NCC Group: Procurement transformation to a strategic partner

There’s a business proverb used time and time again: “If you aren’t moving forwards, you’re moving backwards”. 

Most business leaders understand this. Many of them accept it as a truth. This is especially true in a tech-powered landscape where it’s easy to fall behind if you aren’t taking steps to keep up to date. Digital transformation is moving at a faster pace than ever before, and remains on the agenda for those in C-suite positions 

As a rule, understanding the need for change and transformation is not the problem. Often, the challenge is finding the funds to implement it. Indeed, cost is the biggest barrier to businesses hitting the “go” button on transformation. 

Grayce’s research of 100+ UK C-suite pros in FTSE 350 companies found that the price of change is the biggest barrier to transformation, with a quarter of respondents citing cost as a blocker to change projects. 

Those able to fund change are also under enormous pressure to get it right. The pace of digital evolution means that an abundance of services and products are now available, creating a selection headache for CPOs who are openly reporting struggles choosing the best-suited solutions. Only half of digital transformation projects met the expected goals or outcomes within a year-long period, according to most business leaders (88%).

With this in mind, perhaps the proverb business leaders should be considering now is: “If you buy what you don’t need, you steal from yourself”. Rising costs have made making the right decisions in digital transformation an essential part of the CPO role. So how can this be done?

Why is the cost of change increasing?

First, it’s important to understand why the cost of transformation is rising for businesses. 

Digitisation isn’t a blanket process with a one-size-fits-all solution. Companies tend to require many different products and services in order to truly digitise operations and implement effective transformation across the front and back end. 

However, as businesses attempt to achieve more and complete complex projects at a faster pace, there is often a necessity for the tech stack to be increased: This comes at a price. 

Subscription services, too, are on the up – as prices rise in accordance with demand. The global subscription economy market size is heading for $1.5 trillion in 2025, up from $650 billion in 2020. Over the past decade, many software vendors have moved to pay-monthly, SaaS models as their core business strategy, recognising the business opportunity and stability these pay-monthly models present. This does, however, usually increase the expense overall for businesses embracing these technologies – with monthly outgoings rising as a result. 

In addition to the increasing cost of the tech itself, training and upskilling costs are also on the rise. The more complex your tech stack, the more people you will need to train to use it. Also, complexity means longer lead times, alongside ongoing training to ensure that the essential knowledge is retained within your organisation. New software innovations are entering the market at a rapid rate. This means that organisations constantly need to upskill their teams in order to understand how to utilise and implement new innovations.  

How CPOs can reduce costs and risks

The combination of spiralling prices and outside influences means that CPOs have to be more strategic than ever in their approach to obtaining new tech. This means focusing on what you need now, and what can come later.  

Without a strategic approach to implementing new software and tools, there will likely be few tangible benefits. Planning new tech around current challenges and future business priorities can ensure appropriate investment.  It’s vital that technology aligns with strategy and priorities, rather than the other way around. 

Getting the right team in place for transformation 

No true digital transformation is achievable without the right team in place. 

When change is afoot, it’s imperative to engage the wider business early. This ensures an understanding of why the new technology is being implemented, how it works and what to do to ensure its effectiveness. Thinking about doing this in-house, you may choose to invest time, energy and resource into your existing team. This requires consideration of workloads and responsibilities, however. Alternately, you may choose to recruit new staff who already have the knowledge required. However, many firms are finding that it is difficult and expensive to acquire fresh talent in 2025. Alongside these rising costs, the Office for Budget Responsibility (OBR) has estimated that 2% will be added to UK employers’ payroll costs due to fiscal changes coming this April.

Risk associated with permanent headcount, alongside time and resource costs associated with this option, have led to many businesses tapping into contractors and consultants on a shorter-term basis to support with implementing change. But this strategy comes with its own risks. Not only is this expertise temporary, but it also puts businesses at risk of damaging knowledge leakage. Indeed, Grayce research found that over a third of C-Suite are concerned about loss of IP when using short-term contractors. 

A possible solution to this is to use longer-term contractors and consultants to support change from project phase into business-as-usual, ensuring a gentler transition. Working with an expert change consultancy can lessen budget risks while still offering scalability and flexibility. Bringing in capable, ambitious, (and now importantly) AI-efficient talent can give companies the flexibility to scale teams in accordance with project requirements, and models like ours give organisations the option to transition analysts into full-time employees for longer-term support and IP retention. 

Ensuring transparent communication to make transformation a success 

Regular, transparent communication is part of what separates successful change projects from failures. Interaction around any new technology must be open, transparent and frequent so that teams can buy into these changes and understand their uses and benefits.  After all, the change is likely to have the highest impact on these individuals, and they, therefore have the capacity to be the biggest advocates.

We have witnessed higher successes in organisations that allocate dedicated ‘change agents’ to communicate project updates. These agents support the project, and enable more effective communication around the transformation. This means they take the wider team along on the journey, ensuring they’re equipped with the information to understand the benefits of the change. Any new software, by its very nature, will result in an operational or cultural shift – and every company must make allowances for this. When people understand the direction of transformation, they are more likely to remain engaged and motivated.

Ultimately, the challenges around the costs of digital transformation are not going away. However, smart, strategic decisions around the most effective technology for business need, open communication, and balancing effective talent solutions are some factors that can present the best possible chance of keeping the cost of change at bay, whilst delivering lasting results.

From materials pricing to labour costs, the challenges facing businesses in the construction sector are significant. In particular, as the Labour government announces new social housing programs and encourages further development in the UK, construction businesses need to be able to operate without succumbing to common industry pain points. 

Digital procurement software solutions provider ProcurePro has unveiled the findings of its latest investigation into the most pressing procurement challenges facing construction companies. The report sheds light on the inefficiencies and complexities that have long plagued the industry. It draws on over 20,000 hours of research and discussions with construction professionals. The results reveal the top pain points affecting procurement teams. These range from a lack of visibility over procurement status to inconsistent quality across projects.

The biggest recurring problems faced by procurement professionals in the construction sector boiled down to the following: 

1. No visibility over procurement status

A lack of access to critical information “leaves the big picture half-painted.” This makes it nearly impossible to assess packages at risk in time to avoid problems. 

2. Manual processes are labour-intensive

A mixture of human-errors, staff shortages, and legacy technology threaten to overwhelm procurement teams. Emails, phone calls, and spreadsheets still dominate procurement workflows, according to the report. Organisations can and should automate the majority of these processes to save time, reduce errors, and increase productivity, they add. 

3. Disconnected workflows

Siloed and disconnected workflows prevent procurement teams from fully capturing the hundreds of steps involved in getting a package from tender to delivery. According to the report, those steps are part of, generally, around 20 different processes running on a few core systems.

4. Delayed procurement puts projects behind

A KPMG study found that, over a three-year period, only 25% of construction projects were completed within 10% of their deadlines, and only 31% came within 10% of budget. Problems in the procurement process can have cascading effects that harm the entirety of a project as it is carried out. 

5. Reporting lacks actionable insights for all levels

ProcurePro’s report argues that “reports are often done for the sake of it.” Not only that, but meaningful analysis often coming as an “afterthought.” Reports are out of date the minute they’re produced and because they don’t always contain relevant data for everyone, are shallow on actionable insights, they add. 

6. Everyone does things differently

A lack of standardisation across the industry means that “Two people trained the same way and working on the same projects will find different ways to reach a solution.” Adopting unified technology stacks can, ProcurePro argues, unify these disparate processes. 

7. Quality drops as volume increases

As the number and size of projects grow, so too do the problems facing procurement teams. “Having scalable, standardised practices in place on a single procurement platform ensures consistent quality as headcount grows,” argues the report. 

8. A lack of supply chain insights

Large construction companies often have ecosystems comprising thousands of suppliers, subbies, and partners. This type of scale creates monumental demand for due diligence in compliance checks, workload assessments, and performance ratings.

9. Scope-of-works gaps

ProcurePro’s research points to the fact that contractors typically lose 10-15% of their margin on variations caused by missing or inconsistent scopes, which then push back projects. The report argues that “Drafting scopes is one of the most time-consuming parts of procurement and has the criminal combination of being easy to mess up and very costly when you do.” 

10. Contracts take too long to get signed

Contracts in the construction sector can mean it takes anywhere from a few days to a few weeks to move a procurement package from the recommendation to contract signing stage. Lost time is lost money, and in worst case scenarios can result in subcontractors showing up at the site before necessary contracts are signed, creating legal and safety issues. 

11. Avoidable errors are common

Human error remains the most common source of procurement problems, delays, and compliance breaches. ProcurePro’s research estimates that avoidable errors erode between 0.5-1% of construction companies’ profits on projects — an estimated total of around £61 million for the sector as a whole each year. 

12. Staff satisfaction, recruitment, and training

“Construction is an industry that runs on the power of people, relationships, and cooperation.” The success of a project might be measured in financials, but for the people working on the project, is it worth it if the work brings misery?” asks the report. A smoother procurement process reduces stress, turnover, and burnout, alleviating pressure on an already overworked sector. 

“Procurement is often seen as a necessary but tedious part of the construction process,” said Alastair Blenkin, CEO at ProcurePro. “But the truth is, it plays a critical role in determining the success of a project. By addressing these core issues, companies save time, reduce costs, and improve the overall efficiency of their procurement processes.”

This week, Crown — a Ukranian-founded, Paris-based procurement startup specialising in procurement negotiations using e-auction technology — announced that it raised €2 million in a pre-seed funding round.

Traditionally, procurement professionals have relied on relatively basic tools like Excel and Outlook when negotiating. Crown argues these tools are inadequate for procurement professionals, preventing from “achieving measurable savings.”

Crown’s founder, Mykyta Voytenko, founded the company hoping to create a new approach to procurement technology. Although brown in Kyiv, Ukraine, he is now based in Paris. Voytenko has over 15 years of experience in international supply chain and procurement. He also teaches procurement at KEDGE Business School’s MAI (Master in International Purchasing). 

He previously led strategic initiatives at companies such as Nestlé, Engie, and Sanofi conducting more than 300 eAuctions for top-tier FMCG companies. After training over 2,500 procurement professionals, who reportedly emphasised the need for modern, technology-driven tools to replace outdated methods, he explains that he recognised a clear gap in the industry.

“Procurement is one of the largest cost centres in businesses, yet negotiation—the heart of procurement—remains outdated, manual, and inefficient,” added Voytenko. He plans to address this problem by bringing more capable, yet more user-friendly technology to market in the form of the e-auction. 

Crown’s new take on e-auctions 

Crown is developing a procurement platform that aims to streamline and accelerate the negotiation process using e-auctions. In much the same way as procurement has transitioned from a cost-containment exercise to a form of more holistic value creation, Voytenko hopes that his company will transform the way procurement organisations think of the e-auction. 

“For nearly 30 years, eAuctions have been used solely to drive down prices, often in ways that lack transparency and ethics. At Crown, we see auctions not as a weapon, but as a tool—one that, when used ethically, creates win-win outcomes for buyers and suppliers,” he said. “We believe auctions are the most powerful negotiation tool when their core purpose is achieving fairness, value, and mutual success.” 

Keeping auctions ethical

The e-auction process enables suppliers and buyers to finalise negotiations in just 20 minutes through Crown’s platform. However, the company has layers of key practices to ensure ethical auctions. 

It includes:

• Structured Processes. Buyers invite qualified suppliers, define clear award criteria, and communicate expectations upfront—removing uncertainty.
• Supplier Engagement. Suppliers have full visibility on bidding rules, ranking, and decision factors in real-time, ensuring clarity and fair competition.
• Post-Auction Transparency. Buyers receive detailed reports, while suppliers receive feedback, creating a fair and structured environment that builds trust over time.
• Code of Conduct. The company collaborates with the clients to develop a Code of Conduct. All parties must accept the code before the eAuction takes place, protecting both buyers and suppliers.

This, reportedly, makes the process especially well suited to serve B2B industries with structured, competitive supplier markets. In these markets, negotiation plays a key role in procurement, so an e-auction is a potentially powerful tool.

Currently, e-auctions are the primary focus of Crown’s go-to-market strategy. However, Voytenko noted that the company’s “long-term vision is to build a full AI-powered procurement suite.”

The funding round was led by Heartfelt. Kima Ventures, Backbone Ventures, Another.vc, Apok Invest, ZAS Ventures, Prequel VC and Bpifrance also contributed. Crown also received contributions from individual investors, including as Dr. Marcell Vollmer, former COO of SAP Ariba; Christophe VIllain, Global Head of Supply Chain & Procurement Technology at Nestlé; and Mario Götze.

The rapid growth of the global software market, valued at $589.6 billion in 2022 and likely to reach $2.25 trillion by 2032, underscores the critical role software plays in our increasingly digital world. Within this growing market, procurement software is gaining significant traction, projected to grow from $6.67 billion in 2022 to $17.9 billion by 2032. This growth is driven by the rising adoption of cloud services, artificial intelligence (AI), and process automation technologies that are reshaping procurement processes and enhancing efficiency.

Yet, the path to digital transformation is fraught with challenges. Despite significant investments, a staggering 80% of digital initiatives fall short of their intended outcomes. This high failure rate highlights the turbulent undercurrents of the digital revolution, which continues to reshape the business landscape with relentless force.

In today’s world, where technology and business are inseparably linked, digital transformation presents both incredible opportunities and formidable challenges. Procurement, once seen as merely transactional, now stands at the forefront of this revolution. Procurement leaders are no longer just managing costs and supplier relationships; they are pivotal in driving innovation, efficiency, and agility across their organisations. Yet, many procurement leaders are still grappling with digitalisation projects that drag on too long, cost too much, and deliver disappointing results. 

The pressing challenge is clear: procurement digitalisation must deliver real, tangible value. The gap between the lofty promise of digitalisation and the reality of its effective implementation is not just striking, it is alarming.

Why do most procurement transformations fail?

While leading award-winning global digital procurement programs and delivering international keynotes on digitalisation and change management, I often encountered peers who were standing at the precipice of their own digital transformation journeys. Many were just beginning, eager to understand why my initiatives had thrived where others had faltered. They were driven to discover the keys to success, keenly interested in the strategies and decisions that distinguished my work on the global stage. In these conversations, I recognised a shared determination to unlock the potential of digital transformation, but also a sense of uncertainty about how to navigate the complexities that lay ahead.

A recurring theme emerged in these discussions: when programs went off course, the blame was often placed on external factors; the software, the implementation partner, or even unforeseen circumstances. Yet, beneath these surface-level excuses lay a more profound, often neglected issue: the failure to look inward and ask the critical question, “What did we overlook?”

The harsh reality is that most digital procurement transformations don’t fail due to external obstacles, but rather due to inadequate planning, poor execution, and a lack of focus on user adoption. Common pitfalls include a lack of clear vision, insufficient executive support, poor resource allocation, constrained budgets, and inadequate or missing change management strategies. 

A well-planned transformation can streamline procurement operations, improve supplier collaboration, and unlock new opportunities for growth. However, success requires more than just implementing new software. Organisations must take a holistic approach, integrating digital procurement into their broader business strategy while ensuring seamless adoption across all stakeholders.

This article explores the critical success factors that drive effective digital procurement transformation and how businesses can navigate its complexities to gain a competitive edge.

Laying the Strategic Foundation for Transformation

A successful digital procurement transformation begins with a well-defined strategic vision. Organisations must clarify their objectives—whether it is optimising costs, increasing transparency, mitigating risks, or advancing sustainability goals. Without a clear roadmap, digital initiatives risk becoming fragmented, leading to inefficiencies rather than improvements.

Equally critical is securing executive sponsorship. Leadership buy-in ensures that procurement transformation aligns with corporate strategy and receives the necessary resources for execution. When executives actively champion the initiative, teams are more likely to embrace new processes, accelerating adoption across the organisation.

To build a strong foundation for transformation, organisations should:

• Define clear business objectives and key performance indicators (KPIs).
• Align procurement transformation with enterprise-wide digital strategies.
• Secure executive sponsorship to drive momentum and accountability.

Driving Adoption Through Effective Change Management

While a strong strategic vision is critical, its success hinges on execution. The next challenge is ensuring that employees and suppliers fully embrace the transformation. Resistance to change is one of the biggest obstacles to digital procurement adoption, often stemming from unfamiliarity, complexity, or concerns over job security.

A structured change management strategy is essential to overcoming these barriers. Procurement teams, business stakeholders, finance departments, and suppliers amongst others should be involved from the outset, ensuring that digital solutions are designed with user needs in mind. Organisations must also prioritise training and continuous support to build confidence in new processes.

Key strategies for ensuring smooth adoption include:

• Involving procurement teams, IT, and business stakeholders in technology selection and system design.
• Offering hands-on training programs and ongoing support.
• Establishing a clear communication plan to highlight the benefits of digital procurement.

Ensuring Seamless Integration Across Enterprise Systems

Procurement does not operate in isolation—it must be fully integrated with finance, supply chain management, and enterprise resource planning (ERP) systems. One of the most common pitfalls in digital transformation is deploying standalone procurement solutions that create data silos, leading to inefficiencies and misaligned decision-making.

To maximise value, organisations should choose digital procurement platforms with strong interoperability. Whether through native integrations or robust API capabilities, these systems must enable real-time data sharing and seamless process automation. Collaboration between procurement and IT teams is crucial to minimising disruption and ensuring a smooth transition.

Best practices for seamless integration include:

• Conducting a technology audit to assess integration requirements.
• Selecting procurement platforms that align with existing enterprise infrastructure.
• Partnering with IT teams to ensure secure and scalable system connectivity.

Leveraging Data and AI for Smarter Decision-Making

One of the most significant advantages of digital procurement is the ability to harness data driven insights. By using artificial intelligence (AI), machine learning, and predictive analytics, organisations can optimise spending, improve supplier performance, and identify cost saving opportunities.

However, the value of these insights depends on the quality of data. Inaccurate or fragmented data can lead to poor decision making and procurement inefficiencies. Establishing strong data governance policies is crucial to ensuring accuracy, consistency, and compliance.

To fully capitalise on procurement data, companies should:

• Implement AI-driven analytics to enhance procurement intelligence.
• Establish data governance frameworks to maintain accuracy and compliance.
• Use predictive analytics to anticipate market trends and procurement risks.

Enhancing Supplier Collaboration and Transparency

Digital procurement transformation extends beyond internal efficiencies—it also strengthens supplier relationships. Organisations that successfully integrate digital tools can create a more transparent and performance-driven supplier ecosystem.

Automated procurement platforms, self-service supplier portals, and real-time performance tracking enable businesses to foster stronger collaboration with vendors. However, supplier adoption is critical to success. Companies must actively engage suppliers, providing necessary training and support to ensure smooth integration.

Best practices for enhancing supplier collaboration include:

• Implementing digital platforms that streamline supplier onboarding and engagement.
• Using performance analytics to build long-term, data-driven partnerships.
• Encouraging suppliers to embrace digital tools through training and incentives.

Embracing Agility and Continuous Innovation

Digital procurement transformation is not a one-time initiative—it is an ongoing journey. As market dynamics evolve and new technologies emerge, organisations must remain agile to sustain long-term success.

Forward-thinking companies continuously evaluate their procurement strategies, leveraging innovations such as blockchain, robotic process automation (RPA), and AI-driven contract management. Companies that adopt a culture of continuous learning and adaptation will be best positioned for future growth.

Key steps for maintaining agility include:

• Conducting regular performance assessments and process optimisations.
• Staying informed on emerging procurement technologies and industry trends.
• Encouraging a culture of innovation and proactive risk management.

Prioritising Cybersecurity and Regulatory Compliance

As procurement processes become increasingly digitised, cybersecurity and compliance must remain top priorities. Procurement platforms handle sensitive financial data, contracts, and supplier information, making them potential targets for cyber threats.

Organisations must implement robust cybersecurity frameworks to protect procurement operations from data breaches, fraud, and regulatory violations. Compliance with evolving regulations, such as GDPR and anti-corruption laws, is equally critical to maintaining trust and transparency.

To safeguard procurement operations, companies should:

• Implement strong security measures, including encryption and multi-factor authentication.
• Regularly update procurement policies to align with regulatory changes.
• Conduct cybersecurity training for employees and suppliers.

In an era where digital transformation is redefining business functions, procurement is emerging as a key enabler of innovation and profitability. Xerox recognised this shift and took bold steps to reimagine its procurement strategy—not just as a cost-saving function, but as a catalyst for business growth.

By centralising operations, leveraging advanced technologies, and fostering strategic supplier partnerships, Xerox transformed procurement from a traditional cost center into a revenue-generating function. This case study explores the key pillars of Xerox’s transformation, illustrating how a forward-thinking approach to procurement can drive efficiency, unlock new revenue streams, and create lasting competitive advantage.

Real-world Example – A Transformation From Cost Center to Profit Engine

Xerox, a leader in corporate innovation, redefined its procurement function—elevating it from a traditional cost center to a strategic profit driver. This bold transformation optimised internal operations while positioning Xerox as a procurement service provider, opening new revenue streams and reinforcing its market leadership.

The Pillars of Xerox’s Procurement Transformation

Xerox’s procurement overhaul was built on six key strategic pillars:

• Centralisation: Consolidating procurement operations for greater oversight, consistency, and economies of scale.
• Technology Integration: Deploying automation and analytics for real-time tracking, data-driven decision-making, and process efficiency.
• Supplier Partnerships: Shifting from transactional relationships to long-term, value-driven collaborations.
• Talent Development: Investing in procurement expertise to align sourcing strategies with broader business goals.
• Cost Optimisation: Conducting in-depth spend analysis to drive cost savings and operational efficiencies.
• Strategic Sourcing: Prioritising total cost of ownership, supplier performance, and sustainability to maximise long-term value.

Together, these initiatives streamlined operations, reduced costs, and unlocked significant strategic value.

Turning Procurement into a Revenue Generator

Beyond cost savings, Xerox extended its procurement capabilities externally, transforming a traditionally internal function into a revenue-generating service. This shift not only demonstrated procurement’s potential as a business enabler but also strengthened Xerox’s position as an industry innovator.

Enterprise-Wide Impact: A Cultural Shift

Xerox’s procurement transformation had a far-reaching impact across the organisation, instilling an entrepreneurial mindset throughout its business units. By integrating procurement into its broader strategic vision, Xerox fostered a culture of innovation, agility, and long-term value creation.

Key Takeaways: Procurement as a Strategic Growth Driver

Xerox’s transformation illustrates the competitive advantage of reimagining procurement. The benefits include:

• Driving Innovation & Agility: Encouraging creative problem-solving and entrepreneurial thinking.
• Strengthening Strategic Alignment: Ensuring procurement actively supports and drives business objectives.
• Enhancing Competitive Advantage: Positioning procurement as a key differentiator in market positioning and service quality.
• Improving Visibility & Accountability: Elevating procurement’s role in corporate decision-making.
• Attracting & Developing Top Talent: Establishing procurement as a dynamic, high-impact career path.
• Boosting Morale & Corporate Reputation: Strengthening internal engagement and reinforcing Xerox’s leadership in strategic innovation.

A Blueprint for the Future

Xerox’s evolution highlights procurement’s untapped potential as a strategic driver of growth. As businesses navigate an increasingly competitive landscape, procurement is no longer just about cost containment—it is a catalyst for innovation, profitability, and long-term success.

The question is no longer whether procurement can drive profitability, but how organisations will adapt to unlock its full strategic impact. Those that seize this opportunity will gain a decisive edge in shaping the future of business.

The Time to Act Is Now

Digital procurement transformation is no longer an option—it is a competitive necessity. Organisations that align procurement with business strategy, integrate digital tools effectively, and embrace data-driven decision-making will gain a lasting advantage in today’s fast-changing market.

Companies that fail to act risk falling behind, losing cost efficiencies, and struggling with outdated procurement processes. Now is the time for organisations to rethink their procurement strategies, invest in the right technologies, and build a future-ready procurement function that drives business success.

For a deeper exploration of successful digital procurement transformation, I share comprehensive strategies, best practices, and real-world insights in my book, Digital Transformation in Procurement: Plan, Execute, and Adopt a Successful Digital Procurement Programme.

Is your organisation ready to unlock the full potential of digital procurement? 

Andries Feikema is author and a distinguished professional in procurement and supply chain management, with over two decades of global experience. He is a pioneer in procurement digitalisation, transformation and change management, delivering successful outcomes across the Americas, the Middle East, Africa, Asia Pacific and Europe. Feikelma has held leadership roles in blue-chip and Fortune 500 companies as well as the non-profit sector. He is based in the Netherlands.

Spend optimisation platform company Vertice has raised new funds to support the development of its platform and expansion of its customer base. The company announced today the completion of a $50 million in Series C funding led by pan-European venture capital firm Lakestar. 

Opaque approvals, rising prices, and compliance threats 

Stephen Day, CPO at Kantar and a member of Vertice’s Advisory Board, commented, “The curse and the blessing of procurement is that it is the only business process that any employee could perform – with or without authorisation.” 

He highlights the fact that procurement teams “struggle every day” with opaque approval processes, rising prices, compliance threats and a lack of clarity over best pricing. So far, according to Vertice, solutions to the problem have been “disparate and disconnected” — solutions that address individual pain points like procurement workflow builders, contract negotiation, benchmarking data and SaaS spend optimisation. 

In a survey conducted by Vertice in September of last year, 37% of respondents said that procurement wasn’t seen “as a strategic priority”, with 35% saying that their organisation wasn’t willing to invest in the necessary skills to tackle the issue.

“Control and visibility of every purchase therefore becomes essential, but it can be painfully difficult when data and intelligence is disparate,” adds Day. “Unifying these data sources and processes into a single platform that is built with the stakeholder experience in mind, as much as for procurement leaders, solves so many challenges – and is a huge opportunity for Vertice.”

Creating an “unfair advantage”

Vertice’s founders — entrepreneur brothers Roy and Eldar Tuvey — have two decades of experience running enterprise SaaS companies. 

The latest investment in Vertice brings the total raised to over $100 million. Additional participants include Perpetual Growth and CF Private Equity, alongside existing investors Bessemer Venture Partners and 83North.

Vertice has grown its revenue 13 times over during the past 2 years. The Series C investment will further accelerate Vertice’s mission to create the go-to unified backbone for modern procurement teams. In 2025, Vertice will open several new regional offices and drive product development by tripling its engineering team. New automated product capabilities and integrations will help enterprise procurement and finance teams improve visibility, streamline processes, reduce costs, and make better decisions. 

“We created our own unfair advantage,” commented Roy Tuvey, Founder and CEO at Vertice. “After spending two years perfecting our SaaS and cloud spend optimisation, achieving product-market fit and taking market share from established players, we’ve brought all of our data and insights directly into the workflow experience. All employees can now initiate any purchase, quickly, transparently and at the best price, while procurement can fully customise the workflows to their needs and embed granular approvals.”

While 2024 was a more stable year for the global supply chain, it wasn’t without its challenges. From Houthi attacks in the Red Sea to port strikes in the U.S., IT buyers should know by now that they always need to be prepared for unpredictable supply issues. 

The IT supply chain will continue to be hugely volatile, but being aware of the ups and downs can make a huge difference as it will help buyers anticipate possible hurdles before they arrive. Here, Ian shares some of the market movements and trends that have the potential to impact IT buyers as we enter 2025: 

Supply chain movements to watch out for 

There are always a number of geopolitical and social factors that can impact supply chains. Trump’s imminent return to the White House and the escalation of tariffs is one such event. In the short-term, manufacturers and retailers may attempt to stockpile goods – while this will go some way in protecting profit margins, it’s only a matter of time before companies will have to make a call on whether to absorb additional costs or pass them on to the end user. 

Buyers should also be aware of factory closures during Chinese New Year which arrive even earlier on January 29^th. Companies have had to scramble to get orders in before the holiday shutdown and this surge in demand has already created constriction with freight rates increasing by up to 30% in November. 

Data management 

A key focus in 2025 will be better data management with procurement departments as companies look to analyse spend. In part, this will help to reduce costs but it can also help to track supply chain purchases from both an ethical and sustainability perspective. For years, procurement teams have had to rely on rudimentary practices, such as Excel sheets, to record purchases. This approach is liable to human error and can lead to gaps and inconsistencies when organisations come back to examine spend. To tackle this, we’re seeing the adoption of digital procurement solutions that are providing access to previously unavailable data or bringing order to unstructured data sets. This is helping teams to more accurately analyse past spend, predict future costs and monitor their supply chain.

Sustainable IT 

Organisations are facing increased pressure to demonstrate responsibility through their supply chain. As well as helping companies monitor the ethicality of its suppliers, we’ll also see greater consideration given to the equipment itself and a surge in demand for re-manufactured devices. Unlike a refurbished device where the odd component is repaired or replaced, re-manufacturing devices involves taking the whole product apart and putting it back together again. This level of care and attention means they are like new – but with the added benefit of being more cost-effective and environmentally friendly.  

Staying one step ahead when it comes to IT procurement

By staying in regular conversation with suppliers, procurement teams can stay one step ahead of anything the supply chain may throw at them and feel confident that they are taking a proactive approach to purchasing IT goods and services in 2025.

Procurement leaders are navigating an increasingly volatile world where supply chain disruptions have become a constant threat. From geopolitical conflicts like the war in Ukraine and labour strikes on the US East Coast to extreme weather events driven by climate change, global trade is under immense pressure. These challenges cause delays, increased transportation costs, and inflationary impacts that threaten organisational performance. Consequently, the key question is no longer whether disruptions will happen, but how prepared procurement professionals are to handle them.

At the heart of these challenges are contracts. Once static documents, contracts have now become critical tools for mitigating risk and ensuring supply chain resilience. They are one of the most powerful resources at the procurement team’s fingertips. Yet, antiquated practices in contract management often undermine this potential, exposing businesses to unnecessary vulnerabilities. To remain competitive, procurement leaders must adopt a modernised, technology-driven approach to contracting. This approach must align commercial agreements with the complexities of today’s supply chains.

The Cost of Disruption

Supply chain disruptions impact industries differently, but their financial toll is widespread. For instance, UK exporters face slower, more expensive transportation, while US businesses grapple with material shortages and rising costs. According to World Commerce & Contracting, such inefficiencies lead to an average 9% revenue loss in every contract. This is a substantial financial impact for enterprises with thousands of agreements.

Contracts serve as the foundation of commerce, governing every transaction and acting as the single source of truth for business relationships with customers and suppliers. Sellers need clarity on their rights, and buyers need certainty about deliverables. Therefore, ensuring contract language addresses potential supply chain disruptions is critical to help enterprises navigate today’s complexities with greater agility.

Traditional approaches to managing contracts fail to account for the unpredictability of modern supply chains. Procurement teams must develop contracts that anticipate and respond to disruptions. Mechanisms like inflation-adjusted pricing, force majeure clauses, and renegotiation terms to maintain flexibility are all critical in this endeavour. Additionally, teams must automate the monitoring of such clauses to ensure they are properly enforced during turbulent times.

Leveraging AI for Smarter Contracting

Many organisations fail to fully leverage the true potential of contracts. Now, however, artificial intelligence (AI) is revolutionising contracting to help enterprises control costs, recapture revenue, and reinforce compliance across their organisations. Research from Icertis reveals that 90% of CEOs and 80% of CFOs struggle with effective contract negotiations, leading to significant revenue leakage. 

AI transforms contracts into data-rich resources, delivering real-time insights into bottom-line risks like cost escalations and upcoming renewal deadlines. These insights empower procurement leaders to make proactive decisions, such as renegotiating unfavourable terms or identifying alternative vendors if there are gaps in supply chains.

By digitising contracts and applying AI, organisations can enhance visibility, streamline processes, and position their procurement teams to make a notable impact on business outcomes. For example, AI can detect risks in supply chain routes and recommend backup suppliers to prevent delays from escalating into costly disruptions. When contract data is integrated with core procurement systems like SAP Ariba, AI can also flag unpaid supplier invoices or discount opportunities that enable enterprises to recapture lost revenue. 

Nearly half of Chief Procurement Officers have led AI adoption initiatives. However, AI’s full potential in contracting – also known as contract intelligence – still has substantial room for growth. AI has the power to free procurement teams from routine tasks, enabling them to focus on strategic initiatives and become effective change makers within their organisations. 

Negotiating for Resilience

To succeed, procurement leaders must take a proactive, technology-first approach to contract management. 

This requires treating contracts as living resources that address supply chain vulnerabilities and advance commercial goals. By centralising and analysing contract data through AI-driven platforms, companies can diversify their supplier base. Doing so reduces reliance on single sources, allowing them to better manage costs, and negotiate more favourable outcomes.

In today’s geopolitical environment, AI in contracting also supports compliance by helping to align agreements with changing regulations, reducing the risk of legal and financial penalties. With the right elements built into every contract, procurement teams can better anticipate risks and enhance their organisations’ longevity.

Contracts as Catalysts for Value

At its pinnacle, effective contract management drives value creation. Well-structured contracts improve supplier relationships by promoting transparency and trust. Procurement professionals can use AI-driven insights to make smarter decisions, secure better terms, and improve profit margins in every department of the business.

By treating contracts as powerful partners, procurement leaders can recover lost revenue, optimise supply chain performance, and capitalise on growth opportunities. This shift is essential for navigating the complexities of modern commerce and solidifying procurement’s central role in organisational success.

The Future of Procurement 

Procurement challenges demand a fundamental shift in how businesses view and manage contracts. In an era of uncertainty, relying on traditional, outdated methods – like saving signed PDFs in a forgotten shared folder – is no longer sufficient. 

Procurement leaders must embrace AI-powered contract intelligence to build resilience, control costs, and turn contracts into tools for transformation. In today’s financial climate, where every pound matters, the time to invest in AI is now.

When it comes to appreciating the enabling powers of technology, few are quicker to see the benefits than an IT manager. New solutions are constantly helping them to speed up once lengthy processes and provide faster access to the crucial insights which empower IT leaders to take up more strategic roles. When it comes to embracing the digital solutions that are making it easier to buy technology however, IT managers have been slower on the uptake. 

Research shows that most are yet to adopt the digital procurement solutions available to them. The majority are instead still relying on manual processes that can prove costly, both financially and through the time wasted. 

For example, almost one-in-five say that every month they spend around one week of their time buying IT equipment. Here are three reasons why it’s time for IT managers to embrace digital procurement solutions that will free up time to spend on more strategic tasks.

1. It’s impossible to keep up 

Even if manual procurement methods were as efficient as possible, it would be impossible to keep up with the volume of price changes in the IT market. There are up to 30,000 price fluctuations every single day. When Probrand conducted research with IT buyers about their buying habits, it revealed that 75% were unaware of this constant state of flux. 

It happens so often that, in the time it takes to pick up the phone to purchase a laptop, an item could have gone up in price by as much as 60% or become eligible for discount. If buyers don’t have the visibility provided by digital solutions, they can often miss these price spikes, resulting in over-spend. 

It’s also true that even if the price they are seeing is still correct, this could become irrelevant if an item has gone out of stock. With digital procurement solutions, however, IT buyers can see live pricing and accurate stock levels in the supply chain at all times.  

2. Greater market transparency

As every vendor has their own pricing model and route to market, comparing several reseller supplier prices is the only way to ensure you are getting the best value for money. Nearly half of IT buyers (45%) now do manual price comparison research online, but it’s a time consuming process. And, while this can give greater reassurance that buyers are not getting ripped off, it still doesn’t provide true visibility of the markups that are actually being added by resellers above the trade price. 

Our research shows most aren’t getting the value they think they are with this manual price comparison process, some are paying one-off markups as high as 1,126%.   

During volatile times, such as during the Covid-19 lockdown period, it can be difficult to know if suppliers are inflating prices or not. Our research has shown that IT suppliers will routinely charge higher margins during these periods especially, often in excess of 50%. 

When armed with digital procurement tools, however, buyers quickly gain transparency over the market. They can scan thousands of options from a breadth of suppliers in an instant. Real-time pricing also allows buyers to benchmark and validate the exact margins that suppliers are charging, enabling them to make fully informed purchasing decisions. 

3. Allow IT teams to focus on their core responsibilities 

The latest data shows that the UK is among five countries currently struggling the most with a technology skills deficit. This shortage of talent at a national level means IT teams are being stretched thin. They are being asked to juggle multiple roles while businesses look to find new recruits to provide the support they need. 

When this is the case, organisations should aim to have their team members focus on their core role, be that a systems administrator, technical engineer or developer – rather than overburden them with additional duties such as procurement. When you consider that procuring technology is not in the job specification of 70% of people who end up buying software and hardware, this doesn’t make sense. 

While it’s true that technology can never replicate the ability of an individual to negotiate and apply judgement, what it can do is ease the burden on overstretched and overworked IT managers. The ability to embrace digital procurement systems will free up their time, allow them to focus on more strategic activities and provide organisations with better value for money. 

So it’s time for IT managers to challenge the norms of manual ways of buying IT and be innovators in adopting digital technology to unlock time and budget for more strategic tasks.  

The US procurement software market is exhibiting strong signs of growth driven by both technological innovation and increasingly common disruptions affecting the supply chain. New data projects that the US’ procurement software market will grow from around $2.24 billion last year to almost five ($4.97) billion by next decade. This represents a CAGR of 9.26% between 2024 to 2032. 

Software solutions to procurement’s thorniest problems 

Procurement software solutions are attracting investment as they aim to solve some of the procurement sector’s most pressing issues. Ten years ago, procurement was a largely reactive, tactical function — filling purchase orders in response to requests from other business departments. Today, in response to increasingly common disruptions to global supply chains, procurement teams are being forced to take a more strategic approach, and leveraging digital solutions is a key part of the function’s transformation.  

Most procurement software solutions automate and centralise several parts of the procurement process. Traditionally menial tasks that took place within siloed departments. For example, processing purchase orders, invoices, and supplier management and sourcing were all typically handled manually. This made them time consuming, expensive, inflexible, and prone to error. All are strong contenders for automation and consolidation within a single unified platform.

Organisations can increase the effectiveness, precision, and openness of their procurement processes by combining these tasks into a single platform. This, according to new data by Research and Markets, has wide-ranging applications in many different industries. Essentially, better digital procurement solutions give businesses a thorough understanding of a multitude of factors affecting their source-to-pay chain. This ranges from vendor performance and availability, to pricing, allowing them to manage their supplier relationships more effectively.

Investment signals sector-wide growth 

The more successful procurement software companies are already attracting significant investment. In October, AI-powered procurement orchestration platform Zip was the recipient of a $190 million funding round. The cash injection represents the largest single round of funding for a procurement technology company in over 20 years. It brings Zip’s valuation to $2.2 billion, a significant increase from the company’s $1.5 billion valuation in 2023. 

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

Speaking with CPO Strategy at DWP 2024 in Amsterdam, Zaparde claimed that Zip has helped its customers save around $4.5bn of spend over the last two years. “One customer of ours, Snowflake, achieved over $300m in savings alone,” he added. “We’ve seen tangible benefits already. The way procurement is evolving isn’t a hypothetical thing – it’s really happening.”

AI, disruption, and digital transformation define the decade ahead 

There are several key factors driving the procurement software market’s growth. Among them are: the growing use of technology, the COVID-19 pandemic’s effects, a focus on cost optimisation, growing sustainability concerns, the rapidly growing e-commerce industry, the integration of AI and machine learning (ML), and supply chain disruptions. 

Research and Markets researchers note that many organisations are responding by pursuing digital transformation in procurement. These businesses aim to not only improve decision-making, but also decrease manual labor, and increase transparency. This, if done correctly, can lead to increased productivity and responsiveness. Making this change, they claim, is essential to being competitive in an ever-more-complex environment that moves faster than ever before.

Being successful in today’s supply chain requires work. It doesn’t just happen by mistake, especially in the fast-paced tech-driven business world of today.

Spencer Penn, Co-Founder and CEO at LightSource, knows this well and recognises the importance of full use of the digital tools at his disposal. 

Indeed, his company is on a mission to ‘illuminate the global supply chain’ through building software that helps procurement professionals collaborate with their suppliers and create a win-win in the process. LightSource is an online platform for strategic sourcing designed for both buyers and suppliers and includes sides of the app with tools for everyone in the supply chain ecosystem.

The birth of LightSource

Penn’s journey to founding LightSource is certainly an interesting one. Penn spent a portion of his early career at Tesla under the leadership of Elon Musk where he helped push the company’s Model 3 programme which was Tesla’s first mass-market electric car. Upon starting with the carmaker, Tesla was making approximately 1,000 cars every week which Penn explains later scaled to 10 million vehicles throughout the lifetime of the Model 3 programme. 

“One of the big challenges that we faced was that we were sourcing 30 billion of direct materials on Excel spreadsheets and emails,” he recalls. “So naturally I went out to the market to find a direct material sourcing solution because I assumed something like LightSource existed. I got demos from every vendor under the sun and I was shocked to discover that there were only really two options that I knew nobody would use. And so at a certain moment, years after leaving Tesla, I thought what would it look like if we went out on our own and built something that’s by procurement for procurement which is easy to use and fast to deploy. And here we are.”

But what sets LightSource apart is its ability to solve the direct materials use case. According to Penn, he believes his firm’s competitive advantage lies in being a source to contract that works for direct materials and large strategic indirect spend. “What we don’t focus on is the tail spend or on this requisition intake to procure process,” he explains. “We are focused on the source to contract which is everything from the bill of materials through the PLM, to sourcing and supplier relationship management which is all focused on direct.”

DPW Amsterdam

At DPW Amsterdam, this year’s theme was 10X which is the idea that organisations need to accelerate thinking that is 10 times their current capacities. As far as Penn and LightSource is concerned, he believes aiming for exponential advances holds the key to long-term success in 2025 and beyond.

“Incremental improvements don’t stick,” he reveals. “If you’re going to go to an organisation and say, ‘Hey, we’d like to improve your procurement process by 5%, 10%, 20%, it’s not that interesting.’ The inertia of what people know and are used to no matter how much they love or don’t love it, they’re not willing to change for a small incremental improvement. That’s what I see a lot of companies angling for is only a slight improvement. But when I think about the theme of 10X and the fact it is also very closely paired with generative AI, this will enable the next generation of software that’s not just an incremental improvement, but a complete revolution.

Transformative space

“I think in two years the way the software landscape’s going to look is totally different. If you present someone with a 10% improvement, there’s not really a lot of interest or adoption, but if you can actually think about what’s a paradigm shift, a 10X improvement, then the conversation switches from why should we use this to how can I make sure I’m not left behind by not adopting this? That’s the key.”   

But in order for procurement to reach its digital potential, executive buy-in is required. According to Penn, it is both the biggest driver and obstacle in equal measure that stands in the way of progress. “If we encounter a Chief Procurement Officer and they’re very forward thinking and have a really clear and defined vision, those end up being really revolutionary deployments,” says Penn. “When there’s a leader that is very comfortable with what they already know, they’re living in their comfort zone and they don’t really want to reinvent the wheel or just think about what’s possible, then it’s always rolling a rock up a hill. I always get a little bit of PTSD when I think about really engaging them more directly.”

GenAI drive

But Penn is empathetic to ripping up the carpet and starting from scratch, particularly when strategies or processes have worked successfully in the past. However, if an organisation isn’t proactive in their approach to digitalisation and embracing 10X thinking, they risk being caught out by competitors. “There’s this great Bob Dylan that I love which is ‘If you’re not busy being born, you’re busy dying’. And I love it because being born is uncomfortable. It’s like being a beginner again, it’s new. And if you’re not busy being born, then you’re busy dying. And I think the same can be said for procurement leadership.”

GenAI is one of the hottest topics in procurement right now. Its potential is exciting and is discussed at length in meetings and conferences the world over. However, there are still risks attached such as data quality challenges like hallucinations along with security concerns.

“You have to think about where these models live and are stored,” explains Penn. “Are they using your data in training? How do you make sure you’re creating safeguards around IP leakage? I think that’s extremely important so we handle that in a very sophisticated way. The second thing is you have to think about access control for the models. One of the techniques that’s been popular over the last year is something called retrieval augmented generation. The model is not just creating a response from its own training set, but rather being instructed to query the company’s known data. If it can query the known data, whoever’s accessing that model, you need to make sure that they have permission to access things like payroll data or HR data if that’s the kind of question that’s going and seeking through databases.”

Managing the AI challenge

However, AI is not a silver bullet and should not be used for technology’s sake. Penn is well aware of the temptation of leveraging AI, and in particular GenAI, because it is shiny and new. But doing so could be a costly mistake.

“You should ask yourself ‘What are the problems that you face that are real pain points?’ And then work backwards and be flexible about the solution,” he explains. “You should then ask ‘Can AI actually solve it?’ There’s a very common product management question I like to ask customers during discovery interviews which is ‘If you had a magic wand, what problem would you solve?’

“That basically asks the participant to forget about the possible and just assume anything’s possible. This is simply to get to the heart of what are the biggest challenges that you would solve. That magic wand thinking is a good approach to scoping out the problem sets that you want to address with AI, especially as the space is moving so fast. My final recommendation is just to know it’s moving quickly. If you’re going to make a big investment in AI, assume that it is very possible that within six to 12 months there is a different company that obsoletes whatever you’re looking at today.”

Find out more about LightSource here.

“Behaviours and mindsets are a fundamental thing that needs to be changed, and it starts with the leadership themselves.”

Lance Younger is the CEO of ProcureTech. Speaking to CPOstrategy at DPW Amsterdam 2024, Younger believes that in order for organisations to achieve 10X, transformation needs to be allowed to happen and quickly. However, this doesn’t just come from systems and processes, as Younger explains. “Leaders need to think differently about how they engage with their teams, with their peers, and with suppliers as well,” he tells us. “And then after that, it’s been very focused on execution. What we find is that with many organisations, they’re looking at too many aspects, and rather than doubling down on one or two things, they’re going to make a substantial amount of change to what they do.”

ProcureTech: Closer Look

His organisation ProcureTech catalyses digital procurement transformation through a proprietary platform of digital procurement solutions, intelligence, approaches, and experts. The company shifts procurement performance through the design and implementation of digital procurement blueprints, procuretech stacks, and road maps that incorporate the dynamic, data-driven insights from 1,000s of digital procurement solutions.

In December 2024, ProcureTech is set to release the annual ProcureTech 100 Yearbook, published by CPOstrategy, which showcases 100 pioneering digital procurement technology, data and analytics solutions that are supercharging procurement. The Yearbook provides essential insights into the vital components that will deliver first-class performance for procurement journeys. “Every year we analyse over 5,000 different solutions and have 80 corporate digital procurement judges involved,” explains Younger. “We crunch data, take the qualitative input and create a cohort of 100 pioneering digital solutions. It’s a fantastic resource for organisations to go and look at, and talk about these individual solutions, but also get best practices, insights and white papers which will help shape what you do over the next year.”

10X Drive

Younger believes this year’s DPW Amsterdam theme of 10X was a great fit because of the bold strides needed to make the most of the exponential digital tools available on the market today. “What we’ve seen over the last few years is too much incrementalism, and that’s meant that we’ve not been making the bold strides that we need to make,” he adds. “It’s different this year. We’ve seen that with the advent of generative AI and a number of other technological advancements, we can make that change. Fundamentally, technology will help that, but it won’t happen without people changing it which comes from the leaders that we’ve got here at DPW Amsterdam.”

While Younger believes procurement’s greatest strategies to uncovering the true potential of 10X are closely linked to its biggest barriers. “It comes down to investment and having the money and time to make the change happen,” says Younger. “The first place we tend to work with organisations is on that change, and to make sure it’s an accurate, timely business plan that justifies the ROI and then ultimately justifies the release of resources to be able to support doing the work and investment into technology as well. What we are also seeing is that there’s a gap when it comes to talent that is not going to be addressed in the short term. Yes, you can get the money released, but the time to mobilise talent is going to take too long. You have to invest in digital in tandem with great people.”

DPW Amsterdam

At DPW Amsterdam, the noise surrounding what generative AI can do for procurement was palpable. Over the past two years following the release of OpenAI’s ChatGPT model, the buzz around large language models has only grown louder. With the benefits of significant cost savings and seismic productivity boosts, it is clear to see why. For Younger, he was impressed with the high-level conversations had at the conference.

“DPW has been fantastic because we’ve been able to see some of the digital solutions talking about generative AI use cases, how they’re applying it and where they’ve reached along the journey so far,” explains Younger. “Some of the solutions presented have been particularly impressive. For example, Certa shared what they are doing and also some research about the productivity you can get from generative AI at about 20%, but if you combine that generative AI with SaaS then you get another 50% as well. In another session with Nestle, they were discussing their five-year plan and are talking about the analytics they are applying today which is supported by deep digital and data architecture and a team that has built that with them.”

GenAI challenge

On the other side of the coin, Younger is well aware that generative AI is not a silver bullet. The technology has often been criticised for providing data quality challenges such as hallucinations, not to mention its governance challenge. “People have got to think about the ethical side and understand the implications of managing and integrating data,” he says. “If you combine that with the fact that there’s a lack of understanding of GenAI, then it becomes quite risky. Exiger extensively shared  how to manage multiple different types of risks in the event of black swan events too.”

Moving forward, Younger is clear about what procurement’s future holds. As technology continues to mature, an ever-increasing number of companies are seeking digital solutions that have the potential to be real game-changers for the space. “There are some critical decisions that leaders need to be making now,” says Younger. “Technology is getting better and better and we’re now at the point where if you want something then it’s there. It’s now about making the decision and committing to technology. Many of the people who are working with generative AI say that now is a fundamental time to place their bets. Now is the time to make those decisions, design a roadmap and start executing against it.”

Find out more about ProcureTech here.

“There is so much that can be done in this space.”

That is why Christel Constant, Executive Board Member at Unite, is so excited.

Having originally transitioned to procurement from a career in financial technology, Constant explains that what inspired her to shift her focus to procurement was the potential of delivering real change, particularly with an eye on sustainability. 

“Procurement decisions can shape supply chains in ways that reduce environmental impact, support fair labour practices, and encourage responsible business behaviour,” she says. “Even when it comes to indirect procurement of catalogue-based products, the potential is still significant. By choosing suppliers with sustainable practices, we can reduce waste, improve energy efficiency, and contribute to the broader sustainability goals of the company. It’s about recognising that every procurement decision, no matter how small, can be a step toward creating a more responsible and resilient supply chain.”

Transformation

Constant is passionate about leadership and has become a transformation enabler within organisations by exploring new market opportunities, presenting pioneering concepts, spearheading change, coaching teams and enabling significant growth. The company she works for is Unite, a buyer-first platform for catalogue-based demands across Europe, offering a single contractual partner, single contact and creditor. With over two decades of experience, its compliant e-procurement solution combines framework agreements and catalogues with a pre-integrated assortment from vetted suppliers for effortless sourcing and purchasing for private and public sector organisations. The company was founded as Mercateo in 2000 and is headquartered in Leipzig, Germany. It now operates in 12 European countries, with over 700 employees and revenue of €440.8 million.

Over the last 20+ years, Unite has acquired a solid foundation of fair competition and trustworthy partnerships. The platform’s scalable infrastructure supports connections, business stability and a robust supply chain. In 2022, Unite became the first platform business accredited with the Fair Tax Mark, representing the global standard for responsible tax practices. Earlier this year, Unite was awarded the EcoVadis Gold rating for the first time, recognising its significant sustainability efforts. This achievement places Unite among the top 5% of companies assessed during the period and within the top 3% in its industry. 

How Unite is evolving indirect procurement

“Unite is transforming indirect procurement by integrating catalogue-based demand—encompassing ad-hoc (tail-end) needs and recurring (core) demand, which has traditionally been managed through framework agreements—into a single platform under one creditor. Currently, we handle contract management and order fulfilment, ensuring that buyers can easily track orders and manage returns. Financial processes, such as billing and payment, are simplified through a centralised system, enabling seamless transactions and mitigating financial risks.

“The next phase in this transformation is a shift to a service-led model, providing dynamic procurement solutions that address the full spectrum of catalogue-based requirements. Our PraaS (Procurement-as-a-Service) model will span the entire procurement lifecycle,” she explains. “From supplier and manufacturer qualification, ensuring compliance with industry and buyer standards, to generative demand analysis that enables automated, adaptive sourcing for repeat purchases. This approach unlocks significant, previously untapped cost savings for our buyers.”

Procurement’s shift

In October, Constant spoke and hosted a panel discussion at DPW Amsterdam 2024. The session focused on market-led strategies within indirect procurement. At Unite, the company views market-led strategies as creating an ecosystem where demand and supply meet seamlessly, providing full transparency for buyers and neutrality for suppliers. Unite centres its focus on three main aspects: providing access to a broad and diverse offering, delivering a user-centric experience, and enhancing supplier management efficiency. “We also touched on the growing pressure within procurement departments. As the number of professional buyers decreases, decentralised, requester-led purchasing has become more common,” explains Constant. “This shift demands more integrated compliance and ease of use, leading to a reduction in the administrative burden by managing fewer suppliers and centralising access through single creditor solutions.

“In implementing these strategies, the discussion highlighted the importance of finding the right partner to integrate with existing IT systems, provide clear change management policies, and ensure user onboarding and training to maximise adoption. At Unite, we designed our platform to enhance transparency and optimise indirect procurement. Until now, our focus has largely been on functional requirements. But we’ve already started incorporating non-functional requirements—such as sustainability measures like CO2 reporting, compliance, and broader ESG criteria—into catalogue-based procurement, with further enhancements planned to make these criteria transparent at the point of purchase. Ultimately, combining these elements can unlock efficiencies and create a more sustainable procurement ecosystem. This will drive long-term value for businesses and suppliers alike.”

DPW Amsterdam

This year’s theme at DPW Amsterdam was 10X and how organisations should think 10 times bigger than their current capacity. Paul Polman, the former Unilever CEO, spoke about how 10X is about a mindset shift. “Paul Polman explained the need to have very ambitious goals to build partnerships to create this systemic change,” explains Constant.

“At Unite, we’ve been at the centre of an ecosystem that includes buyers, suppliers, other e-procurement platforms, and IT partners that we integrate into our system. Here, we feel we can be at the centre of this change because we connect with the different stakeholders. For us, what is very important is that aiming for 10X is not just about growth. It’s about being purpose-driven. At Unite, our purpose is to connect the economy for sustainable business, which drives us. We need to achieve 10X  our growth and impact because only then will we bring our purpose to life.”

Future proof

It is clear Unite has no plans to stand still. Next year, the organisation aims to launch a foundational service step. This will enable companies to reduce the complexity of their indirect procurement processes. “With our end-to-end support, businesses can focus on core operations while their indirect procurement is being handled efficiently,” she explains. “This approach not only improves operational efficiency but also ensures compliance and flexibility in managing supplier relationships.”

And with GenAI set to continue to shake the procurement space, Constant expects an ever-increasing adoption rate as time progresses. “In 2025 and beyond, I believe we are going to see lots of new offerings and changes,” says Constant. “Of course, GenAI and large language models will impact many industries. We are already working with these technologies to accelerate our impact on society and to power our statement and purpose. Next year will be a real amplification into getting some new technologies to support a more sustainable way to procure.”

Read more about what Unite has to offer here.

Procurement software solution vendor Workrise has launched a new offering designed to improve the source-to-pay process for the energy industry. Workrise claims the solution, Workrise Bid Management, streamlines and optimises the bidding process on energy projects. This is something they believe will benefit both operators and their suppliers.    

The product launch follows the recent release of a national benchmark study by Workrise and Newton X. The study explores the state of source-to-pay in the energy industry. Among its findings: Industry leaders are being asked, on average, to reduce costs by an astonishing 40% to 60%. Competitive bidding represents a key opportunity for savings at a time when everyone in energy is feeling the cost crunch.

Bid management 

Bidding is the first step from sourcing new vendors to verifying and paying for completed work. Workrise argues that outdated, time-consuming procedures define the energy sector’s bidding process. Manual processes like creating, refining, editing, and exchanging emails, PDFs, Excel spreadsheets are common in the bidding procedure. So too is the “copious manual work” required to manage them all. These outmoded and inefficient processes, Workrise claims, strain resources and inhibit efficiency for energy companies and suppliers alike. 

“Bidding might seem like a small, or even insignificant, step in the source-to-pay lifecycle,” commented Jacob Gritte, General Manager, S2P Solutions at Workrise. “But we see it as a massive opportunity for the industry to get more out of every dollar it spends, and another tangible step on the road to helping operators, suppliers, and the talented men and women in the field work better, together, to meet the world’s increasing energy demands.”

“This is a powerful solution to a problem that has plagued the industry for decades,” said Praveen Kalamegham, Chief Technology Officer at Workrise. “For operators, this puts an end to the days of digging through emails and spreadsheets, centralises all RFQ-related information in one place, and provides access to a broader vendor network — potentially uncovering new, cost-effective options for projects. And it allows suppliers to submit more competitive bids and, ultimately, get more work.”

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

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

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

The challenges

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

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

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

Strategies for supply chain success

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

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

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

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

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

Levelling up tomorrow’s defence

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

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

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

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

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

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

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

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

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

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

Where’s the money going? 

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

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

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

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

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

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

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

1. Check software usage

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

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

2. Determine planned future use of software

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

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

3. Review the terms of your software licence agreement

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

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

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

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

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

5. Benchmarking

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

6. Negotiation

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

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

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

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

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

Zip Forward 

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

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

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

Un-zipping the new innovations 

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

Preferred supplier purchasing

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

AI invoice coding

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

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

Budget integration with Workday Adaptive Planning

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

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

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

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

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

What does addressing spend really mean? 

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

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

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

1. Avoid cost increases

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

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

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

2. Ensure that cost-saving opportunities are realised

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

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

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

3. Maximise value from the supply base

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

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

4. Keep pace with the market

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

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

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

5. Manage risk

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

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

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

6. Ensure appropriate due diligence and challenge

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

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

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

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

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

7. Create better internal alignment and business collaboration

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

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

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

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

8. Ensure contract terms are addressed  

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

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

9. Make sure that evolving business requirements are considered

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

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

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

10. Create financial capacity to reinvest

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

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

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

A final thought

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

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

Tension.

At first glance, tension may seem like a negative force, but research shows that short-term stress can actually be beneficial, driving innovation and progress.

In today’s disruptive business world, managing procurement and supply chain complexities can feel stressful.

With the likes of market fluctuations and rapidly changing consumer behaviours to global volatility and regulatory challenges to contend with, every twist and turn presents a new challenge. But what if these tensions were not roadblocks, but pathways to game changing progress? Within every tension lies an opportunity waiting to be harnessed.

Enter InTension.

The rise of InTension

InTension empowers businesses to transform challenges into strategic advantages, turning tension into tensile strength that fuels unprecedented growth and performance. InTension guides businesses through the maze of procurement and supply chain dynamics, uncovering hidden opportunities, strengthening the fabric of their operations, and delivering exceptional financial returns. Leveraging cutting-edge digital tools and proven strategies, InTension equips companies with the insights and capabilities to rapidly make informed decisions, manage risks, and seize opportunities with confidence.

Transformation demands decisive, forward-thinking leadership. InTension empowers companies to quickly navigate past complexities and unlock future opportunities. Transforming organisational culture and performance requires bold, resilient leadership. InTension helps companies untangle the web of past decisions, quickly assess future spending needs and choices, and unlock insights from years of third-party spending to ensure future decisions drive the progress, performance and value needed to support long-range goals.

Tim Herrod is the CEO of InTension. Herrod is a passionate, purpose-driven transformation leader, people builder and results driver. He loves tackling complex problems with great people, inspiring and empowering teams to do difficult and amazing things, continually learning what’s possible and operationalising best practice things, challenging the status quo, and living value creation through customer-centricity and unlocking the full potential of essential partnerships.

Herrod has experience leading multiple successful transformations across procurement, treasury and investor relations in four globally complex, multi-business unit companies. Over more than 25 years, Herrod has delivered $900 million in realised operating cost savings while unlocking significant incremental growth through improvements in profitability, safety, reliability, responsiveness, delivery timeliness and digital innovations. He also has experience presenting to and gaining endorsements from boards of directors and externally communicating transformation results to shareholders in external investor presentations.

“The company name is spelt strangely – but that’s on purpose. InTension means intentional tension,” explains Herrod. “I learnt the hard way and proved my ability to lead in times of difficult change. Transformation is a widely overused term but what it means is dramatic change. My observation was you have to create tension because tension prevents change and almost all of it is coming from humans who are already impacted. 

“Before I worked at Albemarle, I thought this was key to helping companies drive change. I came up with this idea around tension, which became intentional tension and how we use it to shift procurement transformations. Our value proposition is that we’ve been in the chair. We want to harness those forces within the procurement ecosystem and get into why decisions are made. We design for the future.”

Navigating AI in procurement

One of the hottest topics in procurement today is generative AI. Go to any conference or meeting, and the draws of chatbots and the efficiency they offer will be on people’s lips. Its potential has taken procurement, and the wider world for that matter, by storm. However, its mere presence doesn’t justify its use—strategic implementation is essential to harnessing its full potential. Herrod believes it is vital to think carefully before adopting new technology without a clear plan.

“I think it’s still too early to make a definitive judgment,” explains Herrod. “It’s extremely important that we understand this issue thoroughly because we have a fiduciary responsibility. There are significant concerns about data security and the accuracy of results. In a world flooded with both real and fake data, it’s crucial to identify and avoid bad data by training AI models. We need to assess how much our team relies on and delivers work based on flawed data.

“While there are many fears, strategically, if we aim to maintain a low-cost, high-performing operating model, we must expedite delivering value to our customers. This means understanding customer needs faster, building efficient operations to meet those needs, ensuring excellence, optimising our supply network, and improving logistics. If competitors are achieving these goals more efficiently using AI, and they’re seeing substantial benefits from focused AI initiatives, every CEO must recognise the responsibility to figure this out.”

Herrod notes that while GenAI introduces new challenges, particularly around internal scepticism and risk, it also presents unparalleled opportunities for those willing to embrace it strategically. “GenAI becomes increasingly efficient with every use, enhancing its ability to drive smarter decision-making and operational success,” he adds. “The ecosystem seems fraught with risks, and internal tensions hinder the adoption of even clearly beneficial technologies. The reality is that AI can be extremely useful and will continue to improve. Therefore, it’s essential to navigate these risks and harness the potential of AI for business success.”

How can graduates benefit from new technology?

A big area of passion for Herrod is education. Having been involved in the space for many years, Herrod also sits on the advisory board of Canada’s representative on the International Federation of Accountants for Professional Accountants in Business. “Talent is one of our most important topics,” he explains. “The biggest challenge in transformation is people. How do we get the right people in the right positions doing the right things and being motivated to do that? My observation is the new core skills, if you want to attract the best, you can’t be doing things the same way as 20 years ago.

“Do you want to give someone a series of pathways in their career that start from a really strong point that is relevant that they can say, ‘Even if I don’t understand procurement, I know that they’re doing it a cool way that I’m going to increase value in me’. The win-win is that I need someone coming in who is open to learning because it’s changing all the time. Today, it’s ChatGPT, tomorrow it could be something else. It’s going to be a commodity in a couple of years. It’s going to be about what you do with it and how you get value out of it.”

Herrod explains he wants procurement to win the best talent because the function is doing interesting work that the next generation of the workforce sees the value in. “I want people to see that the core base of business has this integrated into how we drive world-class repeatable decisions faster,” reveals Herrod.

“Almost everything comes down to the talent agenda which is shifting. After hiring a new intern, the first thing we get them to do is undertake four LinkedIn learning generative AI courses and we talk about new tooling to diagnose tension in clients where we have data sets and we figure out how to build a custom GPT. Ultimately, the fundamentals don’t change, but you could do it better, faster, smarter and design everything for that. It comes down to whether or not you have the talent with the capabilities to change and figure that out or to come in fresh.”

InTension: A closer look

“The way InTension has evolved is with my co-founder Stephany Lapierre, who is well known in procurement circles and continues to focus almost entirely on her supplier data AI/ML startup TealBook. She has rolled her 16-year-old life sciences focused procurement consultancy Matchbook into InTension.

“Stephany brings unmatched digital expertise in AI and ML, along with an extraordinary network and insights that helps elevate client value across industries. This partnership enhances InTension’s capabilities while allowing us to serve Matchbook’s original focus area – life sciences – more comprehensively.”

Forward facing procurement

The exciting reality is that procurement will become significantly more valuable as it shifts its focus toward long-term strategies and business alignment over the next five years. “One of the tensions that I believe happens and why change is difficult is because individuals worry about change and how it’s going to impact them and their families and then they also worry about that for their teams,” he explains. “Good leaders love their teams, they care about their people and change is scary. So, the feeling is ‘I’m going to drag my feet on change because I’m worried about it’. But the reality is the exciting future is a function that’s so much more valuable to the business because it’s focused on the next five years. It’s focused on actually doing the things that enable what the business is trying to do and it’s doing it in a better way.

“If I’m running an operation, I want it to be safe, efficient and world-class that is low-cost and is delivering what the customer wants all day, every day. If I’m in maintenance and I have a supplier not performing, a rubbish widget or an unsafe contractor, no one is helping me with that. I don’t want to be dealing with suppliers or buying stuff. I don’t want to be writing work orders, managing contractors and building kits in the warehouse – I shouldn’t have to do that. But if I don’t have a good partner helping me with that, I’m going to have to.

“You get these procurement functions that are focused on their existence and it’s like we exist to negotiate hard and to get the lowest price and they become increasingly disconnected with where the business is going. Rather than saying in the examples I gave, it’s like what do we need to be worrying about and how do I prevent my business from going off the rails because they weren’t so thinking strategically. The exciting part of the future is a big part of the function is going to be babysat by some individuals in centre of excellence. And most of that is going to be done with automation and AI.

“It’s a really exciting world, but it’s a scary world for the humans in it. And that’s where InTension is going to help because we understand that. You can design for those humans to be able to make this pivot and to be the heroes. Our job is to help these teams be wildly successful and to be the heroes in making that switch, and that’s how they have to think about it.”

IKD is a company specializing in the production of high-precision aluminum die-casting products. IKD has factories located in Ningbo, Mexico, Malaysia, and Hungary. The meaning of IKD comes from I representing “I”, K representing the pronunciation of “can,” and “D” representing “do.” which combined is “I can do”.

Founded in December 1995 with a registered capital of $2 million, IKD has grown from strength to strength over the years. In the third year since its establishment, IKD created a benefit-sharing mechanism with its employees. This initiative allowed each employee at every development stage to purchase company equity at the net asset volume. “This meant they became a shareholder of the company and partake in the advantages of the company’s development,” discusses Zhang Jiancheng, CEO at IKD. “In the 28 years since the company’s founding, IKD has issued additional shares to employees eight times which accounts for about 10% of the total number of staff.”

Global automotive industry

IKD makes every effort to find ‘the leading enterprises during the development of the global automotive industry’, attract them like Bosch as our customers, and continuously enhance our technical expertise and management capabilities by manufacturing parts, providing products and providing services.

IKD’s partnership with Bosch began in 2004 and provided products to Bosch such as components for wiper system parts, motors, steering, braking system and different kind of parts. In the initial stage of every new project, Bosch will send personnel to train the staff within IKD. “As long as we are willing to learn, Bosch will make a great effort to provide us with any resource to help us grow,” he says. “They continuously motivate us to become a qualified supplier and the best supplier to meet Bosch’s requirements.”

IKD China has become the production base for Bosch in multi-variety and small batch products, offering products and services to Bosch factories globally and at a competitive price. This requires continuous improvement of flexible manufacturing capability, informatisation supporting ability and resilience in the market.

IKD’s vision

Bosch has broadened IKD’s vision and propelled them onto the global stage. This partnership led IKD to establishing its first overseas production base in Mexico which made the company the first Chinese die casting company to set up a factory in the country. “It is a great honour for us to be a supplier for Bosch,” he explains. “Also, Bosch is the most critical strategy customer of IKD. We will keep pace with the best enterprise in the world and can also promote IKD to achieve excellence. This is the cornerstone of achieving sustainable development of IKD.”

Looking ahead to the future of the partnership, Zhang Jiancheng is optimistic that the next few years of the collaboration are bright. “IKD will create volume for a more competent supply chain for Bosch,” he says. “At the same time, Bosch does not blindly ask for a reduction in price for their suppliers. Instead, it assists supplier growth to help us continually reduce product manufacturing costs, reduce waste, and make us more competent in price. The cooperation between the two sides is mutually beneficial. IKD responds positively to Bosch’s slogan ‘Invent for Life’ and wants to continue as the strategic supplier to Bosch which strives to become the outstanding supplier within Bosch’s supply chain platform. The cooperation between two sides is based on equality, multi-benefits, share needs, and coexistence.”

Find out more in the latest issue of CPOstrategy Magazine.

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

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

The New Imperatives for Procurement

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

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

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

Challenges in Scaling Procurement Processes

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

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

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

Regulatory Pressures Driving Digital Adoption

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

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

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

Bridging the gap between Procurement and AP 

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

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

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

The Strategic Shift to Fully Digital P2P Systems

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

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

Transforming Procurement Through Digital Integration

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

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

A Call to Action for Strategic Digital Transformation

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

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

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

After the runaway success of DPW Amsterdam for the last five years, it’s no surprise that the organisation’s first ever North America event would be just as well-received. 

DPW launched its flagship event in 2019, and the subsequent annual conferences, based in Amsterdam, have gone from strength to strength. The 2023 event saw thousands of procurement professionals pouring in to learn, to share, to make connections. 

As a result, and based on popular demand from sponsors and attendees, DPW decided to host a small, intimate event in New York in June 2024. And it couldn’t have gone more perfectly. CPOstrategy was fortunate enough to attend this exclusive event, joining over 130 procurement pioneers for a day of learning, discussion groups, and sharing expertise with peers.

Matthias Gutzmann founded DPW based on a gap he saw in the industry. The entire reason he launched the organisation was because he identified a need for events focused on digital transformation in procurement, particularly recognising startups at the forefront of innovation. 

DPW focuses on getting the best speakers to tackle procurement’s most critical issues and priorities. The same held true for the DPW NYC Summit, where the main topics of conversation included the exponential impact of AI and the future of procurement, with notable speakers including Scott Belsky and David Rogers.

“A lot of what’s out there for procurement events, it’s the same old, same old,” explains Gutzmann. “It’s the same old speakers, the same old topics. We bring new topics into the community, focusing on technology first. It makes sense to prioritise innovation.”

Why NY?

The idea for DPW was actually formulated in New York. Gutzmann was living in Brooklyn  when the idea first struck him to introduce something new and unique to the procurement industry. He later moved back to Germany, and launched the first DPW event in Amsterdam.

“If you do well in Europe, the next big market is North America,” Gutzmann states. “You have to ask yourself, ‘where do we go?’ As a launch event, you want to get access to the CPOs, the top leaders in procurement. New York has the highest density of CPOs in the US. It’s really low-hanging fruit to launch DPW here.”

DPW across borders

As DPW has grown, so too has demand to expand beyond the flagship event in Amsterdam. While Amsterdam was the perfect place to launch the world’s most influential procurement technology event, there are many other hubs of innovation to be tapped. And DPW is aiming to fulfil that role.

“There’s definitely a widespread desire for something focused around technology and digital transformation,” says Gutzmann. “In North America, the B2B communities and events tend to be a bit broader. The need we’re fulfilling is in the tech space, and there’s a big need for that – specifically a focus on AI. 

“People are also looking for a new experience. We’ve built the brand in Amsterdam, the industry has heard about it, and they’re ready for more. We entered the market cold and so much of our popularity has been word of mouth. That just goes to show how needed DPW was and is.”

Defining procurement

What’s interesting is that, on the one hand, procurement increasingly has a seat at the table for many organisations. The segment is making decisions, driving innovation, utilising advanced technology. On the opposite end of the spectrum, procurement is sometimes a complete unknown. In its current form, it’s a new role with blurred borders that’s evolving all the time. 

The problem with this is that people don’t necessarily know what procurement entails, or they assume it’s not an interesting or attractive job. This has led to a talent shortage in the sector, which was an ongoing – and concerning – topic of conversation throughout the DPW NYC Summit.

“If you want to drive digital transformation success, you need to bring in new talent,” says Gutzmann. “It’s time for the next generation to come in. However, people don’t know what it is. They know sales, they know marketing, they know finance – but what about procurement?”

Driving change

And it’s people that drive real change. Not technology, but people transformation. The lack of tech talent, procurement talent, and of knowledge around what procurement truly is, is what led Gutzmann to launch the DPW Next 100. 

“It’s a young talent community focusing on the next generation of procurement tech professionals under 30,” he explains. “We’re doing our bit to nurture the next generation of talent. Once people are in procurement, they typically stay because it’s an amazing function. You get to touch so many areas, you’re dealing with suppliers in an external ecosystem – it’s great. Some people think procurement isn’t attractive, but I disagree, especially as procurement becomes increasingly digital.”

The educational element of bringing awareness to what procurement truly is is something of an ongoing mission for DPW. Gutzmann adds: “My belief is that procurement will be a game changing function within businesses. This is because it brings in outside innovation from suppliers. That’s the biggest value proposition, in my opinion. 

“It takes time to build a brand, so creating a positive name for procurement is a work in progress. But Luxembourg University launched its digital procurement masters a couple of years ago, and there are always news stories about supply chain issues on the television. These are the sorts of things that are putting procurement on the map. It might not be top of mind just yet, but we’re here to change that.”

The future of DPW

It’s impossible to discuss DPW at a DPW event and not consider what the future will bring for these cutting-edge procurement events. The Amsterdam event will be occurring this year as usual between the 8th and the 10th of October, bringing established and new procurement professionals together to discuss the sector’s biggest challenges. But what about after that?

“The pandemic really highlighted the fact that face-to-face events aren’t dying out,” Gutzmann confirms. “People are craving interaction on a personal level. What we’ve done is connect the right seniority levels with each other, making the best of the networking opportunities DPW offers. 

“We also need to maintain intimacy, on the top level,” he continues. “There’s room and opportunities for broader events where we bring teams of eight-to-10 people from specific companies, over one or two days, along with something for more junior attendees. What I learned from the DPW NYC Summit is that people do want that intimacy, and that we should maintain and nurture that, while also building something bigger to bring in larger teams.”

As DPW looks to create new types of events and tap into areas like FinTech, the question of whether there will be another US event after the grand success of the DPW NYC Summit can be answered with another question: why not? There’s a demand, a hungry audience, and so much still to explore and learn as the sector morphs into new and exciting shapes every day. We can’t wait to see what DPW has in store next.

To find out all about the highlights of the DPW NYC Summit, read the overview in issue 52 of CPOstrategy.

“If you follow your talents then you’ll end up with work you love.”

Falling into procurement is a common theme for many practitioners. And while a career in procurement wasn’t an obvious choice for Mike Dubbs, he grew to love the profession after discovering he could leverage his natural talent for developing relationships within the space. 

While a scientist by training, Dubbs has spent nearly all his career in procurement and previously led the IT procurement department for Monsanto Company, as well as several other areas across indirect and direct procurement. Now armed with more than 20 years of experience within the function, Dubbs currently serves as department head in R&D procurement at Bayer and is also a member of the North American procurement leadership team. 

“Like lots of 17-year-olds, when I went to university, I didn’t know exactly what I wanted to be. I assumed I would work in science because that’s what I was studying my undergraduate degree for,” explains Dubbs. “But after entering the workforce, I got exposed as a business partner on a couple of sourcing events and RFPs. At the time it opened my eyes to procurement as a career opportunity, because over 20 years ago universities didn’t have supply chain management programmes and everybody my age who got into procurement sort of stumbled into it.” 

Procurement transformation

Within Bayer’s procurement function, the company is building an environment of increased empowerment and accountability. Bayer is referring to this philosophy as Dynamic Shared Ownership (DSO), which is considered an innovative way of leading a company the size of Bayer.  According to Dubbs, this shift in culture has seen a major impact on areas ranging from how leaders lead to the way in which procurement operates.

“DSO is something that has been rolled out across all of Bayer and it’s a big journey of change for our leaders because what we’re trying to do is shift away from the traditional command-and-control leadership style to where leaders act more as a coach,” says Dubbs. “As a leader at Bayer, the goal is to get to where leaders are establishing a vision, motivating or catalysing their employees, but then also empowering those individuals who are closest to the work to make their own decisions. These are the people who are most knowledgeable on the day-to-day business. Once you get into leadership, you get further removed from the day-to-day work.”

Evolutionary leadership approach

As Bayer decision-makers transition from a traditional leadership approach, it means leaders are to provide vision and activate their teams, but also empower teams to make choices while having the freedom to be creative and take risks. Dubbs explains that this represents not only a change for leaders but also procurement professionals actually doing the work. “An example is how I conducted goal setting with my team this year,” he says. “Most years goals are cascaded down and are largely predetermined. But this year I stepped back, provided some guardrails, and then allowed the team to design their own goals. These individuals on my team are closest to the work and the result was a better set of goals and tasks that will lead to successful outcomes.”

Dubbs explains that in his experience, part of being a good leader is also knowing when to get out of the way and let your people perform. “This is definitely a longer-term journey within the organisation because it is not just a major change for leaders,” explains Dubbs. “This empowerment and accountability concept is new to a lot of individual contributors because they’ve either worked in more traditional organisations where everything was top-down and this change is going to take time for them to acclimate. But again, that’s where the leader comes in and provides coaching and guidance to help people along that journey so that they are successful as well.”

The Procurement User Experience

As procurement evolves, organisations must change with it. Bayer has recently introduced a new Salesforce tool called ProConnect which pools relevant supplier information into a single dashboard.

“I think this is a really good example because it’s the first platform that we’ve deployed where stakeholder value was front and centre, i.e. not simply the value for procurement,” he says. “Historically I would have looked at what we do as a function and asked what does procurement want to get out of a platform like this. And in this instance though, what we said was, ‘What value can a stakeholder get out of this as well?’  “It’s strange how in procurement we’re sometimes guarded and privatise our platforms, our data, and our intelligence from the rest of the business. I think our mindset with this was we want to make this a tool that’s helpful for us, but also accessible to stakeholders in the organisation.”

“We’re even looking at ProConnect as being a kind of conduit to our suppliers.  It’s not just a tool that is helpful internally for Bayer, but how can this tool be something beneficial for suppliers to have insight into our company? It is a different approach to how we think about leveraging our networks alongside a platform, and ultimately what value can be created.”

Sustainability drive

Sustainability is a key piece of the puzzle to Bayer. Indeed, the company’s Chief Procurement Officer is Thomas Udesen who is also one of the co-founders of The Sustainable Procurement Pledge (SPP). The SPP is an international society aimed at driving sustainable procurement practices and developing more environmentally responsible supply chains. As far as Dubbs is concerned, sustainability at Bayer starts with Udesen. “He’s not just a role model within Bayer but an industry role model. As an organisation, we try to embed sustainability into the majority of our decision-making. I think we recognise too that sustainability is still an emerging area, and we still have a lot to learn.”

A clear sign of the passion Bayer procurement has for sustainability was evidenced by the recent World Sustainability Day event hosted by SPP.  Across the global offices for the procurement function were in-person watch parties where people from various teams came together to participate and learn. 

To help accelerate Bayer’s sustainability objectives, the organisation has teamed up with external partners such as Ecovadis and CDP to help them on the journey. “With their expertise and tools, we are able to assess the as-is performance of suppliers while developing actionable plans that we can use to jointly work with our suppliers to advance sustainability,” adds Dubbs. “One success story in my area was with a large Contract Research Organisation (CRO), who following the Ecovadis engagement and receiving an unsatisfactory score, realised the need and benefits of creating a sustainability function. This is what sustainability is about, not a rating or survey score, but jointly working together to improve.”

Digitally future facing

Technology is gripping procurement now and for the foreseeable future. As such, the procurement space is at the fore of transformation and functions are continuously seeking to embrace the latest innovations in order to harness efficiency, save money and grow quickly. 

In the case of Bayer, the company is currently piloting a solution from ORO to optimise guided buying for stakeholders while complementing the features of SAP Ariba. “It’s not about replacing our big platform providers, it’s about how you complement them,” discusses Dubbs. “What we found is that innovative startups are coming up with best-in-class solutions to leverage generative AI for the guided buying experience, which is part of improving the user experience. Working with startups, we found very quickly that not only do they have cutting-edge technology, but they’re extremely agile and adaptable. Every big company is going to have something unique about them and a one-size-fits-all solution, or rigid solution framework, might not be always the best fit.

“To drive digital transformation we need good collaboration partners that can bring expertise in new technologies, but also speed and agility to keep up with the pace of our business. With ORO they have Bayer come up with a vision for how we want the guided buying experience to look, and they use their technology and expertise to create something that fits that vision. I am very optimistic and excited because user experience is one of our key priorities this year.”

Future of procurement

Looking ahead to the future, Dubbs is full of optimism and insists the next few years for Bayer and the wider industry is incredibly bright. “It’s amazing to see how much change has happened just in the last five to 10 years within our organisation as well as the industry in general,” he explains. “At Bayer as well as other companies that I talk to within my network, our procurement organisations are playing a much bigger role in our companies and we’re enabling those businesses that we support in ways that we never did in the past.”

Dubbs adds that the rise to the top of the c-suite also comes with new challenges that previously weren’t a factor. However, on the other side of the coin, procurement’s evolution has made it a more attractive proposition for tomorrow’s workforce.

“What I see that is very positive is that procurement is being elevated as a career opportunity for people,” he continues. “You’re starting to see the attraction of talent become much easier and you’re getting new faces into procurement organisations and they’re seeing this space as a great career opportunity. I think that’s going to help drive a lot of the innovation and problem-solving for some of these new challenges that we have. Even with advances in technology, strategic procurement will still be a people business, and it is going to be these individuals coming into the industry now who are going to write the next chapter for procurement. We’ve all got a lot to be excited about.”

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

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

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

Vista acquires Jaggaer

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

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

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

Executive reflections

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

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

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

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

The Need for Shared Responsibility in Cloud Security

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

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

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

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

Background  

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

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

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

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

Where does responsibility sit? 

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

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

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

Advantages of SRM in Cloud Security

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

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

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

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

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

Benefits of SRM for Compliance and Innovation

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

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

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

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

Martin Walsham is director of AMR CyberSecurity.

Striving to build a safer digital society. For Orange Cyberdefense, the mission is clear.

The company is the expert cybersecurity business unit within the Orange Group. And one of its most influential relationships in the UK is with Coventry Building Society. Having worked together for almost 10 years, the alliance has seen quite the evolution. Will Mardling, Account Director at Orange Cyberdefense, reveals the duo’s shared values are a considerable factor for the partnership’s longevity.

“The Society often talks about having a ‘Digital First, Human Always’ approach to the services that they deliver to their members,” reveals Mardling. “We like to think that we apply the same sort of approach to our services. We’re not just driven by technology and using it as a simple fix. We very much understand that there’s a human element in play here that is going to make a real difference for our customers, much in the same way that it makes a difference with the Society and the services that they deliver to their members.”

Dominic Trott, Director of Strategy and Alliances at Orange Cyberdefense, explains that despite being one of the largest global providers of Managed Security Services, Orange Cyberdefense has built a strong local presence.

“It means that while some of our competitors operating more broadly than security may seem higher profile; for a company like Coventry Building Society they might feel slightly removed from (and less of a priority for) a global systems integrator or ‘big four’ management consultant,” he reveals. “But our local subject matter experts dovetail with our global reach and delivery capability. We are local and present for our customers. It’s very much a partnership rather than a transactional relationship.”

Mardling adds that one of the biggest strengths of the partnership is how clear and straightforward the team within The Society is to work with. “We spend a lot of time with the technical teams which are the ‘boots on the ground’ but our relationship also extends through into the supplier management, procurement and finance teams,” he says. “It’s very clear to see that there’s a great culture, which is part of what makes working with the Society’s teams such as pleasure. We’re currently working on two very large programmes of work with them around SASE and Managed Detection & Response. Both of these programmes are aimed at delivering tangible business outcomes, as opposed to solely satisfying a list of technical requirements.”

One of the non-negotiables that the partnership needs to have is trust. According to Mardling, it is something that has been earned and developed over time rather than taken for granted and he stresses it is a key ingredient to success within Orange Cyberdefense. “Given the nature of the kind of projects that we work on with the Society, it’s paramount that they have confidence in our ability to deliver and confidence in our level of expertise and that it will ultimately be delivered to the highest standard,” says Mardling. “The building of that trust has been helped by how open, honest and transparent the Society has always been with us. That goes both ways. If there’s something that we can’t do for them, we’ll always be very open about that.”

Looking ahead to the future, there is little sign of the partnership slowing down. “We’d like to think that it will continue to be a beneficial partnership for both organisations,” explains Mardling. “Coventry Building Society is on a really exciting journey regarding expansion and digitalisation at present and it’s one that we are looking forward to supporting them on.”

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.

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

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

Better procurement means better business outcomes 

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

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

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

Does size still matter?

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

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

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

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

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

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

Procurement software needs are evolving 

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

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

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

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

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

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

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

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

Public procurement lacks competition and innovation

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

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

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

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

Public procurement of innovative solutions 

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

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

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

BirchStreet Systems is the leading global technology provider of P2P operations solutions to the hospitality sector.

Over the years, its solutions have been developed through deep collaboration with customers to deliver groundbreaking and innovative work throughout the likes of hotels, casinos, restaurants and food management companies. BirchStreet offers a robust modular platform that optimizes end-to-end procure-to-pay process and provides data and insights that hospitality customers use on a global basis across its properties to make better purchasing decisions. The company works to deliver a significant amount of value to its customers, as it enables them to capture spend in one place while focusing on price and discounts with suppliers, as well as full accounting compliance.

John Fay has been the CEO of BirchStreet since 2022, which has been working with Marriott International since 2009. Fay recognises the collaboration between the companies: “Our focus has been on building and enhancing that relationship with Marriott as Marriott has grown both within existing markets and in new markets,” he said.  “That collaboration is strategic for us at BirchStreet. Our objective is to understand Marriott’s purchasing and strategic focus and then to work closely with Marriott to help drive more effectiveness from the platform related to purchasing, financial control and payments.”

An effective business relationship needs to be mutually beneficial and built on trust and transparency. “One of the very unique roles BirchStreet plays is that we are the neutral purchasing platform at the centre of the hospitality business. While we work extensively with Marriott, we’re also addressing similar issues for other large hospitality brands. We also form non-commercial working groups in the industry to tackle questions that affect the whole space. As a result, BirchStreet can offer hospitality brands access to a very special community, consisting of users of our platform who face similar issues and challenges in their operations.”

Fay says, “Since we only focus on the hospitality sector, we are able to incorporate specific feedback into our product roadmap and build unmatched depth of functionality within our P2P platform that none of the generic horizontal platforms can deliver. It’s a win-win.”

2020 was a year of significant disruption and change.

Many people and businesses experienced their toughest years yet amid lockdowns and global restrictions. For procurement and supply chain, the industry was one of the hardest hit.

But despite catastrophic turbulence on an unprecedented scale, there was still opportunity to be uncovered.

Enter Zip.

The rise of Zip

Zip is a world-leading intake-to-pay suite which provides a single front door for any employee to initiate a purchase or vendor request. The company helps businesses gain clear and timely visibility across all purchases, while dramatically improving the employee experience. The platform’s no-code configuration and intelligent workflows integrated across disparate systems enable businesses to automatically route requests for faster approval across finance, legal, procurement, IT, security and other teams.

Zip was founded in July 2020, just a few short months after the beginning of the COVID-19 pandemic. Lu Cheng, Co-Founder and Chief Technology Officer at Zip, admits his company’s starting point was “interesting” but without being born against the backdrop of the pandemic, Zip wouldn’t have been able to get off to such a fast start.

Using Covid

“We certainly wouldn’t have been able to have the number of conversations with procurement leaders that we had in the early days,” he discusses. “The company being formed during Covid helped with our own resilience, and it shone a light on the importance of procurement as a strategic function. Business continuity has been so much more important for businesses — this is demonstrated by the last five to 10 years, where the number of vendors has grown dramatically. Companies are increasingly focused on their competitive advantage and outsourcing more of their work to vendors. They’re no longer on the software side of things, and instead of building all software and technology in-house, are leveraging third-party vendors for things like new R&D development. Today, one of the reasons you see so many SaaS providers is because the majority of companies are not building AI in-house.”

Cheng reflects on a decade ago when he was working at Airbnb and the level of transformation the space has undergone in the past few years. “That certainly wasn’t the case when I was at Airbnb,” he reveals. “We had over 4,000 engineers and we built our own AI platform with AI data. But today, companies are focused on outsourcing more of that work with vendors. It impacts other verticals too, like life sciences, financial services, manufacturing, retail and even marketing companies, which are leveraging external marketing and design agencies more and more.”

Gen AI boom

And the newest and most talked about form of technology in today’s world is generative AI. Natural language processing (NLP) tools such as ChatGPT are being heavily considered by many procurement functions as a way of saving time and money. According to Cheng, he has witnessed first-hand how the demand for machine learning processes like Gen AI has skyrocketed industry-wide and beyond.

“A lot of the acceleration of AI today is due to the quality and level of output, which has dramatically increased over the last few years, especially in the past year and a half alone,” Cheng explains. “NLP wasn’t very well leveraged before because the use cases weren’t broad enough and you had to spend a lot of effort to train various specific models. The rise of compute power, the ability to support and calculate a large amount of data and draw it from a wide knowledge base and the quality of output has been significantly better, which is why we’re seeing many more general purpose applications built on top.”

Scaling efficiency

While Gen AI has been widely praised for the efficiency it brings, the concern surrounding hallucinations remains. Hallucination data is incorrect or misleading results that AI models create. These could be caused by a range of reasons such as insufficient training data, incorrect assumptions made by the model, or biases that the data has used to train the model. Cheng explains that the way Zip’s product works is by providing companies with two key elements that contribute to accurately training AI models.

“First, Zip provides companies with one entry point for any employee to engage with procurement intake. The second thing we provide with our workflows is orchestration and visibility. We are taking a lot of processes that happen offline and bringing them online into a very clear workflow while digitising the process,” he reveals. “At a broad industry level, in the next one to two years there will be very rapid developments and improvements in the accuracy and quality of generative AI data and at Zip, we are ahead of that curve.

Keeping the human in the loop

“Where generative AI comes in and why we’re very strategically positioned to take advantage of Gen AI:  we have all of the data to automate those workflows. The first product we launched with Gen AI was around documents. If you look at where the bottlenecks and challenges in procurement are, there are a lot of manual reviews that happen. Legal may spend two to three hours reviewing a single MSA — checking the box against 50 to 60 different risks that the company doesn’t want to be exposed to. The security and compliance teams may be reviewing documents around the company’s security posture information as a business and scanning against those different things.

“With our generative AI capabilities, you can scan 100 different risks within 10 seconds automatically, and report the results back to generate valuable business insights along the way. The thing that’s really important is that this is not automating away any type of work, it’s just making it easier and faster. The way our interface works is that there is still a human involved, reviewing the results of Gen AI, meaning you can dramatically reduce the time it takes for a security or legal review that previously took a couple of hours. The human-in-the-loop aspect is still very important today.”

Meeting challenges head-on

For Cheng and Zip, time-to-value holds the key. Upon starting the company almost four years ago, Cheng explains that due to procurement’s complex workflows across the entire business, it was a challenging start to life at Zip. “The purchasing process varies based on a number of factors including the category of spend, which subsidiary is making the purchase and where you’re located. It’s going to be a very different process purchasing something that’s $10,000 versus $500,000,” explains Cheng. “It also changes if key company information is shared with the supplier. One thing we found is that the complexity of procurement made time-to-value a unique challenge for us to solve for our customers.”

Future-focused procurement

Just four years into its founding, Zip has significantly reduced time-to-value to between eight and 12 weeks. Cheng explains that it’s not only about adopting the product but also making sure the product works for all of a customer’s use cases. “It’s really about rethinking and taking a closer look at your process along the way,” says Cheng. “We have a world-class product that’s able to support almost any kind of use case out there as well as meet any type of workload, including enterprise-level workloads and scalability. We have this working for over 350 customers from high-growth late-stage startups all the way up to our global 2000 customers. We’ve built a world-class solutions team that advises customers on how to create the right processes and, how to best implement the system and best practices.”

Looking ahead, Zip is showing no signs of slowing down. Indeed, the company recently announced new generative AI capabilities for finance and procurement teams. Cheng explains that Zip believes generative AI holds the key to transforming the entire intake-to-pay process. “We’ve made a big bet in leveraging Gen AI to improve all aspects of the platform,” he says. “It’s really the beginning for us l and Gen AI is a core area of focus — continuing to bring generative AI to all parts of the intake-to-pay suite from intake to sourcing to vendor management to helping assess supplier risk to some of our newer products like procure-to-pay. It’s about making that entire process seamless and automated as much as possible.”

Arnaud Malarde, Smart Procurement Expert at Ivalua, explores the need for procurement departments to digitise their operation in order to meet the evolving demands of the business. 

Over recent years, increasingly connected supply chains have exposed businesses to a wide range of geopolitical risks. As a result, the procurement department has become instrumental in helping businesses to tackle their greatest challenges. Whether it’s reducing supply shortages, curbing inflationary impact, or mitigating disruption from global black swan events – a high functioning procurement department is more important than ever.

But the procurement function is currently being held back by a chronic lack of digitisation. Research shows that procurement leaders say less than half (47%) of current procurement and supplier management processes have been digitised. Organisations are also wasting more than a fifth (22%) of their time dealing with manual or paper-based procurement processes. Half of procurement leaders (50%) recognise the issue, saying the rate of digitisation within procurement is too slow. Every organisation needs to evaluate their procurement digitisation progress, and ensure transformation is a top priority.

Procurement can help organisations react to future challenges, and ensure the business is on track to achieve ESG standards. But for this to happen, digitisation is essential.

The old ways are not always the best

The time to digitise processes was yesterday – as it’s already having a serious impact on the businesses which haven’t. A lack of digitisation wastes time through drawn out, manual tasks. Not only this, but it also limits organisations’ ability to make quick, informed decisions regarding their suppliers. After all, if procurement teams are bogged down in low-value tasks, and can’t access information quickly through digitised procurement solutions, how can they be expected to make informed decisions quickly?

Inflation currently remains high and for most, the economic outlook is uncertain. But, a lack of digitisation is also preventing organisations from tackling rising inflation and spiralling costs. Procurement teams need granular visibility into current supplier data. Without it, it’s easy for inefficiencies to pile up. As a result, businesses miss opportunities to identify savings through initiatives like early payment terms.

What’s more, slow digitisation is making it almost impossible to attract and retain the best talent for 41% of procurement leaders – creating more disruption for procurement teams in the long run, as they lose talent to more tech-savvy competitors.

Businesses need to act fast to utilise the full potential of digitising procurement processes. This will help drive savings and improve efficiency. Not only this, but it will also reduce risk at a time when curbing needless spend is crucial.

Don’t let AI pass you by

Businesses that remain reluctant on procurement digitisation are putting themselves at a disadvantage today. Not only that, but they are sabotaging their efforts in the future as well. By failing to digitise processes, businesses will be unable to make use of emerging technologies further down the line.

AI can be the catalyst for procurement transformation, with clear use cases for automating spend (re)classification, supplier deduplication databases, contract risk analysis, and invoice data capture. In fact, 63% of procurement leaders say they have already implemented or plan to implement AI or machine learning technology.

But to harness these technologies in full, it’s important to build a solid data foundation. To do this, 85% of organisations revealed they have implemented or are planning to implement data analytics within the procurement and supplier management function. But just 30% said they are “very confident” in the quality and accessibility of their supplier data when it comes to supporting effective procurement. Poor-quality data will limit the insights produced by AI and prevent organisations from achieving its full benefits. Organisations need access to actionable data insights into their supply chain processes.

Achieving this starts with digitisation. Businesses must take a smarter approach to procurement, which builds a solid and reliable data foundation that will inform decision making. This will help reduce the risk of ‘garbage in, garbage out’ and ensure organisations are on track to make the most of any emerging technologies.

AI-dapt or perish

To ensure their place in the future, businesses must digitise now. This will not only be fundamental to removing the tedium of manual, paper-based tasks – but also to put them at the forefront of the procurement AI revolution. To do this though, they must walk before they can run, taking a smarter approach to procurement that builds a solid data foundation for transformation.

After all, those who can transform quickly will be able to spend more time on high value tasks and improve visibility into suppliers to reduce risk or identify opportunities. This will help them catch up with other businesses and give them the edge over competitors.

The increasing movement of private enterprises and, more slowly it’s true, public sector organisations’ IT systems to the cloud is driving a significant shift in the way that the procurement, sourcing, and tender processes work. 

“Dramatic changes in the global economy, ongoing supply chain disruptions, the rise of a highly distributed workforce and the rapid digitalization of the consumer have pushed organisations to adapt swiftly and evolve to survive – not just from a procurement perspective but also their core business model,” said Kahly Berg, Senior VP, Digital Experiences, at SAP SE, reflecting on the findings of a 2022 survey and noting that “the digital marketplace is here to stay.”

The digital marketplace is “here to stay”

By this year, the majority of procurement professionals (54%) told SAP that they wanted to be buying goods and services primarily online, either through a vendor’s own site or a digital marketplace, with 44% of respondents citing a “one-stop shop for multiple vendors” as the most important feature in a digital marketplace.

More and more, public procurement divisions are turning to digital marketplaces, like AWS Marketplace, for a more competitive and cost-effective sourcing landscape. 

AWS Marketplace functions as a digital repository of third party cloud based software, made up of business applications, reporting tools, and migration utilities. Hosting more than 2,000 independent software vendors offering more than 12,000 products, the platform serves as a comprehensive resource for public sector procurement.

According to Jim Helou, worldwide leader of business development for AWS Marketplace public sector, there is a widespread push among states, cities, and counties in the US to transition their primary applications from on premises data centres to cloud platforms. 

In meeting that need, the AWS Marketplace has emerged as a crucial middle man between public sector entities and service providers. Simplifying product exploration is central to this effort, with the platform’s landing page providing IT directors with a user-friendly interface to navigate its extensive catalogue. 

Moreover, the Marketplace significantly expedites the timeline for researching, purchasing, and provisioning software. Procurement, often a daunting task within the public sector, is notably streamlined through Marketplace, reducing the procurement process by close to 50%. 

Procurement is the most recent of the supply chain functions to undergo a strategic evolution. Sourcing is increasingly recognised as a driver of value for the business as a whole with the ability to drive technology adoption and sustainable reform. 

Digital transformation is no longer optional in procurement. Technology adoption is a  prerequisite to success over time, especially at scale. Demand for procurement technology platforms and solutions is understandably high. As a result, so is the supply. 

Procurement platforms abound 

The growing importance of technology to the procurement process is driving an explosion of “ technology platforms, data providers, and start-ups,” according to researchers at Capgemini. However, while this bountiful supply of new tools, platforms, and potential partners holds the promise of digital transformation success, the profusion is making it “overwhelming for decisionmakers in and outside procurement,” to make the right selection. 

Another report by Forrester found that, while adoption of digital tools in the procurement sector has been widespread and enthusiastic, “many organisations think they are more advanced than they actually are.” 

Forrester’s report warns that, when selecting source-to-pay (S2P) procurement tools, many procurement leaders are failing to properly evaluate their needs and the potential of the software itself. This is a potentially serious hurdle for the sector, as choosing the right tools is critical, and failing to do so can badly hinder transformation. 

They found that numerous organisations struggle with their technology choices. A staggering  82% of respondents who switched procurement platforms regretted the decision and were considering switching again. 

Capgemini notes that, while these S2P platforms are maturing and “offer robust solutions for various businesses,” many organisations are still struggling to realise the value they offer. 

Ecosystem onboarding issues 

One of the key problems for procurement departments implementing new S2P platforms could lie outside the organisation. According to the Forrester report, the top obstacles leading to changing technologies were supplier onboarding followed closely by user adoption. 

The researchers found that an inability to effectively onboard suppliers to a new S2P platform the most common reason for switching software solutions. 

“It is no longer acceptable for selfish CPOs to impose expensive and/or unwieldy software on their suppliers or force them to incur fees or agree to vendor terms,” argues the report. It adds that, in order for the digital transformation of procurement to be successful, the process must be inclusive of suppliers. Steps such as onboarding and responding to RFXs in addition to transactional processes such as ordering and invoicing cannot be neglected. 

Procurement is increasingly being asked to exist at the intersection of multiple contradictory trends. 

At a time when procurement leaders are searching for ways to deliver strategic wins and new forms of innovation for the business, the traditional yardsticks for success—reliability and cost containment—have never been more important. Procurement teams are consistently being asked to do more (and more complex) work. Simultaneously, procurement headcounts aren’t rising in step with workloads. 

CPOs are increasingly turning to automation as a way to support existing staff while increasing efficiency, streamlining processes, and managing internal spend. For procurement leaders exploring the potential for automation to alleviate pain points and unlock new strategic wins, we’ve put together the top X use cases for automation in procurement. 

1. Payments 

Manual payment processing, including invoice management, is a common cause of bottlenecks, delays, and data entry errors. The risk of human error and lack of visibility also raise the risk of vendor fraud. 

Robotic process automation can automate payments based on specific triggers. These RPA bots can improve supplier relationship management and maintain a positive business reputation by reducing processing time and errors. By automating the payment process, accounts payable can efficiently and accurately handle payments, record transactions, and store data for subsequent reporting activities such as month-end close and financial reporting.

2. Contract management 

Contract management is another time consuming element of procurement. The ability for RPA tools to automate some of the more time consuming elements of the contract management process can be a huge source of efficiency for procurement teams. 

Contract management automation tools can draft new contracts by automatically extracting vendor information from other sources. They can flag imminent or incipient compliance breaches or contracts that are about to expire. Automating the contract management process can even improve customer satisfaction, as the number of errors and time to delivery go down. 

3. Pricing negotiation 

A large part of the procurement process is cost negotiation between procurement representatives. While the process seems, on the face of it, to be very human-centric, pricing negotiations are actually a prime candidate for automation. Once a procurement department receives a vendor quote, they can use an RPA bot to automatically negotiate prices based on a rules-based framework. Certain pre-programmed criteria determine whether the bot approves, rejects, or negotiates a quote.

4. Repeat orders 

Traditionally, procurement teams would be required to either manually monitor inventory levels across the organisation or wait to be told to reorder stock by other stakeholders. With RPA tools, bots can automatically monitor inventory levels and create purchase orders for the products that are about to be depleted. 

5. Inventory management 

Much like repeat ordering, inventory management automation takes a highly manual and error-prone process and streamlines it. 

Combining RPA tools with IoT devices makes it possible to monitor inventory levels in real time. This then enables automated reporting and inventory audits. For businesses like grocery stores that rely on fresh inventory and need to avoid overloading on perishable produce, having an up-to-date inventory report is crucial. Automated inventory management identifies products lingering in the warehouse, reducing the chances of overstocking perishable items.

6. Supplier onboarding 

Supplier onboarding is a long and necessary process that can consume a lot of valuable time for procurement teams. By using RPA tools, CPOs can automate multiple aspects of the onboarding process. Bots can, for example, scrape supplier information from the web like references and prices, and compile it into a report. 

RPA also has the capacity to conduct a basic evaluation of suppliers based on rule-based decisions. For instance, if a company needs a logistics company with experience moving fragile or unstable materials, and can’t find relevant case studies on the vendor’s website or profile, the vendor may be ranked lower. When done manually, these initial assessments can be time-intensive. By delegating these tasks to RPA bots, procurement teams can focus on more valuable work.

7. Sourcing 

Sourcing is the process of identifying and selecting suppliers to meet the organisation’s needs. Traditionally, sourcing is a highly manual, time-consuming process prone to delays and communication errors. 

A procurement automation platform streamlines this process by providing a centralised portal for supplier communication, bid comparison, and document storage. It also offers insights on price and delivery to ensure procurement teams are able to select the best supplier based on criteria  including, but not limited to, price, reliability, sustainability credentials, and more. Increasingly, automation is allowing AI-enabled solutions to buy and sell products with minimal human intervention and oversight.

Tonkean has announced the unveiling of Collaborative Intake offering new capabilities for enterprise procurement teams.

The company confirmed the news on Wednesday (April 17th) which will see the introduction of a new suite of capabilities in its ProcurementWorks solution.

Collaborative Intake enables cross-functional, in-workflow collaboration and engagement across every step of the entire intake lifecycle, from intent through resolution.

Tonkean is a first-of-its-kind process orchestration platform that helps enterprise internal service teams. Via Tonkean, users can build processes that are personalised for each requester and that use AI to automate the intake, triage, and resolution of every request.

“Without a proper venue for real-time collaboration, the quality of work suffers,” said Sagi Eliyahu, co-founder and CEO at Tonkean. “Tonkean’s Collaborative Intake ensures procurement is present, responsive, and effective from intent to resolution—transforming a transactional silo into a strategic nexus.”

There are several core new capabilities including contextual, real-time collaboration, dynamic workflow adjustments and omnichannel communication.

Tonkean Collaborative Intake builds on ProcurementWorks, a lifecycle orchestration tool for enterprise procurement teams that Tonkean released last year. ProcurementWorks allows procurement teams to intelligently automate the purchasing process end-to-end. This is also to create guided buying journeys for strategic spending personalisable to end users.

Collaborative Intake empowers procurement teams to provide buying experiences that are even more seamless and effective. The main benefits include proactive engagement, reduce human error and higher quality work.

Read more here.

SourceDay has announced a strategic partnership with industry cloud company Infor.

It is expected that the alliance will bridge the gap between ERPs and supplier networks. This will also be while enhancing the efficiency of direct spend purchase order lifecycle management.

Delivering supply chain visibility

As part of the partnership, SourceDay is now an Infor Certified Solution Partner. It will deliver deep, bi-directional technology integration across Infor’s Discrete Manufacturing ERPs. Shared customers can now manage direct material POs proactively and comprehensively from creation to receipt.

SourceDay is a supply chain collaboration platform that integrates with any ERP system to overcome the risks and costs inherent in manual PO lifecycle management processes. It helps manufacturers and distributors achieve supplier on-time delivery rates as high as 96%. This is through providing unmatched visibility and control over inbound supply.

Further, Infor is an official reseller of the SourceDay platform, which validates the SourceDay solution while significantly expanding customer reach.

Strategic partnership

“I’m thrilled to partner with Infor as the supplier collaboration platform of choice for their customers and prospects. This is the culmination of a rigorous process where Infor selected SourceDay based on the quality of our technology and shared commitment to our customers’ success,” said Clint McRee, co-founder of SourceDay. “SourceDay will continue to focus on proactive supplier engagement and data accuracy that today’s supply chain teams require to mitigate risk and unlock next-level business outcomes.”

Mark Humphlett, Industry and Solution Strategy Director at Infor, added: “Infor is focused on creating and sustaining collaborative relationships with partners, such as SourceDay, that have considerable vertical market expertise and are well aligned with our solutions and CloudSuites. This new partnership demonstrates Infor’s continued focus on quality and commitment to its customers.”

Read more about the new partnership here.

Some things change quicker than others.

In procurement’s case, it is speed so fast that the function’s own rulebook is almost being rewritten.

Truthfully, procurement has had to think on its feet. A rough Covid pandemic mixed with navigating the complexity of wars and inflation has been a cumbersome combination. But procurement has not been without help. The acceleration of digital has stepped up to the fore with many functions embracing tech-driven processes in ways previously alien to increase efficiency and decrease costs. Add last year’s buzzword, generative AI, into the mix and procurement is almost unrecognisable. The function isn’t tucked away out of sight anymore, it stands as an important cog in an organisation’s machine.

And having witnessed procurement’s trials and tribulations first-hand is Simon Geale. Having served as Executive Vice President, Procurement, at Proxima since June 2021, he has been involved with the organisation for almost 14 years overall. Geale has worked in procurement for more than two decades and has spent the majority of his career in solutioning roles designing procurement organisations and programmes. 

His company Proxima provides expert procurement services to a comprehensive client list featuring some of the world’s largest organisations. As a part of Bain & Company, Proxima helps its customers spend their money wisely through an extensive suite of procurement consultancy services focused on cost transformation, supply chain sustainability and decarbonisation. “My role is not like a traditional Chief Procurement Officer (CPO), I’m more market-facing,” discusses Geale. “I’m there to communicate what we think, what we say and the services that we build. I essentially keep in touch with our communities and calibrate what we do as business accordingly.”

Sense and Simplicity

Indeed, the procurement world of 2024 is in a vastly different place than it was when Geale first joined. 20 years of digital transformation and evolution have taken place since then. But interestingly, in 2005, in a previous role at Philips Electronics he attended an internal conference where he heard the launch of the tagline ‘Sense and Simplicity’. Given the trajectory procurement has been on since then, how curious is it that ‘Simplicity’ is one of Geale’s key themes of 2024? “I suppose it’s something that’s always stuck with me, that concept of let’s make things that make sense to our customers and are easy to use. We have to think about the value to the customer in everything that we do.

“For example, five or six years ago we had built a supplier management platform and I was trying to sell it within the procurement community. I can remember having many meetings with procurement teams and very few, if any, walked out of that meeting saying this was a bad idea. There was universal enthusiasm for the concept and the feedback was great. But the adoption was low, contingent of driving quite a big organisational and operating change. It was too hard at the wrong time.”

Looking back to move forward

One can learn a lot from the past. Famous scientist Albert Einstein once said the definition of insanity was to do the same thing over and over again while expecting different results. Indeed, Geale believes that what went before can act as a powerful reminder of how far procurement has come. The general perception of what procurement is and what it does has also shifted over the years and despite clear evolution, Geale affirms the core human elements remain the same. 

“I remember doing a speech on supply collaboration once, and actually some of the best lessons were from the 1990s in automotive,” he explains. “I think topics like relationships, talent, capabilities, skills and digital, they don’t go away. They keep coming back round but the business environment, and our capabilities have moved on. The questions are slightly different, but the theme is the same. It’s easy to dismiss something from 10 years ago and think it’s old news. But it all comes back around and actually, a new innovation could be a learning from the past or a fresh take on something.”

Procurement’s new dawn

Every year, Proxima consults leading CPOs to get their take on the opportunities and challenges in the year ahead in Proxima’s CPO Report. This year’s entry had reflections from the likes of Thomas Udesen, CPO at Bayer, Sandra Brummit, CPO at NiSource and Laura Cook, Director of Procurement at Primark. Having spoken to dozens of CPOs as part of the report over the years, Geale believes a common theme is that the average CPO is juggling having to do more with less resource than five years ago. 

“CPOs might have grown their function, but it’s in response to a much bigger to-do list,” he explains. “They’ve virtually all got big cost targets, a resilience agenda, data and transparency agenda and digital initiatives which means more tech investments within the businesses that they serve. Yes there is more sophisticated tech available to them to help them but they are unlikely to have unlimited budgets.

“They probably need to shift around some skills, balance some external insights to help challenge their thinking, and pick and choose where they need external support. On the positive side procurement is more relevant and better understood than in past times. They’ve likely got an organisation that has a better understanding of who they are and why they partner with them which means they can backtrack on some of the historic processes and red tape and allow for more flexibility and self service. The CPOs that we interviewed are really focusing on trying to get people to spend time and efforts on what really matters.”

Procurement future-focused

In the report, Udesen discussed three core areas that procurement leaders should focus on. Eliminate time consuming tasks, sustainability and learning from mistakes. “Firstly, it’s time to eliminate practices that are consuming too much time and not adding value: think tedious, time-consuming processes that can be eliminated and replaced with more pragmatic and practical measures,” he reveals in the report. “We must continue to adapt and evolve our profession, learning from mistakes of the past, to stay current and applicable to future generations of business challenges.”

As technology’s influence in procurement continues to soar, Geale is in no uncertain terms that the landscape is moving towards a more transparent and connected model for value chains. However, he acknowledges that while a defined movement is underway, change this seismic won’t happen overnight. “The themes that we’re currently looking at around resilience, cost, sustainability and growth are going to be the same because they always have been,” says Geale. “It’s the world that’s changing and themes are staying very similar so it’s how we react to those. Things are going to change around the planet, and we are going to have to react to them. We don’t quite know how much or how yet, but I think it’s going to be fascinating.”

US-based agricultural goods trader Archer-Daniels-Midland (ADM) has introduced a new level of digitally driven transparency into its procurement process. The company loaded and shipped the first vessels of verified, fully traceable soybeans from the US to Europe in January.

Regulatory pressure to increase transparency  

ADM initiated the pilot program in order to adhere to new EU regulations. Introduced in 2023, the regulations prohibit contact with deforestation in organisations’ supply chains. ADM reports the program traced the passage of 2.4 million bushels (64,000 tonnes) of verified soybeans to Europe. 

“While there are still issues—including how full compliance will be defined, measured and enforced—to work through in advance of the EU’s deforestation regulations, we are confident in our ability to continue to deliver to customers in Europe,” said Jon Turney, ADM’s vice president, EMEA Crush. The tracing program utilises a mixture of digital technology, according to ADM. They revealed that this includes FBN’s Gradable digital platform. Next, ADM applies the digital stack to its origination and transportation capabilities. The result is an allegedly successful attempt to verify, trace and segregate participating beans from farms to their final destination.

“At ADM, our future and success depend on the farmers we work with and for, which is why we’re committed to helping support their businesses and their legacies by ensuring that global markets remain open to U.S. agricultural products,” said Matt Hopkins, ADM’s vice president of North America River and Export.

100% transparency from bean to customer

ADM representatives say that the company intends to deliver a 100% deforestation-free supply chain by 2025. The company claimed in 2022 that it can trace 100% of its soybean suppliers in Argentina, Brazil, and Paraguay. 

Scope 3 emissions are coming under closer scrutiny throughout multiple industries. This is especially true in the agricultural sector. Soybean producers in particular are widely scrutinised for their role in deforestation across Latin America. ESG targets are becoming more difficult to hit, and organisations need to strive for greater transparency within their procure-to-pay cycle. 

According to a blog post by GEP, there are several steps that drive traceability in the supply chain. Embedding ESG into the supplier assessment process, collaborating more closely with those suppliers to foster their ESG-focused cultures, and embracing technology driven solutions are all effective steps in increasing traceability as a way to drive ESG goals in the procurement process.

They note: “As the world moves towards standardised reporting and regulatory requirements for ESG, companies that prioritise visibility and traceability across their supply chains will not only meet compliance obligations but also gain a competitive advantage. They will forge alliances with suppliers and consumers, driving positive change and contributing meaningfully to sustainability goals.”

Procurement priorities in 2024 are shifting. Prior to the COVID-19 crisis, pure profit motivation led to exceedingly long, widely distributed, complex, and fragile value chains. In the last four years, however, the world has begun to realise that the endless succession of geopolitical disasters, climate catastrophes, and once-in-a-generation economic hiccups isn’t going away any time soon. As a result, organisations are increasingly pivoting their priorities towards a more balanced approach. 

Not only must procurement maintain cost-containment in uncertain economic times, and (more and more) be a driver of strategic and sustainable innovation for the business, but CPOs in 2024 find themselves at the the forefront of companies’ risk management strategies as well. 

According to an Amazon Business report, when it comes to the top activities procurement leaders recognise the need to invest time and money into, “technology and tools to increase efficiency” (36%) and “taking steps to mitigate risks in the face of economic or geopolitical challenges” (35%) comfortably claimed the top spots. 

Considering “many of the top risks identified by respondents have the potential to disrupt procurement operations with little warning,” procurement leaders looking to drive innovation, improve efficiency, and increase their ability to anticipate and mitigate risk are exploring the potential of digital twins. 

Digital twins in procurement?

A digital twin is a virtual replica of a physical object, organisation, person, or process. This digital duplicate enables users to test and predict behaviour in different hypothetical situations. Organisations in the manufacturing industry have been using digital twins for years to facilitate iterative prototyping. More recently, however, the technology is increasingly being paired with AI and machine learning. As a result, digital twins can track and model more complex systems than ever before. 

A digital twin designed to track a procurement process or supply chain is called a network twin. Supply chain leaders have hailed digital twins as a useful tool for monitoring and testing logistics networks and supply chains. However, the technology is still underutilised in procurement. A report by Gartner found that 60% of supply chain leaders were planning to invest in digital twins. While that is a high number, it is still noticably smaller than in other fields like industrial manufacturing and logistics. A report by McKinsey found that “70% of C-suite technology executives at large enterprises are already exploring and investing in digital twins.”

The lack of applied analytics to digital twins in procurement may be partially responsible for the slower pace of adoption. Steve Kyle, a consultant for Deloitte, notes that “dynamic visibility” has the power to transform supply chains. This is only true, however, he stresses, when analystis translate that visibility “into recommendations and actions.”

Digital twin readiness in the procurement sector

Adopting digital twins is a complex and potentially fraught process. Nevertheless, Kyle explains that much of the building blocks that would enable a successful and widespread deployment of the technology in the procurement sector are already available to most procurement leaders.

These “enablers required to implement digital twins,” include “highly scalable computing power and storage, availability of historical data, advanced algorithms, ability to integrate external data, and the technologies to make sense of it all.” Many, if not all of these key tools, he notes “are already available and being used.” 

Digital twins bring the capacity for long term planning, disruption detection, integrated business planning, and increased resilience to the procurement process, but Kyle points out that CPOs and CSCOs struggle with finding the right tools, getting the timing right, and articulating the value that a large investment like a digital twin (and the necessary analytical tools to unlock its potential) demand.