment, yeah.”

The main goal for this technology eventually is for GenAI’s outputs to become trustworthy and valuable, right? What kind of timeline are you seeing for potentially getting to that point? Or do you think there’s a disconnect between the narratives around that timeline and what’s actually happening?

“Yeah, I think people and companies are quite enthusiastic about the timeline between now and then — as they should be. I think the technology is moving quite quickly and, by the time AI is coding itself, it’s going to get even faster. 

“Especially in terms of what Ivalua has been doing, we already have some clients that have deployed some valuable use cases for themselves, but as it continues to grow over the next year or so, and especially as Ivalua releases their V 10, I think that’s where it’ll really hit the ground running.”

Fraser Woodhouse, Digital Procurement Lead, Deloitte

How is the value GenAI is creating in procurement right now measuring up against the expectations for that technology? Are we at a stage where things are maybe a little overhyped?

“I think that’s probably incorrect. The hype is real and for good reason. I’d say a lot of procurement’s ability to access the latest GenAI innovations is lacking for a variety of reasons. Sometimes, they don’t have the tech that implements the newest features, or there are too many controls and risks around data security. There are many reasons why people can’t access those latest GenAI features, but when it does come, it is going to completely revolutionise what we do as a discipline.

“Right now, what you’re seeing in most tools on the market are single-point solutions for specific use cases. There are many tools that do one thing very well. 

“I think where we’re heading for the moon is the progress we’re seeing towards unscripted, multi-step, AI agent-driven, contextually intelligent toolsets that operate autonomously. That’s coming not just to procurement, but everywhere, and it’s going to change how we think about the entire department.”

How long is that runway in your opinion, between now and the moon?

“Between now and the moon? I think there will always be a “moon,” no matter what it is. As soon as one thing comes out, the next thing becomes the “moon.” If you’d asked me a couple of years ago, I would have thought we’d be further along by now. 

“You saw those first-generation use cases flooding the market a couple of years ago, and it’s taken longer than expected to really connect them. Many organisations still aren’t seeing the value. A recent survey showed that almost 90% of CPOs have piloted something related to GenAI, but only roughly 40% are starting to see the value.”

How would you say we close that gap? 

“There are a few ways to access GenAI right now. One option is agentic AI, where you can build something yourself. Honestly, I think this is where we’re seeing the biggest return on investment—when organisations have the funds and skill set internally to build something, or when they engage the right partner to co-develop a solution tailored to their specific use cases. That’s one way.

“Another option is buying a specialist tool, a point solution. The challenge there is integrating it within your processes. It may do one thing very well, but it can be clunky if you have to jump between tools or deal with the technical debt from all those activities. Alternatively, you can “sweat” your existing tech stack. But honestly, a lot of the existing suite providers have been slower to innovate compared to some of the newer solutions on the market.”

“So one answer to your question is to wait for that existing tech stack to catch up. However, that’s not appealing to many. If you want the latest and greatest, you’ll need to make some interesting choices. Speak to someone who can help guide you through those decisions, or you’ll be asking the same question next year when the latest GenTech solutions come out.”

So, in part, you’re suggesting that people resist the FOMO?

“No, I don’t think you should resist it. There are many ways to access time-saving features now. For example, Deloitte is shortly releasing a GenAI marketplace, which gives you low-barrier access to generative AI use cases. Some of the tools you hear about have marketplaces where you can pick high-impact use cases without the burden of cumbersome integrations. That’s often what prevents organizations from pursuing these technology journeys. So, there are ways to access the latest now, while also preparing your foundation for when the “moon” comes.”

Oh, that’s really interesting. Can you tell me a little more about the marketplace, maybe providing an example of a more plug-and-play AI solution?

“As I mentioned earlier, there are different ways people can access GenAI. One way is through an enterprise AI tool, like a copilot or something similar to ChatGPT. A lot of what procurement organisations are doing now is copying and pasting data into these tools. It works, but it’s not perfect—it still saves time, but to really get value, people need to learn how to write effective prompts, which can be challenging for many.

“It would be great if you didn’t have to think about prompts in the same way, and if you had a tool with a language model specifically trained for procurement use cases. This would allow you to easily input what you need, get the results, and move on. It would be like a pay-per-use solution—simple, efficient, and targeted for procurement.”

Alec Saric, CMO, Ivalua 

Earlier you spoke about GenAI’s potential to take existing data and platforms to offer new recommendations and pull new insights from different bits of data. How close are we to getting users and customers to a point where they trust those recommendations?

“Right now, there’s still absolutely a human in the loop. We’re not at the point where things are completely autonomous without any human involvement. That’s mainly because of trust, and in some cases, the capabilities aren’t fully there for certain processes. But for the most part, it’s a trust issue. Right now, AI is typically used to provide a draft or a recommendation, which can save a lot of time. However, organisations are still not fully trusting those outputs to be used without human review.”

It feels similar to how driverless cars evolved over the last five years. You can get it 90% of the way there, but a human is still needed in the process. Is the ultimate goal to reach a fully autonomous situation, where you can trust AI recommendations and let it “take the wheel,” so to speak? That’s the final goal, right?

“Yeah, that’s an interesting question. From a technology perspective, the aim is to make the AI so reliable that it could be fully trusted. However, we’re not recommending that strategic activities be completely handed off to a robot. 

“For really strategic decisions, it will always make sense for humans to be involved. But for more tactical items, like sourcing a one-off purchase from a tail spend category, it can be a time-consuming task for procurement. It doesn’t have a major impact or reputational risk. The worst-case scenario is that an employee doesn’t get the item exactly when they expect it, because the supplier is unreliable.

“For these more transactional and tactical activities, the goal is to remove the human from the process as much as possible, so people can focus on strategy, relationships, and making final decisions for more significant matters. From our perspective, that’s the direction we want to go in: freeing up people to do what they do best—focus on relationships and strategy—while technology handles the rest.”

What was the expectation and hope that AI would be delivering by now, and how far away do you think we are from that stage, based on the current rate of progression?

“I think the gap we’re seeing is the level of use within organisations. There may have been an expectation that, by now, we’d have 40 use cases doing things across the organisation. But it was never expected to be fully autonomous at this point—that has become more of a recent development with generative AI. What was expected, though, was that more people within the business would be using it. 

“The reality is that consumers adopt technology much faster than businesses. Businesses are more risk-averse; they have policies, regulations, and the cost of a mistake can be far greater for them than for an individual making a poor decision, like ordering the wrong item.

“What we’re also seeing is that there’s an assumption that you can just take AI “out of the box” and apply it directly to your organisation. That works in some cases, like summarizing a contract—it’s a fairly universal task. But in many cases, it requires some refinement. For example, one organization was pulling a category intelligence report with recommendations for sourcing strategies, and it was about aluminum. The organisation is a steel producer, so they have very specific market indices they use for tracking aluminum prices. The model gave a good recommendation, but it referred to a different third-party source than the one they use.

“These kinds of adjustments are necessary, and what we’ve found is that AI tends to work better when it’s rolled out for specific use cases on a pilot basis. You can evaluate and refine the tool based on those use cases and then roll it out more broadly.

“Of course, you can have general AI tools to find information on the web that can be made available to users, but I think that refinement step is important in many cases. This will be even more crucial as we approach a more autonomous state. 

“If we’re going to automate complex, multi-step processes—especially ones where humans aren’t involved—organisations will need to be sure they understand exactly what processes are being followed and how decisions are being made.”

Marc Ofiara, Procurement Innovation Category Management, and Ryan Whitmore, Procurement GenAI, Process Orchestration, and S2P eConnectivity, make up two thirds of Bayer’s recently-founded procurement innovation department. Ofiara has been with the pharmaceutical and biotechnology company for nine years, focusing on driving digital strategies across sourcing roles, while Whitmore has been part of the company for a decade. The two conducted their own talk at ORO Imagine, an official side event preceding DPW Amsterdam 2024. The discussion – ‘Make procurement work for our people’ – delved into how procurement can be leveraged for business users, suppliers, and internal teams, and how ORO Labs’ orchestration solution has allowed Bayer to level up.

Bayer’s main driver for implementing orchestration has been improving the user experience. A common reason, certainly, but one that’s evergreen in terms of its necessity. “In the end, we want to make sure procurement works for our users,” Ofiara explains. “Procurement as a function has been very much focused inwardly on increasing internal tools, how we can improve the work of our procurement teams, and so on. Really, we wanted to bring the value of procurement to the business users, and process orchestration really came in as a great segue to tackle this end-to-end. We’re not focusing on a single element in the process, but tackling it from start to finish.”

“The users brought the problem to us,” Whitmore adds. “They gave us the feedback that there were too many procurement systems to access to figure out what to do. So really, the reason we brought ORO Labs into our company was due to that user need for a better solution. They wanted something that identified what they needed to buy and give them better transparency about procurement processes.”

Problem-solving with orchestration

Bayer is tackling a lot of major issues through leveraging orchestration. It is now solving problems it’s never been able to solve before. “One is the whole issue of supply onboarding, which is a huge pain point and a very complex process,” says Ofiara. “Another is identifying the right category for what the business user wants to buy. These are all little building blocks that need to be solved as a whole before you can make the entire end-to-end process work. By deconstructing the big problems we’re facing – and have been for decades in the procurement space – we’re now able to move at a much faster pace, tackling them one by one.”

In many cases, orchestration also helps with issues a business didn’t even know it had. As Whitmore mentioned, it was the users who brought Bayer’s problems to light. But the interesting thing is that Bayer thought it was already serving the users well. “We were living kind of a lie, because we thought what we had put in front of the business users was sufficient,” Ofiara says. “With good intentions, you can just find your way around the system. But we found that we were asking a lot of our stakeholders. 

“By starting with process orchestration as the centrepiece and finding a solution where we can build into multiple use cases is really helping with our strategy. We now have building blocks on how we can plug in GenAI not only as a buzzword, but as something that makes a process work. At the same time, having the spectrum of conversational interface to orchestrate entire workflows gives us the whole toolbox that we need in order to tackle things capability by capability. Also, we have to make sure that we build internal capabilities with our people. Process orchestration, for us, is a great starting point towards digital transformation.”

Preparing for orchestration

Of course, as with any implementation, it’s important to know what you’re letting yourself in for with orchestration. Knowing whether it will solve your issues starts with understanding what your issues are. This requires reflection on your business and careful consideration, as well as management of expectations. 

“The best advice I can give is to really map out the user journey of the inputs and outputs of what you expect,” says Whitmore. “At the start of this project, we thought we were starting at a very high level with a simple process. But what we’ve realised is our process is much more complicated than we realised. We even have to think about when we notify a user, how we do that, what the best channel is, and what information we should include. So my best advice is: think end-to-end before you start really designing the workflow.”

Ofiara adds: “Think of it in increments. You’ll discover many more issues and problems along the way, so be prepared. Nothing should be found to tight deadlines; give yourself the freedom to grow, to learn the capabilities to build that stack. This is a long-term transformation – not a short-term investment to fix something that’s urgent.”

In the future, orchestration will play more closely with AI. This will lead to even better problem-solving for Bayer, and for many other businesses, as the pace of technology continues to sprint on. “AI with process orchestration will allow us to really grab information out of documents in a way we’ve never been able to, and then summarise it” says Whitmore. Ofiara adds: “The biggest one for me is the combination of conversational interface to a workflow, and having almost endless possibilities on how to combine this. Like Ryan said, by solving problems that couldn’t be solved before GenAI, you can really bake this into a process. So it’s a great combination.”

Around the world, geopolitical tensions are rising, trade policies are evolving rapidly, and societal attitudes are shifting. Many companies are now finding the once-predictable pathways of globalisation increasingly replaced by a more fragmented, ‘glocal’ approach. 

This trend, often referred to as reverse globalisation, is not just a temporary setback. Rather, it’s a fundamental rethinking of how organisations conduct business in a world increasingly shaped by protectionism and political uncertainty. And for businesses in 2025, the implications of this shift are profound and varied. For many, it means recalibrating risk management strategies, diversifying service offerings, and improving local capabilities to stay competitive.  

The decline of the global supply chain 

For decades, globalisation has allowed businesses to access affordable labour, scale operations quickly, and tap into new markets. However, this has changed as trade wars, tariffs, and rising nationalism take centre stage. Today, many companies are beginning to reconsider their long-standing reliance on global supply chains. 

At the heart of this shift is the increasing complexity of managing cross-border operations. The uncertainty surrounding Brexit, the trade tensions between the United States and China, and the impact of the COVID-19 pandemic on international logistics have all exposed vulnerabilities within global supply chains. These disruptions have highlighted a dire need for companies to build more resilient, adaptable systems. 

This ‘glocalisation’ strategy is reflective of a broader trend in which businesses are looking closer to home for solutions. Companies are rethinking the long-standing model of offshoring and nearshoring, instead focusing on regional supply chains that are more flexible, more sustainable, and better equipped to weather political and economic storms.  

The logistics sector is a prime example. Crown Worldwide Group, best known for its international relocation services, diversified many years ago to offer solutions to localised client challenges. With a focus on localised logistics, information management, and workplace solutions, Crown has expanded its services. The organisation now provides digital and sustainable solutions that align with the needs of today’s businesses. 

Adapting to geopolitical uncertainty 

The rise of populist movements, the emergence of protectionist policies, and the increasing use of trade tariffs have all contributed to a climate in which globalisation is no longer viewed as universally beneficial. Instead, businesses are having to adapt to a more fragmented world order. Many businesses are scaling back their global ambitions and reconsidering their approach to international markets, placing greater emphasis on regional supply chains, strengthening local partnerships, and prioritising operational resilience over expansion. 

For organisations looking to remain competitive, this shift requires an agile approach. It necessitates a fundamental rethinking of how business is done; one that takes into account not only economic considerations but also political, social, and environmental factors. In this climate, businesses are increasingly turning to procurement strategies that prioritise resilience over scale and localisation over globalisation with the ever present need to consider environmental impact. 

Workforce transformation in a post-pandemic world 

Another crucial component of reverse globalisation is the transformation of the workforce. Since the COVID-19 pandemic, remote and hybrid working have become the norm for many organisations. This shift, accelerated by the COVID-19 pandemic, has fundamentally changed the way companies approach talent acquisition, employee mobility, and office space management. As businesses scale back on international assignments and long-term relocations, they are investing in new workforce solutions that are more localised and flexible.

In response, Crown Worldwide has expanded its workspace services to help businesses optimise their office environments. This includes asset management, covering IT infrastructure, equipment and office furniture, along with recycling and renewal capabilities to support sustainability goals. Beyond logistics, Crown Workspaces also help businesses to create efficient, engaging workplaces that encourage employees to return to office.  

Remote work has reduced organisations’ reliance on physical relocations. However, it has amplified the need for digitalisation – particularly in information management. With hybrid teams and a growing number of digital nomads, organisations must ensure seamless access to critical information anytime, anywhere. Moving to a fully digital system means that organisations can be flexible and responsive to the needs of their workforce, whilst also protecting their future planning. In this sense, workforce transformation is intrinsically linked to supply chain adaptation. Both are driven by the need for businesses to remain resilient and responsive in the face of dynamic change. 

Looking ahead to the future of ‘glocalisation’ 

Looking to the future, while globalisation will not disappear entirely, in the near term it will likely evolve into a more regional model that places greater emphasis on local solutions, supply chain resilience, and workforce flexibility. Companies that make this transition successfully will be those that embrace, rather than ignore, the changing geopolitical landscape, investing in sustainable and digital solutions and empowering local teams to respond quickly to market demands. 

Rather than resisting the changing tides, businesses will need to adopt a more agile and “glocalised” approach to operations. While globalisation is evolving, the world will remain profoundly interconnected – just in new ways. The future of international business will present challenges. But, it will also bring exciting opportunities for those who can adapt. 

The Labour government has published a new national procurement policy statement (NPPS). The statement replaces the previous version from May of last year made by the previous government. 

The new NPPS lays out a series of strategic priorities for public procurement by contracting authorities. Also, the government has published a new and updated round of Procurement Policy Notes (PPNs). These provide detailing guidance on best practice for public sector procurement. 

Gross spending on public sector procurement totalled £407 billion in the 2023/24 financial year. With the recently live Procurement Act 2023 opening new doors for small and medium sized organisations to compete more effectively for government contracts, the stakes and levels of complexity facing organisations looking to engage with public procurement frameworks have never been greater. Likewise, thousands of contracting authorities across the UK are facing a momentous change to the ways in which they operate in compliance with government guidelines. 

We heard from Shamayne Harris, head of procurement at Pagabo — a company that sets up and manages frameworks on behalf of public sector contracting authorities — who provides clarity on some of the essential details and impacts of the new NPPS and PPNs. 

What do you see as the government’s intentions behind the new guidelines? 

“Through the NPPS, the government aims to maximise the impact of the £400 billion spent each year on essential goods and services. The government intends to use public procurement to support the delivery of its missions by kickstarting economic growth, making Britain a clean energy superpower, taking back our streets, breaking down barriers to opportunity, and building a National Health Service fit for the future.

“When delivering procurement, contracting authorities must have regard for the goals within the NPPS, which are the importance of delivering value for money, driving economic growth, delivering social and economic value, and building commercial capability to deliver value for money and stronger outcomes.

“All contracting authorities must have regard to the NPPS as mandated by the Procurement Act. It applies to contracting authorities as defined in section 2 of the Act with the exception of the authorities and procurements set out in section 13(10). These include private utilities, contracts awarded under a framework or dynamic market, procurements under devolved Welsh or transferred Northern Irish procurement arrangements, and devolved Welsh authorities or transferred Northern Irish authorities. 

“In addition to the publication of a new NPPS, we have seen the release of new and updated Procurement Policy Notes (PPNs). The two new PPNs 001 and 002 address SME and VCSE inclusivity and establish procurement spend targets, and take account of social value in the award of contracts.”

What about PPN 001? What are its goals and how will it affect contracting authorities? 

“Essentially, PPN 001 acts as a facilitator for one of the core objectives of the Procurement Act and NPPS – to open up public procurement to new entrants. Historically, there has been a target for SMEs to benefit from 33% of central government spend either directly or indirectly through the supply chain – but this is a target rather than a legal requirement, and data from Tussell suggests that direct spend with SMEs is currently around 20%.

“The difference now is that while there isn’t a mandated target, there is reference to setting a three-year target for direct SME spend from 1 April 2025 (or two-year targets for VCSEs from 1 April 2026) and to publishing annual results, which, of course, are there for accountability. This is all in reference to central government, but we expect to see the guidance trickle out to the wider industry, with other organisations voluntarily aiming for the same standards to ensure best practice in alignment with government.

“As with everything in this procurement reform, wording is incredibly important. Along with new and changing terminology, the Act incorporates a lot of permissive language – in this case that contracting authorities should ‘have a duty to consider’ reducing barriers for SMEs. This reflects that the Act is not there for short-term fixes but is a long-term commitment to change that will require transition.”

And what about PPN 002?

“With social value, there is not a mandated minimum award criteria required for all contracting authorities in scope of the Procurement Act. However, PPN 002 mandates central government authorities must apply a minimum 10% weighting of the total score, to social value where it is relevant and proportionate when the procurement commences on or after 1 October 2025. For procurements commenced under the Procurement Act 2023 prior to this date, in-scope organisations can choose to apply this PPN or continue to use PPN 06/20 during this transition period. 

“When followed, PPN 002 should apply to all stages of the commercial lifecycle, but particularly at the planning and preparation stages. As with the SMEs and VCSEs elements, it’s all about setting a clear direction of travel with a long-term aim to enact change, rather than setting unachievable parameters by expecting overnight change.”

Do you see these new steps as positive for the public procurement sector? 

“Our immediate reaction to the new NPPS and PPNs is that we are pleased to see positive steps being taken in supporting the SME and VCSE inclusive agenda, which is something that we at Pagabo have always championed in collaboration with contracting authority hosts in framework procurement strategies. 

“The NPPS sets out the expectation for the public sector to maximise SME and VCSE procurement spend and demonstrate how this can be delivered via preliminary market engagement, collaboration and transparency through visibility of procurement pipelines, which will be supported by the introduction of new mandated notices for applicable authorities under the Procurement Act 2023. 

“Contracting authorities should familiarise themselves with the new NPPS and PPNs now, to help align their own goals with the government’s strategic goals for procurement. It’s an important period for procurement, so those concerned need to be doing everything they can to understand the changes and implement the processes to ensure compliance and alignment.”

Managing risk is a continuous journey.

Procurement risks happen when the process of purchasing products, resources, or services becomes unreliable. Given the importance that any disruption to the supply chain can have on a business, procurement risk needs to be appropriately managed as it could have a significant impact on an organisation’s overall performance.

In truth, every acquisition comes with risks. But the important component is that these are managed correctly. Procurement risks could be related to cost, delivery, quality, customer expectations and supplier reliability, among others. Risks could be generic, but they can also be specific to a sector, geography or industry. Risk management revolves around closely monitoring and mitigating these risks in order to avoid disruption.

In this article, CPOstrategy uncovers five tactics to managing procurement risk both in the short and long term.

Identify risks

The first task on a CPO’s agenda should be working out where an organisation’s issues are. This should include assessing both internal and external risks throughout the entirety of the supply chain. The reliability of an organisation’s vendors and any risks they are exposed to should be carefully considered as a business is only as robust as the companies it engages with.

As has been clear over the past few years, the next ‘black swan’ event could be just around the corner. As such, it is important to determine weak spots before they become problems and to stay as alert as possible to potential risks. Being able to respond quickly to disruption could be the difference between winning and losing in challenging situations.

Work with the supply chain closely

In an ever-increasing globalised business world with complex supply chains, procurement professionals face their fair share of challenges. CPOs should seek to develop strong risk management processes to ensure that their teams understand their responsibilities to mitigate risk and ensure operations are secure now and in the future.

Ultimately, success in the supply chain relies on a company’s ability to maintain constant communications with the partners it receives items from as well as those it delivers to.

Supplier relationship management

Establishing and maintaining a strong relationship with suppliers is important but it does take work. Managing suppliers effectively can help mitigate disruptions in the supply chain such as bad quality products or late deliveries. As a result, this has led to the importance of supplier management software and online inventory management as tools to help track suppliers to readily check supplier information, detect possible supply risks and measure performance. The information gathered from performance tracking will also help to avoid poor supplier selection in the future, unethical sourcing and deal with potential problems.

Spend analysis

Spend analysis is essential to ensuring a CPO has visibility over where an organisation’s money is going. When analysing spend data, valuable information can be obtained which reveals procurement spend, such as unidentified payments, redundancies, double invoices, rogue spending and certain suppliers who may be open to re-negotiation.

It is also important to diversify a supplier base as relying on a single supplier for vital goods and services is a significant risk. Should this supplier be delayed for any reason, a company’s entire supply chain could go down. Spend analysis helps work out if too much money is being spent on specific suppliers or if there is an overreliance on any particular ones too.

Compliance

Government regulations can often change which means it is essential to be agile and adaptable to the latest rules. Risk management in procurement includes introducing procedures to maintain compliance with ever-evolving regulatory requirements. Failure to do so could result in penalties and even more disruption to the supply chain.

Contract compliance is also a key area and should be reviewed often. This will help work out how well suppliers are keeping to pre-set terms and conditions such as efficient delivery of quality goods.

“The world around us is changing rapidly — the train has already left the station.”

Speaking to us exclusively at DPW Amsterdam 2024, Sebastien Bals, Chief Procurement Officer at Merck KGaA, doesn’t mince his words.

Indeed, procurement functions are already in the midst of equipping AI tools into their operations amid an accelerated interest in digital transformation.

AI, and in particular generative AI (GenAI), is one of the biggest buzzwords today in procurement. And the reason is clear. The ability to offer exponential cost savings and deliver efficiency is music to many CPO’s ears. According to Gartner’s predictions, 50% of supply chain organisations will invest in applications that support artificial intelligence and advanced analytics capabilities by the end of 2025. It is a key reason why supply chain organisations are leveraging AI and advanced analytics in order to navigate an ocean of data to figure out what is happening in their business now and in the years ahead.

Procurement transformation

Bals believes that the acceleration of GenAI acts as a critical enabler for procurement and those who embrace the latest innovations are poised to succeed long-term. “We can’t continue relying on solutions from the past. This is an exciting time to be in procurement, but only for those who are ready to embrace it,” explains Bals. “For those who aren’t willing to adapt, it’s going to be a frustrating time. It’s not about the train leaving, it has already left. You’re either on it or you’re not. If you’re on it, you’re in for an incredible ride. For those who aren’t, they’ll have to figure out how to catch up when it comes back around.”

Having been involved in procurement for the past 15 years, Iris van der Harst, Chief Procurement Officer at Equans, explains the reason she is so passionate about the space is the function’s ability to transform over time. “When I was younger there weren’t many further education courses in procurement that you could do. Everyone just grew into procurement from different backgrounds,” she says. “The reason why I still love being in procurement is that it evolves all the time. It’s always changing and it’s getting increasingly relevant. It is an exciting time and I think it still will be in 10 years.”

Like van der Harst, Michelle Baker, Interim Chief Procurement Officer at Virgin Money, has also had a front-row seat to procurement transformation and believes technology is the heartbeat to business strategy today. “Technology has always been an interesting thing and I’ve grown up with it,” reveals Baker to us at DPW Amsterdam 2024.

“So when I started work, there were no PCs on desks. The only person who had a typewriter was the managing director’s secretary. So technology for me has always been really interesting in terms of how it can augment our lives. If you look at DPW behind me, we’ve got 1,400 attendees excluding exhibitors. That is a massive number of people who are interested in technology now. If we’d had the same conference 10 years ago, we’d barely have filled a room of 100 people. I think there’s a sense now that data analytics, digital, all of these cool words actually have an impact upon your business and it’s an inescapable, unavoidable impact.”

Change management

Jurriaan Lombaers, a procurement senior executive and formerly Chief Procurement Officer at Air-France KLM, explains that one of the most important areas of consideration for CPOs today is around how to navigate change management successfully. “Scaling fast is all about adoption,” reveals Lombaers. “There’s still a long way to go to get these things embedded into the organisation. That’s why you have to start small and take people by the hand. People might be a bit frightened about all the automation on offer because it is taking work away that they have done for many years. What we need to learn is that it’s taking some of the more administrative or repetitive work away. Secondly, as part of 10X, there’s so much more that the business is asking of procurement that needs to be done that can be utilised by the time you gain from further automation.”

But change management comes from within and ultimately the workforce is most impacted. Recognising this all too well is Chris Platts, Director of Procurement Operations at SSE. Without good people, success is impossible which means getting the best out of procurement teams could hold the key. “A big piece of this work is ensuring they’re not bogged down by poor processes, excessive admin, and constant queries,” says Platts. “How can we free them up from these inefficiencies? It’s a major challenge, but I believe there are solutions out there that can help.”

Platts adds that as a result of the geopolitical risks scattered throughout the supply chain, complexity is to be expected. “Most organisations, including ours, have a global supply chain, so we need to navigate many increasing geopolitical challenges, work out what kind of relationship we want with high-risk jurisdictions and ensure our supply chains are as resilient as possible in the event of a global shock.” 

Sustainability drive 

Driven by regulatory and customer changes, sustainability is another key topic on the agenda for many CPOs. At DPW Amsterdam 2024, Kristina Andric, Product Sustainability Director at Tetra Pak, tells us that she recognises three factors that influence a greater sustainability focus across companies. “One issue is that people generally want to contribute, but they often don’t know how or struggle to see the impact of their efforts, when it comes to sustainability,” she explains. “The second issue is the perception of sustainability as a cost driver rather than a value driver. Companies need to recognise that sustainability goes hand in hand with the total cost of ownership. While there may be higher upfront costs, it ultimately leads to long-term benefits and cost savings. Finally, companies often deprioritize sustainability in favor of other initiatives, creating another challenge.”

The sustainability boom is driven partly by the Paris Agreement which is a legally binding international treaty on climate change. Adopted by 196 parties at the UN Climate Change Conference in Paris in December 2015, the mission is to unite countries and stakeholders for people, planet and prosperity. Climate action sits among 17 Sustainable Development Goals with the aim by 2030 to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature to increase 1.5°C above pre-industrial levels.

“This is why that mobilisation is very, very important,” Bertrand Conquéret, Co-Founder of Together for Sustainability (TfS) and The Sustainable Procurement Pledge (SPP), tells us. “At the same time, many companies and countries have also committed to sustainable goals in 2025, 2030, 2040, etc. But the how is the challenge. We have very limited time, so we need to manage the how now. That’s why we have that scalability requirement. This is what we have learned through the TfS initiative that there is the possibility to enable change through that collaboration at scale. The power of collaboration through business sectors is visible through procurement. We have learned that in our companies when it comes to collaboration internally and with strategic relationship management with our suppliers. Together, we are stronger.”

Future facing

Working collaboratively with TfS since 2019 is The Sustainable Procurement Pledge. The SPP is working to make the industry more sustainable by embedding all procurement practices with the UN Sustainable Development Goals and Science-Based Targets by 2030. “I would say the underlying principle is that this is a challenge that we need to do together in an open, inclusive and collaborative manner,” explains Thomas Udesen, Steering Committee Member for TfS and a Co-Founder for SPP.

“That ideology is something we get from TfS because we have been living it now for the past 13 years. And it was also that spirit that triggered us to think that despite our company hats along with all the other CPOs in our day jobs, we have an industry dimension where we work within certain boundaries, but we also have a procurement community that we need to tap into. It’s really those three dimensions that we want to boost all the cylinders because at the core of this sits the same knowledge. It is about the likes of decarbonisation, a responsible inclusive economy, supplier diversity and water usage. Our role at SPP is to empower and equip all the practitioners along the value chains to do the same thing. The essence of what good practice looks like is universal and something that we can improve together.”

Looking ahead, today’s Chief Procurement Officer has a lot on their plate. From navigating the best way to unleash AI into processes, to managing the next generation of talent and adopting more sustainable practices amid changing legislation and customer demands, there isn’t a moment to lose. But procurement holds the cards and it is up to the function’s practitioners to determine when to play them correctly.

Frameworks have quickly become the preferred route to market for public sector projects. This momentum will continue to grow now that the Procurement Act 2023 has comeinto effect. Now, those procuring and managing frameworks, including the likes of Pagabo, must go beyond the basics to cut through the noise to pave the way for fair, practical and transparent procurement that serves the needs of contracting authorities, suppliers and agents equally. 

A successful framework is one that helps the contracting authority to choose the best organisation to deliver the best value for the project at hand. It should be backed by the a promise of quality and legal reassurance provided through the prior due diligence that’s essential before any awards are made. 

Now, though, it’s not enough to just proudly showcase previously approved suppliers on each lot. More and more frameworks are launching, and standards are set to rise as the Procurement Act moves the industry closer towards the goal of achieving the ‘gold standard’ set out in the Construction Playbook. 

Frameworks should support contracting authorities in making the best choice for their projects. Not doing so just won’t cut it in today’s market, especially with the need for competition essential in many contracts. 

Here lies the difficulty – every job is unique and so will require a different company with relevant resources and experience, making it tempting to pack framework lots full of talented businesses.

However, having too many suppliers can easily become overwhelming and can dilute the demand, making it equally as unattractive for both the contracting authority and the contractor. Instead, all parties need to strike a balance. The key to success is flexibility. Authorities and contractors need to create a framework with processes around it that embody this mindset in every relevant touchpoint. 

Refining the process around frameworks

If a spanner could represent the tool you need for the job, then we view our frameworks as an adjustable spanner and will work with the contracting authority to ensure it fits their needs each and every time. To do this, it requires flexibility on a number of levels – this could be through offering a wide range of appointment options and contracts, such as Direct Award or New Engineering Contract (NEC), or through having the infrastructure in place to cope with the ups and downs of the market, and the vast disparity between each job. 

One way we do this is through our use of a ‘reserve list’ on several of our frameworks. Through this structure, we may allocate nine places on each lot for example, six of which would form the ‘core’ suppliers, with the remaining three forming the ‘reserve list’. We were the first national framework provider to introduce the use of such lists several years ago, with their development being a response to the market. 

Lessons to learn 

We all remember the collapse of Carillion and, more recently, the collapse of ISG, both of which demonstrated that suppliers can go bust in unstable markets even when financials look robust. While evaluations for appointments examine financial stability in bidding parties, it would be wrong to ignore the somewhat turbulent economic waters of recent years. As of December 2024, new Insolvency Service figures showcase the construction industry to be the most heavily affected over the past year for insolvencies. This makes the element of rigorous financial checks more important than ever.  

Plus, with an increase of work across the whole sector, we have seen resources at many contractors tied up, meaning they are not in a position to bid the work. 

In both scenarios, the reserve list comes into its own – enabling competition for contracting authorities when core list suppliers do not provide enough competition by themselves, and providing a wider pool of suppliers should the worst happen for any organisation sitting in a core list position. 

All bidders under core and reserve lists are allocated equally and with the same criteria. In essence, reserve lists have helped to refine the way we manage further competitions and, in turn, mitigate any risk due to market instability.  

On the flip side, offering choice of too many suppliers from the start could deter many contracting authorities from running a further competition, adding more complexity to the labour-intensive process of evaluating a large number of returns. Skilled suppliers may also look to bid for a place on other frameworks where their chances of winning would be higher. 

Value, on a wider level 

There’s a lot to unpack as to why these shocking statistics have become reality and alongside protecting the contracting authorities, we know the frameworks we manage go some way in supporting the sector too, offering one solution to the wider challenge. As part of our commitment to pioneering transparent and ethical procurement, we have other processes that aim to create opportunities for our industry’s next generation and help the built environment sector to grow. 

These include internal processes, such as offering detailed ‘bidder debriefs’ for every successful and unsuccessful contractor, explaining the reason for our decision and offering constructive feedback on how they can make their services stronger. 

Our use of reserve lists also helps to boost engagement and encourage market brilliance when managing frameworks. Having the option to interchange between the core and reserve lists gives more businesses the chance to tender for exciting projects. They also go far deeper, generating social value through creating and safeguarding jobs and facilitating work placements and apprenticeships via successful and ethical procurement strategies.

This year and beyond, public sector procurement will only become more complex as concerns such as safety, security, quality and value for money remain front of mind for every project. The framework market is strong, but to make the right decisions it will pay off to dig a little deeper and search for frameworks that offer the level of flexibility required to meet the demands of the modern world.

Eliminating complexity is music to most Chief Procurement Officers’ ears.

In a world with so much uncertainty, efficiency is king. And for Vertice’s founders and brothers Eldar and Roy Tuvey, simplifying procurement is at the heart of everything the duo believes in. 

Indeed, their company Vertice is on a mission to remove obstacles and barriers in order to simplify procurement. Today’s procurement teams need a smart, agile framework that orchestrates all aspects of purchasing with precision. Armed with accurate data, real-time pricing benchmarks and deep insights into the best solutions, CPOs can be sure that the decisions they make are as informed as possible. According to Eldar and Roy, procurement platforms have so far failed to unite procurement leaders’ requirements into a single seamless platform. 

This is where Vertice comes in. The company is aiming to become the integrated backbone of the procurement and finance stack, empowering its customers to scale effortlessly and efficiently. By eliminating friction, Vertice enables organisations to focus on growth and innovation while maintaining full, transparent control over their financial processes and procurement spend. 

In an exclusive article with CPOstrategy, Eldar Tuvey, CEO of Vertice, talks us through why simplifying procurement via a unified orchestration layer enriched by data and insights supports better, faster buying decisions.

Briefly introduce us to Vertice. What, for you, differentiates it from other companies in this space?

Eldar Tuvey: “Vertice is the only spend optimisation platform that enables businesses to simplify their procurement workflows, gain granular control and visibility of their spend, and realise cost savings of as much as 30%. 

“It is the only solution that combines SaaS spend management, procurement workflows and cloud spend optimisation under one roof. Because of this, we can provide a full spend management service to our customers, helping them combat rising business costs.”

What are the biggest problems you are aiming to solve for procurement?

Eldar Tuvey: “When we founded Vertice, we built it to last. From day one, we knew that capital discipline and taking back control of inefficient spending were always going to be important to businesses regardless of the economic landscape. Today, that focus on smart procurement is more prevalent than ever before which has been accelerated by high-profile news such as Elon Musk’s US government ‘DOGE’ and the UK government’s commitment to cutting costs.

“While scrutiny of spend has increased, the ability to drive real savings hasn’t kept pace. Businesses operate globally. Vendors are multiplying, and they often have overlapping capabilities. Buying is increasingly decentralised. Data remains fragmented while actionable insights are rare. This all undermines the core goals of best practice procurement: control, visibility and transparency.”

Can you tell us about the journey of Vertice? Since being founded in 2021, what have the past few years been like?

Eldar Tuvey: “It’s been incredible to see the rapid growth of Vertice as a business, but also the rapid success we’ve delivered for our customers. We now manage over $3.4 billion of software, cloud and direct spend for high-growth customers in over 30 countries and we are rapidly growing across the US, Europe and APAC. We’ve helped our customers achieve an average of seven times ROI and saved them millions of hours of employee time, and we’re just getting started.

“When my brother Roy and I founded Vertice in 2021, we saw the opportunity to solve an urgent problem in the market – SaaS spend was soaring out of control. With procurement and finance leaders feeling enormous pressure on SaaS costs, plus a combination of our product development, our excellent negotiation service and our fiercely independent stance, we grew phenomenally quickly, establishing ourselves across US, Europe and APAC in only two years – and earning a track record of routinely delivering extraordinary 30% cost reductions.

“We then noticed an opportunity to expand this approach into cloud costs – finance and procurement’s next biggest cost worry. Then, we added a cloud cost optimisation service that creates a single, shared view of cloud costs for both finance and procurement and their IT and cloud colleagues. We run continuous optimisation tests and help businesses make the right financial and technical decisions to reduce costs – again with an average of 30% reductions.

“Both of these showed us the importance – and underperformance – of procurement workflows. We therefore launched Intelligent Workflows, a procurement orchestration tool that brings automation and intelligence to the purchasing process. It eliminates manual approval routing and re-routing, anticipating bottlenecks, and reducing the daily workload for procurement teams – all while improving control and speed of outcomes. It’s the boost procurement teams need to ease the manual burden upon them.

“It’s a game-changer for the procurement industry, and we are already seeing results. Customers are now halving their approval cycle times and doubling purchasing compliance savings just from how they conduct procurement workflows.

“Crucially, we have integrated all three of these areas into a single offering. The market’s current response is fragmented with disparate point solutions tackling procurement workflows, contract negotiation, benchmarking data and Saas spend optimisation in isolation. But Vertice has become a leader in procuretech via an alternative approach and delivers a range of capabilities through a single, unified platform.”

How would you describe the past few years in procurement as a result of the influence of tools such as GenAI and LLMs? And are we actually seeing the true value of it yet? 

Eldar Tuvey: “We’re seeing GenAI and LLMs begin to impact procurement in data analysis and content generation (in contracts and negotiations), but it’s not a mature area yet.

“Automation is what’s providing true and tangible benefits right now. Accelerating the whole process, reducing the manual effort required in each stage, ensuring better alignment and buy-in from stakeholders – this is transforming modern procurement.

“We conducted a recent survey of over 300 global procurement leaders and found that those with modern, robust automation within their procurement processes are 29% faster at bringing new services and products to market, and are 32% more able to implement new initiatives. Procurement automation empowers business performance.”

What are the biggest considerations that CPOs need to think about when seeking to use automation as a business strategy in procurement?

Eldar Tuvey: “Introducing automation to your procurement strategy has obvious benefits, across multiple areas including compliance, speed to market, and budget control. But it’s not as simple as bringing it in and watching it immediately improve your setup.

“Automation needs to be introduced strategically. If it is integrated into a setup where deployment is still manual, unsophisticated, and is lacking in data hygiene, centralisation or even access, then it won’t be much help. 

“Getting your ducks in a row is essential before introducing automation. Otherwise, you’re building from uneven foundations that will restrict your growth and become even trickier to fix down the line.”

In your view, what is the best way procurement professionals can make more data-driven decisions? 

Eldar Tuvey: “The biggest obstacle to data-driven decision-making is simply not having ready access to data in the first place. There is so much data available to procurement teams in terms of price benchmarks, contract terms and supplier information. But it’s laborious and complicated to extract for teams that are already time-poor. 

“Even if they do have internal data, this might not be representative of the whole industry. If, for example, your original contract was 30% over the normal standard price, and you renewed at a 10% discount, you’re still unknowingly paying 20% more than standard. Access to wider industry data requires a lot of research or costs a significant amount to purchase from a third party, often without context. 

“This is why Vertice has information from over 16,000 global vendors to provide an unbeatable array of data points that customers can analyse to make better procurement decisions and negotiate more effectively.”

How do you retain good people and encourage them to join/stay with Vertice?

Eldar Tuvey: “People are at the heart of Vertice, and the Vertice team is our greatest asset. Nothing makes me happier than witnessing a young hire with drive and a bit of experience progress over the years. I love seeing them manage significant partnerships or lead teams. Reflecting on how far they’ve come since they first joined us is incredibly rewarding.

“And we keep them by constantly growing Vertice. The business has such large potential – and we’ve grown so rapidly – and this is down to the drive, expertise and commitment of our people. Everyone plays an active part in doing so and they can see their own impact before their very eyes – that’s really rewarding and makes working here so attractive.”

Anything exciting you’d like to share? Any announcements?

Eldar Tuvey: “Vertice is currently enjoying phenomenal momentum. We have grown by more than 13x in two years, now managing more than $3.4 billion of software, cloud and direct spend for customers across more than 30 countries. “We are excited to be celebrating our next milestone – a $50m Series C funding round from Tier 1 investors Lakestar. This funding will allow us to open new offices, triple our engineering team and accelerate our product development – all single-mindedly geared towards our mission to make procurement simpler, unified and enriched by data and insights that support better, faster buying decisions.”

The UK’s new Procurement Act 2023 (PA23) went live this week. The new regulations aim to encourage smaller businesses in the private sector to secure a bigger share of £400 billion in public spending each year. Some experts have already hailed PA23 as a “win for Davids over the Goliaths.” Others, however, have warned that new, complex processes risk overwhelming unprepared SMEs. 

With any new regulatory changes, there are new risks. These can range from lost business and penalties for organisations found to be in breach of new rules, to reputational damage for delivering sub-par services. 

In conjunction with PA23 going live, procurement specialist Pagabo has launched a campaign to support the UK’s public and private sectors as they work to adopt and benefit from the latest procurement reform.

TIme to “Act on Procurement” 

‘Act on Procurement’ is simplifying the legalisation within the Procurement Act through a range of resources, including an extensive downloadable guide, explainer video, frequently asked questions and webinars – all created by the experienced experts at Pagabo.  

As well as explaining what changes key stakeholders, including contracting authorities and suppliers, will have to consider, Pagabo’s Act on Procurement campaign explores why 2025 will be a landmark year in the history of procurement legislation and how the well-established procurement specialist can help. 

Shamayne Harris, head of procurement at Pagabo, said: “Through our close contact with organisations varying in size across the public and private sectors, we’re well aware of the different levels of preparedness ahead of the launch of the act. With this in mind, we’ve established a collection of resources to increase access to knowledge and support around the Procurement Act – both from before the Act went live and afterwards – to help others compliantly navigate procurement reform.  

“There are lots of new concepts, definitions and processes for different professionals to familiarise themselves with, which we hope to have made more accessible and actionable.  

She added: “The Procurement Act presents a huge opportunity to increase simplicity, transparency and opportunity within procurement in the long-term, which will help to ensure the public purse is best utilised – making this an important moment in time. With central government continuing to unveil substantial plans for development of infrastructure, communities and public services, the time is now for everyone to pull together and help realise the potential for public procurement to provide value for money, economic growth and social value.” 

The new Procurement Act is set to bring about big changes. To begin with, we can no longer think of procurement and contract management as separate entities. The act will bring about more flexibility, transparency, and will cement current best practice in legislation. However, substantial challenges in its day-to-day delivery are likely to impact its success.

Of course, it’s great to see SMEs at the heart of the act and being granted more opportunities. Nevertheless, we could see them becoming overwhelmed with tenders and the burden of unsuccessful bid costs.

Embracing change

The Procurement Act 2023 has now come into force. The act heralds huge changes in the procurement process that are likely to shake up day-to-day activities and operations. This is particularly true when it comes to contract management. 

The regulatory changes introduced by the act aim to improve public procurement processes, making the system more transparent and flexible. The changes are impactful, and in response, the industry needs to adapt quickly. Organisations must change how they manage projects and gather data to ensure they are compliant with the act’s new guidelines. 

While this change is positive in principle and is rooted in the embedding of best practice in the industry, it’s important to consider that implementing the required changes will not be a straightforward process, and will require time, patience and skill-building. 

First, the positives

The intention behind the new act is positive, and embedding best practice within the procurement process is undoubtedly a step forward. In addition to its benefits for planning, it is also intended to ensure equal treatment, assist proportionality, increase flexibility, and help suppliers achieve strategic objectives. The bidding process will be more flexible, while transparency will be improved through a new central digital platform. Adapting to new processes will also hopefully lead to upskilling across the sector. This would benefit both individuals and organisations in the long term.

In theory, suppliers will also be given visibility of stock much earlier in the process via the new central platform. This would have a positive impact and provide more transparency and opportunity for scrutiny. Having this early visibility means there is more scope to target opportunities and develop business according to supply levels. Doing so would result in a more streamlined and effective process.

SMEs have also been placed at the heart of the new act. Numerous barriers to bidding have been removed. This makes it easier for small businesses to participate and progress in a process that has previously been challenging when competing with larger organisations. 

Despite these positive steps, the practicalities of implementing a new act are far from easy. Procurement professionals will need time to adapt.

Tackling the challenges

When implementing change there will undoubtedly be challenges. As it stands, preparation for the Procurement Act has felt somewhat rushed. We have experienced a flood of guidance, policy, regulations, and more recently, Procurement Policy Notes (PPNs). All this has meant busy procurement teams have been stretched further as they have attempted to get prepared. On the other side, many contracting authorities are also likely to overrun their implementation phases. As an industry, we are also nervous as we await full sight of the new central digital platform.

It’s also important to consider the capacity of industry professionals to dedicate the time needed to these changes. Bid teams across the sector are currently inundated with frameworks. There are alsoquestions over the market’s ability to respond. For example, the industry-wide skills shortage is a huge problem that will only be put under further strain. 

At EN:Procure we have been working with our members to understand what they need in place to best prepare as well as any gaps in their solutions, and we have also offered training to help develop their skills. It’s important to consider that it will take time to adapt and for us to see the results of the act, and that the practicalities will take time to work out.

Another challenge to recognise is the effect removing barriers to SME participation will have. Making the process simpler for SMEs is positive but may also result in a long list of businesses competing in open tender and bidding for work. Short timescales and resources for bidding may also cause problems, and if too many businesses are bidding, processes may need to be adjusted. 

Procurement Act 2023: Only time will tell

Delays in guidance being published, renewed focus on supplier KPIs, and skills shortages across the sector all mean that while it’s a positive step in principle, implementing the new Procurement Act will be a slow process.

With all change comes a period of adjustment, and while the essence of these changes is positive, the level of administration it will take to make them work may be an issue. Time will tell as to whether the Procurement Act will have the impact it has been designed to have, and as a sector it’s up to us to make the most of the opportunity for development it presents.To find out more about Efficiency North, please visit https://www.efficiencynorth.org

If there is one lesson that COVID-19 taught us, it is the importance of planning for the unexpected. For the electronics components industry, this means adopting a flexible supply chain sourcing model to respond quickly to unforeseen challenges.

Following the global semiconductor shortage, governments and organisations around the world rushed to fix their supply chains and prevent future severe disruptions. However, the reality is that achieving complete stability is impossible. Organisations must avoid the trap of focusing solely on past demand. It’s important to remember that today’s needs could be entirely different from those of tomorrow.

Any increased tension can quickly disrupt supply chains, pushing manufacturers to look for alternative sourcing with very little advance notice. The geopolitical impact of the Russia-Ukraine war, for example, would have been impossible to predict. Nevertheless, the conflict created supply chain shock waves throughout the electronics components industry. From transportation issues and trade restrictions to the shortage of raw materials used in semiconductor manufacturing. This was yet another unforeseeable blow to the electronics industry.

We live in a highly volatile world, influenced by various geopolitical and economic factors. These factors affect different industries in diverse ways. It is crucial to have flexible procedures in place that allow for the rapid sourcing of hard-to-find and obsolete components.

Avoiding the Bullwhip Effect is key

Maintaining a surplus of stock can only carry an organisation so far; it will never be entirely sufficient. The over-ordering of stock may seem like a good strategy, but the counter consequences, including higher storage costs, holding costs, and the risk of inventory obsolescence, will stack up (literally) and become more detrimental in the long run. 

This was identified and named the ‘Bullwhip Effect,’ when, as a result of COVID-19, consumers and suppliers reacted and overreacted to anticipated supply and demand, causing inventory disruption across the supply chain. An MIT Sloan Management Review study found that the bullwhip effect can increase inventory costs by up to 10-30%. The fact is, the speculative view from customers, suppliers, and manufacturers about supply and demand can often be very inaccurate, especially in reaction to a disaster or unforeseen circumstances. Yet, all actors involved influence the entire value chain and cause forecasting chaos. 

For certain industries, such as aerospace and defence, which have long and varying production cycles, managing the lifecycle of products is ever more complex. There are continual challenges in ensuring that procedures are established for when components reach the end of their lifecycle. 

Looking at the aerospace industry 

If we take the example of the aerospace industry. The lifespan of an aircraft can last several decades, yet the internal components for these aircraft systems, including semiconductors and mechanical parts, have much shorter life cycles. The prolonged operational lifecycles of military aircraft, in parallel with rapid technological advancements and reiterations, create a dynamic landscape where components risk obsolescence before the end of an aircraft’s service life. This requires organisations in the aerospace industry to adopt a ‘two-speed’ product lifecycle framework that qualifies all component aspects occurring during the complete lifecycle of the system but with flexible replacement procedures for when essential components with short lifecycles become obsolete. 

In both the case of organisations that have fallen into the trap of the bullwhip effect and for organisations with complex product lifecycle requirements, the need for emergency and quick turnaround for obsolete products becomes further intensified. 

So, the question is how organisations can most effectively implement a flexible and reliable electronics sourcing model that accommodates all eventualities and challenges: fluctuating market demand, volatile geopolitical circumstances, emergency scenarios, and complex multi-tier product lifespan requirements. 

It involves establishing and maintaining a dependable, end-to-end value chain, and there are four crucial steps to follow:

Building a flexible end-to-end value chain

1. Select a robust supplier network

This involves thorough research to identify and qualify the right value-chain network. A total network of suppliers, vendors, and industry partners that have the expertise to: 

• help with sourcing standard and specialised parts
• offer engineering design, maintenance, and industry-specific services
• has the capacity and flexibility to handle an emergency, obsolescence, and a quick turnaround sourcing requirement

2. Proactively improve forecasting across the value-chain

Implement proactive and predictive tools and methodologies to predict and monitor potential obsolescence issues and forecast demand patterns accurately. The best scenario is for organisations to invest in advanced analytics, and artificial intelligence (AI) to more accurately and proactively handle demand fluctuations.

Alongside this, organisations should implement electronic data interchange visibility throughout the value chain to facilitate the exchange of inventory and order data between partners and to enhance communication channels.

3. Collaboration and trust 

Successful value-chain management relies on building reliable, collaborative relationships with suppliers. Open communication channels, regular feedback, and joint troubleshooting drive innovation and create a foundation of trust across the value chain.  

4. Continuous monitoring and analysis of the supplier network

Real-time data collection and analysis should be used to track supplier performance against KPIs and identify areas for improvement. Ongoing monitoring and analysis of supplier performance data ensures organisations can troubleshoot and proactively address any potential issues or performance gaps to mitigate risks in the supply chain before they become a problem.

Essentially, what any organisation in the electronics industry should be looking for is one total end-to-end value network that can cover and understand all their sourcing needs, with the versatility and flexibility to adapt to anything on the horizon. 

In uncertain times, with the lingering effects of past supply chain disruptions remaining challenging, organisations, more than ever, must prioritise risk preparedness and resilience in their electronics sourcing strategy.

Procurement, logistics, and supply chain organisations are looking to shift their processes closer to home, as a flurry of tariffs from the Trump administration force the world’s biggest economy into a protectionist stance. As borders become increasingly expensive and risky things to move goods across, organisations are reportedly scrambling for a way to adapt. 

The de-globalisation race

This week, Crown Worldwide Group, one of the world’s largest privately-owned logistics companies, announced that it is refocusing its emphasis for growth on services and divisions that are “inherently local.” 

The business highlighted President Trump’s efforts to slow globalisation further, noting that “Events in the USA over the past several months have reinforced the prevalence of an anti-globalism sentiment.” Flaring tensions between the US and China, Canada, Mexico (its biggest trade partners) and, more recently, the UK and European Union, are reportedly giving Crown, and organisations like it, pause — provoking them to rethink how they do business. Crown’s Group CEO Jennifer Harvey commented: “Our view is that this won’t last forever — but in a business that is both global and cyclical, the last 60 years have taught us to hedge by investing in different business lines.”

Donald Trump has said that he wants to cultivate an American manufacturing renaissance through the introduction of wide-ranging tariffs and tax breaks. Critics of his policies claim that the higher resulting costs from tariffs will result in higher prices for American consumers. 

It’s not just Trump (but he’s not helping) 

Trump may be supercharging the deglobalisation trend affecting supply chains, but he didn’t start it. The trend has started to take shape in the post-COVID world, as organisations look closer to home in order to promote resilience and avoid increasingly common disruptions. 

Crown established its business 60-years-ago in the midst of the mass globalisation of supply chains, as well as the containerisation of freight, and affordable air travel, which Harvey notes created new horizons that now seem increasingly out of reach. “Today, the world is quite different. Fewer people are moving internationally, with technology that facilitates remote work reducing the need for corporate assignments, and geopolitics making moving overseas more challenging and expensive – a trend that’s likely to continue following recent political events in the USA,” Harvey says.

This combination of technological tools affecting the way we work and an environment increasingly defined by global conflict, compounding the lingering economic impacts of the pandemic, (both coupled with simmering anti-migration sentiment) and the rise of far right governments in places other than the US, is also driving the deglobalisation trend. 

“Transitioning supply chains isn’t simple,” observed Eric Linxwiler, Senior Vice President, at TradeBeyond in a recent article. He added out that, in order to respond to tariffs, businesses face the challenge of “establishing new supplier relationships, ensuring quality control, and navigating new regulatory environments requires time, investment, and operational expertise.”

European automakers, pharma manufacturers, and more brace to contend with the threat of an EU-US trade war as Trump announces new metal tariffs.  

Not content with 25% tariffs on its closest trade partners and a further 10% levy on Chinese goods, US President Donald Trump has announced a flurry of new trade restrictions on goods from the European Union (EU). 

Overnight, President Trump announced 25% tariffs on foreign steel and aluminium. The move has prompted retaliatory measures from the EU, with president of the European Commission, Ursula von der Leyen saying that she “deeply regretted” the US president’s decision, adding that “Unjustified tariffs on the EU will not go unanswered,” and that the EU would respond with its own economic sanctions to “safeguard its economic interests.” Von der Leyen added: “We will protect our workers, businesses and consumers.”

Procurement thrown into disarray

Approximately 25% of EU steel exports go to the US — about €3bn worth a year over the past decade. Canadian prime minister, Justin Trudeau — whose government responded with its own retaliatory tariffs on the US last week — said that Canadians would “stand up strongly and firmly if we need to.” He described the Trump administration’s move as “unacceptable”.

The latest round of tariffs could be the next domino to fall on the way to a worldwide trade war, severing international ties, and driving up prices for consumers in multiple markets — especially the US. If Trump’s tariffs continue to alienate the US’ trade partners, Simon Bowes, CVP Manufacturing Industry Strategy EMEA at supply chain solutions company Blue Yonder, notes “it could set off a chain reaction across the globe.” He adds: “This could limit the ability of companies to leverage the global specialisation and expertise that currently drives international trade. For instance, the world’s reliance on Taiwan for semiconductors or Germany’s expertise in automotive engineering would become more complicated if countries erected barriers against each other. The rise of tariffs would likely stifle competition and innovation, and while some industries could benefit from protectionism, others would undoubtedly face higher costs and reduced market access.”

Manufacturing procurement braces for disruption 

The impact of Trump’s administration on some European industries like pharmaceuticals, Bowes explains, may force businesses into “a catch-22 dilemma.” 

He explains that organisations must “either bear the cost of relocation or absorb the tariffs and face increased costs for manufacturers and consumers.” 

The automotive market in Europe is particularly at-risk, with the industry already “struggling due to competition from China,” as well as the withdrawal of electric vehicles (EVs) subsidies from key markets, and the ongoing transition to European sustainability regulation. “The US is a critical market for European car makers,” says Bowes. Therefore, “tariff threats are sending the industry to boiling point — and if placed on internal combustion engine vehicles (ICEVs), it would put a tin lid on everything that’s going bad for the industry. Increasingly, automotive businesses are having to plan for a potential future with dramatically reduced sales to the US.”

What’s next? 

Whatever the long-term consequences, Rob Shaw, GM EMEA at Fluent Commerce, notes that short term consequences are a global supply chain in chaos.“The trade market can only be described as an unstable, ever-changing state,” he says. Should the US proceed with imposing more and more tariffs, “other countries will retaliate, as we’ve already seen with China. In this scenario, tariffs may be imposed in the opposite direction, raising costs within the supply chain.” 

Ultimately, he adds “it’s consumers who will bear the brunt of these changes. To protect their profit margins, businesses will inevitably pass on higher costs, placing additional financial strain on buyers already struggling with economic pressures.”

Procurement professionals are at varying stages of readiness for the Procurement Act 2023 (PA23), which is set to come into force on 24^th February. The Act introduces a considerable number of changes and requirements affecting public sector procurement processes. 

Our recent survey of procurement professionals (Finance & Procurement Trends Report 2025) reveals that fewer than one in five (19%) believe their organisation is well prepared for PA23 implementation. Concerningly, 14% said they were either poorly prepared, or not at all.

PA23 will affect procurement professionals working in public sector organisations directly. The private sector will also be impacted on the supply side. Any organisations that supply or seek to supply a public sector organisation with goods and services will need to be ready. Getting ready will require understanding and preparing to mee the Act’s new requirements. The Act covers “bodies governed by public law” which includes organisations like National Highways and Network Rail. It also covers local authorities and councils, schools, the NHS, universities, blue light organisations, social housing organisations, and utilities. 

Public sector spending ammounted to £407 billion gross in 2023/24. Therefore, any non-compliance or dragging of feet with the changes will have a significant potential fiscal impact on supplier businesses.

PA23 for suppliers

For private companies that are already supplying the public sector, or wish to explore new business opportunities with this valuable customer-base, PA23 will bring potential opportunities for increased participation in public contracts. The Act encourages a more open, transparent, and competitive bidding environment, which should benefit these organisations. It’s an unprecedented level of insight into bidding opportunities and decision-making criteria. In theory, it will enable businesses to better tailor their proposals to meet specific public sector needs. Those that take advantage will dramatically enhance their chances of success.

PA23 introduces simplified procedures, which can lead to quicker decision-making and reduced lead times for contract awards. This agility is beneficial for private companies seeking to engage with public sector contracts, as it allows for more efficient allocation of resources and faster project initiation.

The Act will also help the private sector by strengthening provision for prompt payments. Even the largest enterprises benefit from being paid on time. It allows them to manage their cash flow and resource allocations to optimum effect. At the same time, however, late payments can make or break a business. Smaller firms have even smaller margins for error. 

According to data shared by the UK government, 52% of SMEs (around 2.8m businesses) suffer from late payments. This costs them £22,000 each year, resulting in around 50,000 business closures every year. 

Benefits for small businesses and social enterprises 

The Act is designed to improve and streamline the way the public sector procures goods and services. Therefore, it contains specific benefits to businesses not currently engaged in supplier contracts with this sector. Crucially, it provides them with a clear framework when bidding for contracts. With a focus on levelling the playing field, the Act will help small businesses, start-ups, and social enterprises gain an important foot in the door. This will in turn enable local public sector bodies to achieve their own supplier and sustainability targets related to adding social and economic value within the local economy.

As a private sector organisation, it’s crucial to understand how these changes will impact your operations. It will be critical to prepare for the opportunities and challenges that may lie ahead. It will require investment in time and other resources to adequately prepare in order to unlock potential new revenue streams. The government is providing lots of help for organisations that already trade with, or are seeking to trade with the bodies that fall under PA23, to help them ensure compliance. 

PA23 for the public sector

Public sector procurement teams have been working hard to get up to speed with the changes required by PA23. Understanding and implementing these has undoubtedly placed a significant burden on organisations, requiring them to invest in additional resources with redirected focus. We found 57% of the procurement professionals who contributed to our survey expect to be managing an increased administrative burden because of PA23. 

It might be easy therefore to lose sight of the potential benefits the Act will bring to local authorities and other public sector bodies.  PA23 will help them achieve more transparency and accountability from their suppliers, to ensure better value for the public purse and higher quality service delivery, thus helping them achieve their own core objectives.

The compliance challenge 

Procurement professionals recognise there will be specific challenges as they start to work within the requirements of the Act, and 50% of those in our survey said the biggest obstacle would be ensuring ongoing compliance monitoring. This was followed by ensuring supplier compliance (44%), adjusting current processes and systems (41%), and understanding the new requirements (37%).

In response to the new requirements, 60% have already begun implementing new compliance measures and 59% have been revising procurement policies and procedures. Half (49%) are training staff on new regulations, while 37% are investing in technology to help improve processes and ensure they conform with the requirements of PA23. 

To make this less of a headache for already stretched public sector organisations, the Government has published some useful guidance. As a provider of sector-specific and PA23 compliant procurement solutions, OneAdvanced has created an online Procurement Act hub, providing more information including a video, white paper, and other resources, as well as specific information for charitable organisations.

We would urge any supplier or public sector procurement leaders to consider using appropriate digital solutions that are already PA23 compliant to do much of the heavy lifting for them. 37% of respondents in our survey are already investing in new technology to ensure they are ready, selecting solutions that provide assurance that every step of the procurement journey is compliant with the requirements of the Act. 

Winning with PA23 in 2025

There are bound to be some teething problems as organisations get to grips with the changes coming this year. But the benefits should make the trouble worthwhile. 

For suppliers, PA23 opens up the procurement process, with greater transparency around opportunities with new and existing customers. 

For local authorities, meeting the requirements of PA23 will have a number of benefits. It should encourage greater collaboration between departments, eliminating duplication and achieving better value for money. The Act also embraces an important shift away from the Most Economically Advantageous Tender (MEAT). Instead, it promotes procurement that focuses on the Most Advantageous Tender (MAT). This distinction will provide greater flexibility for procurement to consider suppliers and contracts on the basis of criteria beyond price. Particularly, buyers can pursue suppliers based on things like social value which may be better for their local economies. 

The increased transparency will eradicate cronyism, and accusations – founded or unfounded, of unfair contract decisions that can plague leaders. It will also improve the experience and quality of service delivered to the citizens that rely on them.

The most important thing to remember is that there is still time to make preparations before the Act goes live. There are multiple resources available out there to help organisations in both public and private sector. These will enable them to focus any financial investment on implementing the most effective, compliant digital tools that will earn their keep from day one of PA23. 

This new legislation has the potential to improve procurement and supplier relationships, ensuring your public sector organisation, or your business as a public sector supplier, can achieve its organisational and financial goals.

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

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

Category Management Entropy 

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

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

Forgetting the art of the possible

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

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

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

Why have we gone backwards?

The four misconceptions

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

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

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

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

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

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

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

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

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

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

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

Restoring excellence and rediscovering breakthrough benefits

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

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

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

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

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

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

Integrating risk management into the procurement process

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

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

Selecting the right software

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

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

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

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

Winning hearts and minds

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

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

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

The benefits for Procurement 

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

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

Conclusion: risk management as a priority in 2025

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

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

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

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

Mounting challenges, widening gaps 

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

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

Opportunities for development in 2025 

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

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

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

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

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

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

Tactics and strategy — Striking the balance 

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

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

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

Navigating the supply chain

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

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

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

Shaping procurement

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

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

Collaborative approach

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

Resilience is more than risk management  

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

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

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

Optimising supply chain inventory

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

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

The future of procurement demands tactics and strategy 

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

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

Managing procurement risk is a continuous journey.

Procurement risks happen when the process of purchasing products, resources, or services becomes unreliable. Given the importance that any disruption to the supply chain can have on a business, procurement risk needs to be appropriately managed as it could have a significant impact on an organisation’s overall performance.

In truth, every acquisition comes with risks. But the important component is that these are managed correctly. Procurement risks could be related to cost, delivery, quality, customer expectations and supplier reliability, among others. Risks could be generic, but they can also be specific to a sector, geography or industry. Risk management revolves around closely monitoring and mitigating these risks in order to avoid disruption.

In this article, CPOstrategy uncovers five tactics to managing procurement risk both in the short and long term.

Identify procurement risks

The first task on a CPO’s agenda should be working out where an organisation’s issues are. This should include assessing both internal and external risks throughout the entirety of the supply chain. The reliability of an organisation’s vendors and any risks they are exposed to should be carefully considered as a business is only as robust as the companies it engages with.

As has been clear over the past few years, the next ‘black swan’ event could be just around the corner. As such, it is important to determine weak spots before they become problems and to stay as alert as possible to potential risks. Being able to respond quickly to disruption could be the difference between winning and losing in challenging situations.

Work with the supply chain closely

In an ever-increasing globalised business world with complex supply chains, procurement professionals face their fair share of challenges. CPOs should seek to develop strong risk management processes to ensure that their teams understand their responsibilities to mitigate risk and ensure operations are secure now and in the future.

Ultimately, success in the supply chain relies on a company’s ability to maintain constant communications with the partners it receives items from as well as those it delivers to.

Supplier Relationship Management

Establishing and maintaining a strong relationship with suppliers is important but it does take work. Managing suppliers effectively can help mitigate disruptions in the supply chain such as bad quality products or late deliveries. As a result, this has led to the importance of supplier management software and online inventory management as tools to help track suppliers to readily check supplier information, detect possible supply risks and measure performance. The information gathered from performance tracking will also help to avoid poor supplier selection in the future, unethical sourcing and deal with potential problems.

Spend analysis

Spend analysis is essential to ensuring a CPO has visibility over where an organisation’s money is going. When analysing spend data, valuable information can be obtained which reveals procurement spend, such as unidentified payments, redundancies, double invoices, rogue spending and certain suppliers who may be open to re-negotiation.

It is also important to diversify a supplier base as relying on a single supplier for vital goods and services is a significant risk. Should this supplier be delayed for any reason, a company’s entire supply chain could go down. Spend analysis helps work out if too much money is being spent on specific suppliers or if there is an overreliance on any particular ones too.

Compliance

Government regulations can often change which means it is essential to be agile and adaptable to the latest rules. Risk management in procurement includes introducing procedures to maintain compliance with ever-evolving regulatory requirements. Failure to do so could result in penalties and even more disruption to the supply chain.

Contract compliance is also a key area and should be reviewed often. This will help work out how well suppliers are keeping to pre-set terms and conditions such as efficient delivery of quality goods.

Amazon Business aims to make life simpler for organisations.

Today, more than five million businesses are streamlining employee purchasing with a one-stop shopping experience, real-time analytics and time-saving features. And it’s big business. In 2023, Amazon Business reached over $35 billion in annualised sales which showcases the acceleration of demand for smart procurement solutions.

Speaking exclusively to CPOstrategy, Martin Schueler, Director and General Manager, Amazon Business Europe, discusses the transformation of the procurement function and how his organisation is thriving in an ever-changing and complex world.

Briefly introduce yourself. What, for you, differentiates Amazon Business from other companies in the procurement space?

Martin Schueler: “I’m Martin Schueler, Director and General Manager of Amazon Business Europe. I’ve been with Amazon for 13 years and I’ve had the privilege to lead Amazon Business in Europe for the last two and a half years. Before that, I headed several Amazon Retail businesses in Germany.

“Amazon Business does for business customers what Amazon.com has done for shoppers for over 25 years – provide convenient, intuitive and personalised shopping experiences they already know and love, with unique benefits designed for businesses. Our innovation is driven by listening intently to businesses of all sizes. To name a few examples, we know that business customers want unmatched selection, so we continue to expand our store which now includes hundreds of millions of items – offering a truly differentiated product catalogue. Equally, we recognise our customers want to focus time on their core business mission, not buying and sourcing goods. That’s why our shopping experience is intuitive and easy to use, so finding the right products can be achieved in just a few clicks.

“B2B commerce is ripe for innovation, and we are uniquely positioned to reinvent that experience with Amazon Business. Whether it’s a local hair salon, global corporation, school, non-profit, hospital, or government agencies we have the solutions to meet the needs of your organisation.”

The procurement space itself has undergone major transformation over the past decade and suddenly, it is so much more than just a back-office function out the way of everyone else now. Few could have predicted such an exponential rise, could they?

Martin Schueler: “It’s hard to understate the transformation the procurement function has gone through in the past decade. Procurement is no longer a back-office function, but a strategic value and growth driver for organisations. This shift has not only been fuelled by advancements in technology like data analytics, but also a growing set of priorities businesses are expected to respond to such as sustainability, keeping up with today’s challenging macroeconomic climate and supply chain volatility. Organisations now realise the significant impact procurement can have on all these areas.

“We’ve seen this first-hand at Amazon Business. We reached over $35 billion annualised sales as of 2023, demonstrating how demand is increasing for smart procurement solutions. But also, when we talk to our customers, we see them leveraging an increasingly diverse range of Amazon Business tools that drive value beyond cost. For example, we are noticing an uptick in those using our Guided Buying tool to select sustainable products helping to contribute to wider organisational ESG goals.

“The exponential rise of technology has also empowered procurement teams to make more data-driven decisions that further improve their organisations’ bottom line. In short, it is an exciting time for procurement, and we are thrilled to be part of this transformation.”

In what ways has the role of the Chief Procurement Officer evolved over the years? What does a good one look like in today’s ever-changing and data-driven world?

Martin Schueler: “The role of the CPO has evolved from being focused on cost reduction to an essential leadership position that drives strategic sourcing, supplier relationship management, and innovation. Today’s CPOs are strategic partners to their organisations, supporting them in navigating the complexities of procurement. In an increasingly challenging global economy, the CPO plays a pivotal role in addressing supply chain complexities, adapting to regulatory changes, and advancing sustainability initiatives – all of which enhance resilience and help to maintain a competitive edge. Having the CPO in the boardroom and involved in executive level decisions shows just how important procurement has become in driving business growth.

“A good CPO knows the value that data and advanced analytics can bring when it comes to a range of areas from risk, supply chain to sustainability and diversity. In fact, according to our recent State of Procurement Report, 98% of procurement leaders are planning investments in analytics, automation, and AI. CPOs recognise leveraging these tools in procurement will completely transform what’s possible in the future, and be key in reducing costs, increasing operational efficiencies and fuelling growth initiatives.”

What are the underlying issues in how companies are currently storing and looking at their supply chain data? Why is this a problem and how can they overcome those challenges?

Martin Schueler: “Many companies struggle with fragmented and siloed supply chain data, that is spread across diverse systems and departments. This scattered approach means it is almost impossible to obtain a complete picture, resulting in poor decision-making and missed opportunities.

“Amazon Business can help tackle this issue by centralising data and making it more accessible. With all information consolidated in one site, businesses can gain enhanced visibility and transparency across their organisation. Additionally, with machine learning, Amazon Business can process and connect vast amounts of data, offering a comprehensive view that facilitates smarter decision-making, anticipate disruptions, and streamline operations. By breaking down data silos, this solution boosts operational efficiency and creates a more resilient supply chain management system.”

In what ways can companies better collaborate with suppliers to drive mutual success and innovation?

Martin Schueler: “Collaboration needs to be built on a deep understanding of customer challenges, how they are evolving, and what you can do as a business to respond to them. At Amazon Business, we aim to supply our customers with the best business purchasing experience possible. And when it comes to driving mutual success and innovation, we’ve learned some things along the way.

“Consistent and open communication is critical. We’re always talking directly to our customers about the issues they are facing and how we can innovate, expand, and fine-tune our capabilities to resolve them. For example, our Buy Local feature, that helps buyers to easily identify sellers near to their location, was inspired by conversations we had with a public sector customer. They needed to respond to recently passed legislation which mandated the organisation to increase its spending with smaller businesses. It was a win-win situation, while it allowed them to successfully and easily comply, we were able to develop a feature that could help future customers facing similar problems.”

How exciting is the future of procurement and supply chain? Some people say that now is the greatest time to be in procurement. Is that true?

Martin Schueler: “Absolutely, it’s an incredibly exciting time to be in procurement as the rapid advancements in technology are transforming how we operate. This evolution allows us to predict trends, manage risks more effectively, and make more informed decisions, which is thrilling for anyone in the field.

“Moreover, the strategic importance of procurement has never been higher. Procurement is no longer a back-office function. Companies are realising that a well-managed supply chain is a significant competitive advantage and are relying more on their procurement function to drive value and meet diverse business goals. It’s not just a cost centre anymore; procurement is responsible for driving innovation, sustainability, and resilience.

“This shift in perception makes now a fantastic time to be in procurement, as it is offers those working in the field increased opportunity to directly impact their organisation’s future.”

What’s next for your department within Amazon Business? Anything exciting on the horizon?

Martin Schueler: “Amazon Business is committed to continuous innovation for our customers, with plans to expand our offerings this year. For example, at 2024 Amazon Business Reshape, one of the new initiatives shared by our CTO Doug Gray was about Program Dashboard, a new Business Prime exclusive feature. This powerful tool will provide data-driven insights to help our customers better manage their spend agreements and optimise their procurement strategies.

“In addition, we’re expanding our partnerships to offer even more seamless experiences for our customers. We’re introducing a new Punch-in integration with SAP Ariba and a Punchout integration with Oracle NetSuite’s Suite Procurement module. These integrations will allow for smoother workflows and better compliance within existing e-procurement systems.

“These innovations are just some examples of some of the upcoming developments and they reflect our commitment to leveraging AI, enhancing personalisation, balancing compliance with ease of use, and expanding our business services. We’re excited to bring these advancements to our customers and continue transforming the procurement landscape.”

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

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

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

The £14 billion problem 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The higher price of protectionism

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

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

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

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

How likely is World (trade) War II? 

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

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

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

What can we do about tariffs and the trade war?

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

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

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

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

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

The procurement balancing act 

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

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

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

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

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

Old and new 

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

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