Powered by machine learning and computer vision expertise, Tobii enables a safer, more intuitive and comfortable in-cabin experience — for everyone in the car. Their technology enables the next generation of interior sensing, pushing the boundaries of what’s possible.

Over the past few years, Tobii has worked closely with automotive companies such as Bosch. Adrian Capata, Senior Vice President at Tobii Autosense, is in no uncertain times about the importance of establishing key, strategic partnerships. “Our mission is to help the world through technology that understands human attention and intent,” he explains. “In order to achieve our goals, we rely on working together with important automotive players. We believe that through joint technology and market expertise, we can provide the right value to our customers. To be successful in automotive, we need to rally as an ecosystem focusing on developing our own strengths and relying on our strategic partners for areas where they are powerful.”

Partnership benefits

Henrik Mawby, Sales Director at Tobii, explains that one of the major benefits of partnerships is how the companies Tobii works with have helped accelerate and mature their delivery to the automotive industry. “We were new and had to learn about the uniqueness of this industry. Working with companies in the automotive industry lends a lot of credibility to Tobii as well,” he adds.

Anders Wirkestrand, Director of Product Management at Tobii, explains that harnessing trust is one of the key ingredients to a successful partnership and stresses the importance of establishing and building mutually beneficial alliances. “Our partners know we are a company who can go in and solve problems when it comes to delivering key signals that are needed, analysing problems and collecting data.”

To meet the needs of partners in the automotive industry in the future, Tobii focuses on innovation and improved ways of working, according to Capata. “We have been in the automotive market for more than five years, but at the core, we are a technology company and through our partnerships we are learning how to become more reliable from an automotive requirements point of view,” he reveals.

Looking ahead to the future of the partnership, both Mawby and Wirkestrand are excited about the potential of Tobii’s collaboration with partners moving forward and are aiming to achieve continued growth. “We want to go deeper into our partnerships and are looking forward to exploring what other opportunities there are over the next few years,” discusses Mawby.

“We are creating technology that saves lives,” adds Wirkestrand. “Something that is for the greater good of traffic safety.”

Find out more in the latest issue of CPOstrategy Magazine.

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

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

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

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

Ensuring supplier diversity

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

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

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

Kickstarting supply chain recovery

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

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

Visibility for supply chain stability

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

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

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

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

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

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

Supply change

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

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

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

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

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

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

Beware of contract drift

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

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

What is contract management? 

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

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

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

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

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

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

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

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

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

Four key issues identified

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

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

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

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

Systemic issues and what to do next 

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

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

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

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

Beating the trend — effective disruption mitigation strategies   

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

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

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

Preparing for disruption amid uncertainty  

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

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

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

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

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

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

Regionalisation, AI, and capex

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

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

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

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

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

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

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

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

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

On the 12th of June this year, we at CPOstrategy had the pleasure of attending DPW’s first ever New York event. 130+ procurement professionals came together for this intimate gathering at NeueHouse, New York City, to learn, mingle, and be engaged by the incredible things happening in digital procurement right now.

The fascinating sessions throughout the day highlighted the current trends and challenges within the procurement segment. Here are five of the most important lessons we learned at the DPW NYC Summit.

AI doesn’t stifle creativity – it promotes it

There can sometimes be a little fear around AI, especially when it comes to art and creativity. However, it’s worth remembering that AI is a tool and it can’t replace human expression – but it can help to enhance it.

Mark Perera, Chairman of DPW, and Scott Belsky, Chief Strategy Officer & EVP Design & Emerging Products at Adobe, discussed this in their talk entitled ‘The radical impact of AI’. They pondered on what makes humans stand out; the answer, they decided, is ideas. As a result, human input will always be necessary. The deployment of AI-powered productivity pools will actually evolve people’s ability to change minds and influence, not stifle it.

In Belsky’s words: “Now we can express ourselves creatively and with confidence, thanks to the tools we have.”

A system should learn you, not the other way around

Orchestration was one of the themes of the day at the DPW NYC Summit. In their session, ‘AI-powered humanised experience: Procurement orchestration at play’, Shachi Gupta, VP Strategy at Oro Labs, and Digital Procurement Futurist Dr Elouise Epstein, delved into this.

They explored the ways in which AI enables us to innovate and improve what we do, and Dr. Epstein reflected on the early days of being a CPO – particularly noting that many fell into the role without knowing what it meant. Change accelerated in 2020 and the concept of a CPO has become solidified since then. However, with that, it has become clear that the way we use technology has changed, and needs to change further.

“The suite providers are over,” Dr Epstein boldly stated. “They’re the old paradigm. The system should learn you. Orchestration is the next generation of procurement.”

Procurement needs a deeper understanding of data

How we use data is constantly evolving, but we need to understand it far better in order to get the best out of it. This was touched on in another session – ‘Next-gen tech: Managing complexity and delivering user simplicity’ – hosted by Mathew Shulz, VP Procurement Strategy at Airbase, in conversation with Christina Howlett-Perez, AVP Head of Procurement at Definitive Healthcare, and Pierre Mitchell, Chief Research Officer & MD or Spend Matters.

The trio explored the concept of procurement now having a seat at the table, and what that means. For example, it means understanding where your company is at, what the policies are, and knowing how to update procurement in a tactical way. It requires focus on gen AI, intake, and orchestration.

The challenge is understanding data better. There needs to be total transparency for end-users as well as the CEO and CFO, requiring easy, adaptable tools. As a result, procurement desperately needs more people with a deep understanding of data, otherwise advanced technological upgrades are just sticking a plaster on a gaping wound.

Digital transformation is not about technology

For obvious reasons, transformation was also a major theme of the DPW NYC Summit. David Rogers, author of ‘The Digital Transformation Roadmap’, led a talk entitled ‘Fueling AI adoption with a transformation mindset’, and highlighted the fact that digital transformation isn’t about the technology you choose.

As with Mark Perera and Scott Belsky’s talk, Rogers’s centred around why humans are still so important when making technological change. What digital transformation is actually about is a change in strategy in mindset; the technology is merely the tool. It’s used in the service of the business to solve what needs to be solved, but people and change management are at the core.

There are four big debts to overcome in procurement

Tony Philippone, Chief Research Officer at HFS Research, closed the DPW NYC Summit with some final remarks and additional words of wisdom. At the end of an inspirational event filled with practical, applicable advice, and discussions marked by ideas and challenges, Philippone reminded attendees that there are still roadblocks ahead.

“A lot of the technology we use today is dead,” Philippone stated, echoing the sentiments of Dr Epstein earlier in the day. He highlighted the fact that procurement is as people-driven as it’s always been – again, a theme felt throughout the day – but that there are still four big debts to overcome. Those are people, process, data, and technical, and they require plenty of attention in order to move forward.

It’s fair to say that DPW Amsterdam has taken the procurement world by storm over the last five years. Founder Matthias Gutzmann developed the concept for Digital Procurement World in 2019, after discovering that existing procurement conferences lacked originality and investor interest. The kernel of an idea for something inspiring and innovative to fill the void formed then, while Gutzmann was working in New York. 

Returning to his home country of Germany later that year, Gutzmann poured all his savings into launching DPW. The first conference, in September 2019, brought in over 400 industry leaders from across 33 countries – an incredible feat for a brand new concept. That response just goes to show that the industry was starved of a truly exceptional procurement conference. 

DPW NYC: The inception

Since then, DPW has gone from strength to strength. Last year’s Amsterdam event attracted over 5,000 attendees and the event has won multiple awards. It seems apt, then, that this incredible growth journey should see DPW coming to its spiritual home of New York for 2024. On the 12th of June, 2024 DPW hosted its first NYC event which dug deep into AI and what it can do for procurement – something that was a natural step for the organisation.

“New York has the highest density of CPOs in the US,” explains Gutzmann. “If you do well in Europe – which DPW has – the next big market is North America. New York is low-hanging fruit with so many pharma and financial services companies.”

As such, it made sense for Gutzmann to launch DPW in New York, where demand for conferences focused on digital transformation and technology is high. “CPOs in the US are looking for something new,” he continues. “They’ve heard about DPW Amsterdam and they’re ready for it here.”

Held in an ultra-cool penthouse in NeueHouse Madison Square, New York City, this intimate event brought together 128 procurement professionals for a day of talks hosted by experts in the field. The goal was to have 100 people, and several others had to be turned away at the door, such was the popularity of the event. The term of the day was ‘artificial intelligence’, the talks focused primarily on what advanced technology and AI can do for procurement – and how the human touch can be maintained.

Thoughts on DPW NYC

“The event has been exceptional from a networking perspective, and really understanding all the challenges that other leaders in similar positions are facing. It’s really heartening to know we’re not the only ones dealing with some of these situations.” – Ajay Khosla, Director, Procurement Digital Experience, Google

“It’s great to hear about what is available in the marketplace from new technology and procurement perspectives, as well as how generative AI is changing procurement as a function.” – Al Williams, Global Chief Procurement Officer and Corporate Services, Invesco

“The intimacy of this event has generated so many amazing conversations between companies. I think this is the perfect sized audience when you’re talking about innovation.” – Danielle McQuiston, Chief Customer Officer, Candex

“It feels like DPW is really starting to build a community and a network. The more of those we have in this space, the more we’re going to get done.” – Gabe Perez, Chief Strategy Officer, RiseNow

Inspiring sessions

Gutzmann opened the day alongside Herman Knevel, CEO of DPW, the attendees buzzing with anticipation. Gutzmann explained DPW’s backstory and how the point of the concept was to nourish the future of the latest thinking in procurement and AI. Where the question was once ‘what is AI?’, it’s now ‘what can AI do for me?’. Gutzmann urged attendees to lean into AI and embrace it and how it can support procurement.

The first in-depth talk of the event was ‘The radical impact of AI’, led by DPW’s Chairman, Mark Perera, in conversation with Scott Belsky, Chief Strategy Officer at Adobe. The two asked: what makes humans stand out? The answer is ideas. The key to positive change through AI lies within its ability to support humans, not replace them. 

Belsky stated that the deployment of productivity tools will evolve people’s ability to change minds and influence, and people themselves will always be necessary. AI tools give us the confidence to express ourselves creatively and unlock better personalisation. Belsky explained how he has watched the AI landscape evolve from low-end automation to decision-making, and as a result, procurement is low-hanging fruit from an AI perspective.

Belsky’s hope is that AI becomes a layer of understanding and more accessible within procurement, raising the bar further for humans. It’s time for 10x thinking, rather than 10% thinking, in his words.

Orchestration at play

The marrying of AI and people power continued with the next session, hosted by Shachi Gupta, VP Strategy, Oro Labs, in conversation with the Digital Procurement Futurist, Dr. Elouise Epstein. The session – ‘AI-powered humanized experience: Procurement orchestration at play’ – delved into the ways in which we can invest in and evolve procurement. 

The pair discussed how AI enables us to innovate and improve on what we already do. Dr. Epstein reflected on when procurement was nascent, with CPOs who didn’t know why they were in their roles or what they should focus on. Change only really accelerated during the peak of the COVID-19 pandemic in 2020, and it solidified the CPO role at the same time. Which begs the question: how can procurement improve the topline as well as the bottom line? 

Dr. Epstein and Gupta talked about lessons learned from the pandemic – including that procurement needed to speed up and become more efficient, since squeezing of costs is an ongoing issue. They stated that UX and data are the focus, while AI is the umbrella, and that procurement orchestration is now absolutely vital. Dr. Epstein boldly stated that the suite providers are over; they’re the old paradigm, and it should be the case that systems learn users, not the other way around. Orchestration is something procurement is only now wrapping its head around, she concluded, but it’s firmly the next generation of procurement.

Five steps to apply AI in your business

David Rogers, author of ‘The Digital Transformation Roadmap’, stated in his talk that five vital steps to apply AI in your business are:

1. Define a problem to solve
2. Find your customer
3. Validate a definition of success
4. Experiment to see what works
5. Share what you learn

Procurement has a seat at the table; so what’s next?

Then came ‘Next-gen tech: Managing complexity and delivering user simplicity’, hosted by Airbase’s VP Procurement Strategy, Mathew Schulz. The session focused on user experience, and saw Schulz deep in conversation with Christina Howlett-Perez, AVP Head of Procurement at Definitive Healthcare, and Pierre Mitchell, Chief Research Officer and MD at Spend Matters. 

They discussed the fact that, with procurement now having a seat at the table, you need to understand where your company’s at when it comes to updating the procurement side. The solution needs to be tactical and cost effective. The group’s solution was to focus on gen AI, intake, and – as Dr. Epstein and Gupta had mentioned already – orchestration. 

The thing to remember, Schulz et al added, is the need for transparency for both the end-users and top leadership. This requires adaptable tools, meaning that procurement needs people who have a deep understanding of data.

The ongoing theme of people – and how they’re still at the core of procurement – was continued by David Rogers, author of ‘The Digital Transformation Roadmap’. His session – ‘Fuelling AI adoption with a transformation mindset’ – focused on the fact that digital transformation is less about technology and more about strategy and mindset.

The afternoon brought with it breakout sessions in smaller groups, with each group involved in lively, innovative discussions surrounding the main topics of the day and presenting their conclusions for everybody to muse upon. This was followed by Rujul Zaparde, Co-Founder and CEO of Zip speaking to Katie Streu, Senior Director Strategic Sourcing at Coinbase, and Guru Mohan, VP Global Procurement at Toast.

The trio brought together the much-dissected topics of AI and orchestration and delved into the best strategies for making them work well together and achieve improvements across the board. They also talked more broadly about practical applications of AI within procurement processes, and the results thereof. 

Thoughts on DPW NYC

“The size of the event is good, and despite how small the group is, the DPW team has managed to keep the vibe of the Amsterdam event. It’s really engaging and forward-looking, and you also get the chance to talk to everybody. I think that’s really great.” – Johan-Peter Teppala, Chief Customer Officer, Sievo

“It’s been phenomenal. The content, the fact that it’s an intimate group, and the quality of the people here. DPW is setting the standard for events.” – Rujul Zaparde, Co-Founder & CEO, Zip

“It feels like home. I feel like everything we’re discussing about solving procurement problems in more innovative ways, and taking a digital lens to everything – these are things I’ve been a crusader for for the longest time. I’m so glad it’s gained momentum and power so that we have this great community now.” – Shachi Gupta, Vice President of Strategy, ORO Labs

AI: Close up

Excitingly, the final session of the day involved everybody wearing a VR headset and being taken on a tour of the metaverse by Clive Teal, CEO of LavinirAI. This involved showing the users around the metaverse, demonstrating its applications, and digging into the benefits from a procurement perspective via multiple fascinating use cases. 

Then, Tony Philippone, Chief Research Officer at HFS Research, closed out the day with some brilliant insights and sobering reminders for the rapt attendees. In his words, a lot of the technology we used today is dead. We’ve spent the last 5,000 years advancing what we’ve always done in procurement, and it demands people-driven as it has advanced. And yet, four big debts remain: people, process, data, and technical. 

Gen AI has changed the game and AI assistants will change things even further, Philippone explained. He also added that implementing gen AI is not a slam dunk. Success requires the right strategy, quality data, and prioritisation to help meet procurement goals.

With a rapt, engaged, and lively audience from start to finish, DPW NYC 2024 was a huge success. Many attendees went on to join the DPW team for the after party at the rooftop of Arlo NoMad where the stirring conversations continued and positive feedback flowed. The event felt like the start of something even bigger for DPW NYC, with Gutzmann, Knevel, Perera, and the whole team openly excited for what’s next. And we at CPOstrategy can’t wait to see how this event evolves, too.

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

The 2024 BCC’s SME Procurement Tracker

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

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

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

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

Local government leads the way in working with SMEs

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

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

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

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

CPOstrategy is renowned for its in-depth coverage and analysis of procurement trends, making it the perfect partner to amplify the impact of DPW Amsterdam. 

As media partner, CPOstrategy will deliver exclusive content, live updates, and in-depth coverage throughout the event.

Here are the updates that you can look forward to:

Insights from Speaker Sessions

Gain insights from industry leaders like Paul Polman, Business Leader & Former CEO of Unilever, Jennifer Moceri, CPO, Google, and Marcelo Stefani, CPO, PepsiCo, as they take the stage to share their expertise and shape the future of procurement.

See Full Agenda

Exclusive Interviews

CPOstrategy will conduct exclusive interviews with top procurement experts, providing you with valuable strategies and perspectives. Stay tuned for these insightful conversations that will be shared throughout the event.

Special Coverage

Look out for special live segments from DPW Amsterdam 2024, as well as full-page summaries in the CPOstrategy monthly magazine that offer a closer look at the vision behind DPW Amsterdam and its impact on the procurement industry. Join the excitement and follow along with #DPWAmsterdam for live updates and exclusive content. Let’s celebrate procurement excellence together!

See Full Agenda

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

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

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

1. Driving down costs

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

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

2. Cultural and objective alignment

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

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

3. Leveraging advanced technology

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

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

4. Ensuring supply chain resilience

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

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

5. Integrating ESG initiatives

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

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

Essential capabilities for modern CPOs

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

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

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

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

Public procurement in the UK dominated by framework agreements 

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

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

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

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

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

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

Procurement is “fragmented” 

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

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

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

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

The trouble starts with legacy communication methods

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

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

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

It’s time for change.

Embracing digitisation as the solution

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

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

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

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

Internal credit and better understanding of risk

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

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

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

Entering a new era 

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

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

Life as an expat can throw many hurdles at you. 

You are constantly forced to adapt to new cultures, languages, forever meeting new people, and forge new relationships – there are no such things as comfort zones. But despite this, there are some things that you simply can’t anticipate or prepare for.

Steven Cox knows this all too well. A Chief Procurement Officer with more than two decades of experience serving the mining sector, Cox is used to leading and delivering major global contracts. And the events of the past few years have played a significant role in the inner workings of both his professional and personal life too.

Navigating disruption

Indeed, Cox was living in Moscow, Russia, when the Russian invasion of Ukraine began in February 2022. His role at KAZ Minerals had seen him lead a team of 30 contract managers and specialists to deliver major construction, off-site infrastructure, engineering, IS&T and mining contracts to support an $8 billion greenfield copper mining project in Siberia. But the conflict ultimately cut his time there short.

“The project was pushed back significantly to re-engineer the serious impacts of sanctions,” he tells us. “We’d already completed mine and infrastructure design aligned with significant contracts being in place for Komatsu autonomous mining fleet, maintenance and repair services, and large construction contracts. All of a sudden, sanctions immediately reduced the available market to predominantly Russia or China. Tier 1 OEM agreements for processing equipment and all related technology also had to be revisited and sourced via the available market. Whilst we could’ve stayed in Moscow, a city and people we absolutely loved, and continued on the project, we made a family decision to leave because of the uncertainty of the situation. We chose to leave and go to Zimbabwe, some would say from the furnace into the fire, where my wife was originally from and to reassess what was next.”

It is in stark contrast to how the year began. Russia entered 2022 with optimistic ambitions. Russian backers even drew up plans for two new copper mines at an investment of $15 billion. But the resulting war meant foreign companies sought to withdraw their influence in Russian mining. Ultimately, the European consumer response has been to look elsewhere and drove continued interest in places such as Australia, South America, Canada and African regions which had acceptable risk profiles.

It was a turbulent time to be living and working in Russia to say the least. Cox explains the importance of being agile and thinking on your feet in such situations. “It was challenging because we had to terminate contracts immediately, implement new ones, being extremely familiar and aware of the ever-increasing sanctions list and ever-reducing approved financial institutions list. Due diligence in all forms of risk, security, written and verbal communications was paramount in order not to breach these sanctions,” he explains. “We had to find solutions to the sanctions we were dealing with which were continually expanding. It was a highly unique situation but incredibly stimulating at the same time.”

For Cox, it wasn’t the first time he had to problem solve. Two years prior and like the rest of the world, COVID-19 was wreaking havoc on people’s lives and business operations. In the case of Cox, he was completing a three-year expat contract in Mongolia with Rio Tinto on the Oyu Tolgoi Project managing a circa $1 billion contract for shafts, underground development and construction. Having gone on holiday to the Maldives in March 2020, Cox and his family couldn’t get back into Mongolia as a result of national and global lockdowns. 

“My three years were almost up so it meant I had to finish the contract remotely,” he explains. “We chose to go back to Australia foolishly and got stuck in the aggressive calamity that was Melbourne, Victoria’s lockdown for several months.  That was tough after living an international lifestyle which wasn’t horribly over policed in Laos, Madagascar and Mongolia. This then led us to Russia which we loved but ultimately ended prematurely too.”

Mining’s perception

In the past, mining has quite often been regarded by some in the general public as an old-fashioned industry stuck in its ways. Boston Consulting Group previously estimated that the mining sector is between 30% and 40% less technologically mature than comparable industries. As such, there is a significant opportunity to generate value by adopting technology proven in other industries. But Cox is keen to squash that old mentality and stresses mining is an exciting place to be.

“That perception mainly comes from those who see it purely as an extractive industry,” he reveals. “There’s probably an ignorance of how much goes on behind the scenes and in the corporate and technical offices to ensure that’s all happening in a cost-effective and environmentally sustainable manner. The corporate background behind big, multinational mining companies is substantial and, in most cases, leading edge. If you haven’t worked in the mining industry, it’s harder to understand that.”

One of the biggest buzzwords of the past 18 months has been generative AI and how it can be used effectively in processes to scale efficiency and achieve cost savings. Cox recognises the potential new technology and AI can have in mining but believes that it is important to use caution when thinking about implementing new systems. “I guess the challenge with mining when you’re talking about analytics, product analysis, critical data and negotiation, the critical success factor before progressing has always been ensuring your data, processes, architecture and assumptions are clean and tested prior to any transition. You must have confidence in these factors if automated decisions and potentially external communication are then going to be artificially generated. There are still some unknowns in this space, so the tactical selection of the most suitable business improvements is critical.”

While the potential advantages are clear to see, the risk of not being able to fully trust the decisions of chatbots is still evident. In mining, failure to do proper due diligence and use inaccurate information can have devastating consequences. “If AI was to give you questionable information and you make production, commercial, technical decisions, or release that information to the market, it could significantly affect a company’s value and integrity,” explains Cox. “In the procurement world, data cleansing for historical and forecasted materials and bulk commodity requirements is very mature and software solutions optimising and automating decisions have been in place for many years. In procurement, it’s about streamlining and automating processes to become more efficient and agile to manage a much more volatile global environment since COVID, all while continuing to ensure ethics, integrity and approvals are maintained.”

Embracing change

Alongside not being particularly tech-driven, another tag that mining is often labelled with is being too male-orientated. In the face of talent shortages, particularly in procurement, encouraging tomorrow’s generation into the workforce is vital – and that includes appealing to both genders to bridge that gap. While progress has been made, diverse talent remains underrepresented across all levels within mining companies. Cox believes mining is actually at the forefront of diversity and inclusion management.

“Rio Tinto and other large mining companies are leading most organisations and industries when it comes to diversity,” he says. “Diversity is important and needs to happen. But for a long time, mining was perceived as a bit of a boy’s club. It’s now extremely pleasing to see the diverse nature of boards, and executive teams and this cascading through all levels of the business. Where career progression opportunities may now be more limited for certain genders, we may start to see extremely experienced mining professionals across all disciplines looking outside of their present organisations and potentially the mining industry.” 

Looking ahead, Cox is full of enthusiasm for the future of mining and is excited about what the next few years for the industry could hold. “There’s mining and there’s mining,” affirms Cox. “I’ve been extremely fortunate to have worked for some great tier-one mining companies. And the reason that I do is because their upstream feasibility is phenomenal, collaboration is second to none, processes, policies and documentation are incredibly mature, and the quality of your colleagues ensures you’re always learning and developing across all areas of the business.

“I’ve also been fortunate to witness many very successful mine closure and rehabilitation projects which benefit local communities for many years to come. Sustainability and innovation are always absolute priorities with unwavering environmental consciousness and extremely diligent reporting. I’d say moving forward it’s important for all companies, not only mining, to invest more heavily in sustainable procurement resourcing and audits which has a presence, but the surface is only just being scratched. 

“There looks to be a lot of movement and portfolio diversification amongst the larger players now in mining with volatile commodity markets suggesting it will be an extremely interesting next few years. This running in parallel with a much larger global microscope on environmental compliance and AI implementation where sensible to do so makes mining an extremely attractive industry to be part of moving forward. I have recently agreed to join another Tier 1 International Mining company in a senior leadership role which will now see me move to a new country and again embrace the unique challenges and benefits these fantastic opportunities present.”

Procurement has undergone a meaningful transformation over the past several years. Driven by global economic, political, and environmental instability procurement has transitioned from its traditionally transactional back-room role, becoming an increasingly strategic value orchestrator for the business as a whole. A recent report by McKinsey observes that “to succeed in the new environment, organisations are currently embedding agility, technology, and innovation into every aspect of their value chains.”

Nowhere is this more true than in the procurement sector, with CPOs becoming drivers of sustainable practice and digital transformation, while simultaneously taking on more and more responsibility for resilience in the value chain and, of course, cost-containment. 

With procurement often responsible for as much as 50-60% of spend within the organisation as a whole, saving money has always been (and will always be) a key responsibility of the function. However, as the discipline becomes more strategic, and factors like supplier relations, carbon emissions, and brand value are also taken into account, we thought it would be useful to take a look at some of the ways a modern procurement function can create value for the business beyond the bottom line. 

5. Ensuring compliance

Much of the risk when it comes to remaining compliant often stems from the organisations your company interacts with, and how those interactions are handled across international borders. Procurement has a critical role to play in ensuring that company spend is not in breach of compliance, and that effective steps are being taken to reduce risk of fraud, waste, and abuse, as well as legal and reputational risks.

4. Increasing resilience in the value-chain 

Much of the strategy surrounding how and from where goods are sourced has changed in the wake of the pandemic, when global supply chain disruption led to spiking logistics prices, resource scarcity, and massive delays. The global source to pay process has restructured itself in the last few years, placing greater emphasis on resilience and adaptability than the last-minute, lowest possible price pre-pandemic approach. 

However, that volatility isn’t going away, despite the waning effects of the pandemic. Climate instability, political upheaval, and continued economic strain felt around the world aren’t going anywhere, and organisations that can learn to thrive amid the chaos will fare better than those who try to resist it. McKinsey’s recent report on the changing nature of the procurement process notes that “Thriving in the future will mean embracing volatility, so that procurement can become a truly predictive function that anticipates price increases, captures downward price movements, and creates value from uncertainty.” A purely risk-averse approach will leave an organisation less prepared to face disruption than one that prioritises adaptability. “Volatility in the markets is at a level we have not seen before,” a pharma CPO told MicKinsey. “Procurement’s ability to adapt to these changes and monetize that volatility will be absolutely crucial for success.”

3. Managing the supplier ecosystem 

While corporate rhetoric has for years been pushing the idea that our value-chains have transitioned from a transactional, legacy approach to a world of strategic partner relationships, many organisations have, it seems, been talking the talk without walking the walk. 

Criticisms were levelled against fast fashion companies in particular this year. It was found that, while a McKinsey survey found that “brands say their relationships with suppliers have depend”, a survey of suppliers by the Better Buying Partnership Index found no change. Reporters for Vogue Business also uncovered partnerships that follow “an exploitative blackmailing model, where brands use the partnership as a guise to pressure suppliers into lowering costs, providing discounts or refusing orders.” 

Procurement is the primary point of contact between many enterprises and their supplier ecosystems, and buyers have a disproportionate amount to power to set the tone and practices in a relationship. Procurement has the potential to make meaningful changes throughout the value-chain with selective buying, favouring qualities beyond just cost, and the tender process.

2. Create transparency and brand trust throughout the value-chain 

The modern consumer and client is increasingly politically aware, environmentally conscious, and assiduous when it comes to identifying empty rhetoric, greenwashing, and corporate spin. Stakeholders, regulators, and consumers are demanding more in terms of environmental impact reduction, starting with transparency throughout the supply chain. 

This month, the European Union introduced legislation banning the use of terms such as “climate neutral” or “climate positive” that rely on carbon offsetting—a widely criticised method of reducing climate emission figures while continuing to pollute. By 2026, inaccurately claiming to be “climate neutral”, “climate positive”, “environmentally friendly”, “natural”, “biodegradable”, “climate neutral” or “eco” without sufficient evidence could carry heavy sanctions. 

Procurement teams have a significant role to play in the process of drawing down carbon emissions, but these steps can’t be taken without first creating the necessary transparency to identify and report Scope 3 emissions accurately. Doing so will not only pave the way for companies to reduce their emissions through supplier and material selection, but will also increase brand trust—and therefore value—in the eyes of an increasingly critical public and regulatory landscape. 

1. Driving emissions reductions in the value-chain  

Taking all the emissions tied to a modern company into account, sometimes fewer than 10% emanate from within its own operations. Scope 3 emissions are a tremendous source of environmental impact, and need to be meaningfully tackled in numerous different ways to avert the worst effects of the climate crisis. 

Increasing efficiency to reduce consumption, transitioning to renewable energy (as well as cleaner sources like nuclear, not to mention advocating for energy mix restructuring at a governmental level), embedding more circular economic practices, and voting with the budget are all key strategies for reducing emissions, and procurement has a huge amount of power to drive their adoption. 

Business relationships can be easy to find but challenging to retain. 

It takes both parties being aligned and willing to work through hurdles together for the relationship to thrive long-term.  

Trustmarque knows this very well. Founded in 1987, Trustmarque is a trusted partner to customers and technology vendors with its advice and technical know-how helping customers acquire and adopt innovative technology to deliver real-life impact.  

And one of Trustmarque’s most important relationships is Coventry Building Society. Having developed the alliance over the past seven years, Trustmarque plays an influential role in propelling the Society toward growth and innovation. Wez Worland is the Chief Delivery Officer at Trustmarque and helps oversee the relationship. He is full of praise for how the partnership has evolved and stresses Coventry Building Society is one of his organisation’s most strategic customers.  

“We love working with Coventry Building Society because as we invest in them, they also invest in us,” he reveals. “I’ll always remember a conversation I had with the Chief Information and Digital Officer Jayne Showell, and she mentioned we solve problems together, we’re honest, transparent, and we work through our issues. I thought this was a powerful and refreshing way to move away from that kind of blame culture. This way of working has allowed us to move forward as one and resolve issues as quickly and as efficiently as possible.” 

Trustmarque has embedded itself within CBS’s procurement processes and driven operational efficiencies through challenging circumstances – even resulting in a £135,000 saving on software tail spend in the past 12 months. Having been involved in the first-ever workshop with Coventry Building Society in 2017, Worland believes one of the highlights was working with the Society on its joint implementation of Microsoft 365 services. “This enhanced their colleague experience, helping their users adopt the latest technology, making them more efficient and helping develop that secure posture internally, but ultimately helping users get a more positive experience.” 

Shared values are an important ingredient to every partnership that can stand the test of time. For Worland, he believes this is where the Trustmarque and Coventry Building Society relationship shines. He recalls sitting down for dinner with Coventry Building Society’s CEO Steve Hughes where Hughes explained how he personally met every single new starter that joined and how communities were supported. “It was from there where I could see we aligned perfectly and had those shared values which are so important,” says Worland. “We’ve always worked on the mantra that trust is hard to build but easy to break. We’ve had to make sure over the years that we’ve maintained our trust.” 

Looking ahead, Worland is enthusiastic about the future of the alliance. “I’d love the relationship to be even more symbiotic,” he says. “We would love to be supporting the Society on their future roadmap and vision because we want to be an extension of them. From a technology perspective, we want to be seen as a thought leader to Coventry Building Society in the areas of data and AI. As Coventry Building Society would say, ‘All together, better’.”  

Click here to read more about Coventry Building Society’s journey towards operational transformation, ESG leadership, and positioning procurement as a creator of social value and community engagement.

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

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

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

Indispensable procurement

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

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

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

Friction with stakeholders

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

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

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

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

When financial systems break down… 

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

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

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

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

Bartering and economic instability 

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

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

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

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

Global and local barter economies in the Great Depression 

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

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

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

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

Public procurement bartering in the 21st century 

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

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

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

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

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

When does bartering make sense for public procurement? 

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

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

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

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