Introduction
The new presidential administration in the United States has put energy policy squarely in the spotlight as a central ingredient of its growth strategy. As the executive branch proceeds with a large-scale rollback of Obama-era climate actions, procurement professionals within the energy and utilities sector are trying to interpret the impact of these forces of change on the strategies and processes that they employ on a day-to-day basis.
This report assesses the evolving U.S. political and regulatory environment and then evaluates the changing energy landscape. It highlights the impacts of nationalism vs. globalism, border adjustment taxes, potentially reduced regulations and lower corporate taxes on this segment. In addition, this report includes discussion of declining nuclear ambitions, growth of renewables, and the deepening natural gas glut. The goal is to provide insight to category managers looking to navigate their procurement function and continue to deliver value in a time of significant uncertainty.
Procurement organizations in many utilities have significantly advanced their capabilities in the past decade, introducing concepts of strategic sourcing and improving management of spend, suppliers and contracts. The increasing adoption of procurement-specific technology has helped these organizations gain complete and manageable information, adding both speed and accuracy to the process. These advances have occurred within a period of relative stability and consistency.
Now, expectations have changed — procurement organizations need to develop management skills focused on agility, flexibility, data and automation. Procurement professionals are expected to be “knowledge workers,” looking way beyond the linear buyer-seller relationship and reaching far into the supply chain and the markets in which suppliers operate. Procurement directors have been waiting for a time when they could become part of the strategic conversation in the executive suite. We can declare that that time has arrived.
While it is important for procurement to align with management’s priorities, it is also important to build capabilities to have the complete enterprise-wide spend under management. This would help procurement retain its status as a strategic partner and minimize the chances of its role reverting to merely tactical.