January 23, 2024 | Procurement Strategy
Procurement teams continued to face disruptive forces in 2023.
Rapid advances in digital transformation, a resetting of globalization and intensifying climate change impacts present new complexities for procurement teams to contend with.
In response to these trends, leaders have the tricky task of looking to the future while also maintaining a firm grip on their current priorities.
By strategically embracing change, procurement leaders can elevate their function, deliver greater strategic value and drive enterprise success.
Emerging technologies like generative AI aren’t just transforming procurement workflows, they’re profoundly altering how enterprises operate.
For procurement teams, intelligent automation of repetitive tasks like transactional purchasing and contract management can enhance productivity of teams and free up resources to tackle more strategic value-added projects.
Generative AI allows users to generate tailored insights by analyzing data and context. Its potential to transform operations is immense.
However, realizing gains requires change management and reskilling to leverage new capabilities, as well as robust governance to ensure responsible use of these powerful new tools.
Geopolitical tensions, attacks on commercial shipping by Houthi rebels in the Red Sea, the Israel-Gaza war, and Russia’s invasion of Ukraine, along with the supply chain disruptions, have spurred efforts to reshape global supply chains in order to make them more agile, resilient and sustainable.
Strategies like re-shoring, near-shoring and friend-shoring continue to gain momentum as enterprises prioritize resilience and supply continuity.
The problem is that while controlling costs is still a core priority for procurement leaders, it’s no longer the sole focus. They’re also tasked with future-proofing supply chains, managing risks and tracking and reporting on ESG goals.
This expanded mandate necessitates closer collaboration with suppliers to reconfigure networks and develop local partners. With global operating models in flux, procurement agility, creativity and supply chain visibility are key to mitigating geographic risks.
Climate change exerts mounting pressure on enterprises to curb emissions across their supply chain. Procurement is central to progressing ESG goals through sustainable sourcing, product substitutions, supplier incentives and circular economy practices.
Leading organizations use procurement and partnerships to reduce their carbon footprint while driving cleantech innovation. Procurement has an opportunity in the next few years to promote a culture of sustainability and make the case for ESG as a driver of value.
Urgent climate action can help to futureproof supply continuity and benefit the planet.
However, procurement leaders must stay aware of climate risks to their supply chains and prepare for disruptions from extreme weather and the impact of climate change.
The digital, geopolitical and environmental crosscurrents of our time call for procurement to elevate its strategic influence. By embracing change and steering the enterprise response to emerging global megatrends, procurement can transcend its transactional reputation to create competitive advantage.
The disruptive forces acting upon global business are too powerful to ignore. Enterprises that equip their procurement function to ride the waves of change will gain strategic high ground. Those that cling to old models will flounder. With technology, trade and climate in flux, 2024 presents plenty of risks and opportunities.
Agile procurement teams that adopt the new digital tools available to increase strategic foresight and meet sustainability commitments will be better positioned to navigate volatility and future-proof their enterprises.
In the current moment, procurement has the opportunity to reinvent itself as a strategic asset.
Uncertain of where to get started when it comes to anticipating and managing the toughest procurement challenges? Download the CPO Compass 2024 report from GEP and Procurement Leaders for your guide to a complex future.