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Summary
A really full month with lots to consider. Overall what I get from these reports is that the procurement and supply chain landscape for 2025 is characterized by significant shifts driven by geopolitical instability and technological advancements. Companies are moving away from traditional lowest-cost, fastest-delivery models towards more resilient supply chains
Themes that I found from these reports were
- Cost reduction was the top priority for CPOs, followed closely by third-party risk management and speed of execution
- Artificial intelligence adoption is surging, with 94% of procurement functions using generative AI weekly, and 70% open to implementing it across the value chain
- Supplier relationship management (SRM) is gaining importance, with 46% of organizations reporting over 4% annual financial benefits from their SRM programs
- Challenges persist in spend analysis, with 53% of organizations reporting lower-than-expected ROI from analytics solutions
These trends highlight the need for procurement leaders to adapt to a rapidly changing global landscape while leveraging new technologies to drive value and efficiency
BCG – Geopolitics and Global Sourcing
Last month I reviewed Gartner megatrends for procurement, and one of them was about the changing nature of global relationships. This article from BCG takes this further and looks how Geopolitics changes the procurement equation.
The article begins by recognising that for much of the past couple of decades, procurement has focussed on building procurement networks that focus on lowest cost with speediest deliveries, byt with the instability at geopolitical level this traditional approach which requires stability will no longer work.
Today, companies must navigate an immensely more complex global landscape, one often unsettled by armed conflict, trade wars, sanctions, export controls, and other unexpected developments driven by geopolitics. As a result, companies are confronting a balancing act: how to reduce procurement costs at a time of high inflation, while at the same time improving access to key markets and ensuring that their supply chains are resilient in the face of geopolitical risk.
The article goes to describe ways to develop best value sourcing locations, (see image) including
- Costs
- Delivery
- Sustainability
- Risk
- Quality
- Innovation
And then cross referencing these with differing regions.
Producing a geopolitical heat risk map for the regions and products is also identified and as indicated by the economist study, scenario planning, for these key risks to identify signposts and trigger points.
All in in all a very interesting read, if you are thinking of re designing your supply chain.
Procurement Leaders – Strategic Planning Primer
This report gives us a view of what leading CPOS are thinking about for 2025.
- Once again Cost savings is predicted to be the top priority for 2025, followed by third party risk and a new one, Speed of execution.
- These will be enabled by evolution in operating models around business partnering, Category Management and Data.
- 30% identified risk management as a value driver for procurement with business interruptions, single sourced materials and at risk revenue being top areas of concern
- Speed of execution is a new entrant with supplier onboarding and sourcing cycle times being areas of measurement for improvement.
Procurement Leaders – CPO Compass 2025
This report is based on interviews with 8 experts across a range of fields (ie not just procurement) looking at the macro trends to identify some of the tensions that procurement leaders will need ot navigate to deliver value.
- Navigating the business Supercycle – The retreat from globalisation continues to redraw the world map, with procurement teams at the forefront of companies’ efforts to adjust. But as leaders continue to pivot at pace, they must develop their understanding of the wider forces driving this trend
- Balancing human and artificial intelligence - CPOs have considered talent to be the number one enabler of success for their functions. But with advances in AI potentially signalling a revolution in what work is done – and how it is accomplished – leaders must view capability development through the prism of technology
- Powering next level productivity - The imperative to do more, to do it faster and more efficiently has never been greater.
It’s a really great read with lots of insights and thought provokers.
Procurement Impact Report – Vertice
This study of 300 global procurement leaders in the US and UK sought to understand the differing levels of maturity in procurement and how that translates to value and opportunity for their organisations.
Not surprisingly the more mature functions are were able to innovate faster, maintain compliance easier and control budgets better. This is aligned to introduction of procurement automation.
What was interesting is that partially advanced procurement teams were more of a hinderance than a help, suggesting that the journey to maturity is a rocky one for the business to endure. Ion other words, change management is hard!
There was a clear split that procurement functions in the UK were more advanced in terms of maturity than their counterparts in the US. 67% of UK firms v 44% of US firms have reached advanced procurement maturity according to the report.
Worryingly, 37% of respondents say that procurement is not seen as a strategic priority and 35% say their organization is not willing to invest in the skills to tackle the issue.
Its an interesting report, with a link for a self-assessment included.
Wharton Business School – AI Growing up
802 respondents in the US took this study earlier this year. Its not solely procurement but across business, and the goal was to take a pulse on where organisations are on their adoption of Gen Ai building from a survey the previous year.
The survey found that:
72% reported that they were using Gen AI once per week and that spending on Gen Ai had increased by 130% since 2023.
For procurement that number rises to 94% (from 50% 12 months ago) making procurement the highest function of all.
“The biggest impact of Gen AI will be to augment my capabilities. [It will] automate routine tasks and provide 24/7 support to our customers, freeing me up to focus on [customer] empathy and more complex problem-solving.”
Banking Leader, $100M - $250M Annual Revenue
Most leaders agree that its having a positive impact, within procurement 35% stated it was high, 41% stated it was medium and 18% said it was low. This was broadly in line with all other functions except IT (which was a higher, high impact).
Budgets were expected to rise in procurement for AI with the majority (58%) suggesting between 1-10% increase over the next 2-5 years.
It’s a great read which details the impact that Gen Ai is having and how it evolves.
AQPC Accounts Payable Practices
The report which surveyed 335 respondents, provides insights into accounts payable (AP) practices, focusing on process maturity, data standards, and technology implementation and highlights the growing trend towards automation, AI adoption, and cloud-based solutions in accounts payable processes.
Delivery Models
- 22% of respondents use an outsourced model for AP
- 99% of respondents consider their delivery model effective, with 39% rating it as extremely effective
AI is being implemented across various P2P processes:
- 42% in procuring products and services
- 37% in processing accounts payable
- 21% across the entire P2P process
State of Flux – SRM
The 16th annual Global SRM Research Report emphasizes the critical role of supplier relationships in modern business, highlighting the shift from the Information Age to the Reputation and Relationship Age.
Key Findings
- 46% of participants reported financial benefits above 4% per annum from their SRM programmes.
- 91% of Leaders monitor financial benefits beyond contracted spend for critical suppliers.
Challenges
- Difficulty in capturing and reporting returns due to lack of accurate data.
19% said their company had no system in place to support contract lifecycle management (however, of Leaders, 82% do have a dedicated system).
21% reported the systems they have to support performance management were ‘poor.’
23% said they had not yet developed a business case at all for supplier management.
The report underscores the transformative impact of strategic supplier management on organizational success but identified that there was a drop in organisations surveyed who qualified as leaders, which with the geopolitical changes happening is a concern due to the rising importance of supplier relationships and the changing of global supply chains.
Everest CPO Agenda 2025
This was taken from a webinar hosted by Everest earlier this month.
CPO Challenges and Priorities
- External Challenges: Supply chain disruptions due to geopolitical events
- Internal Challenges: Budgetary constraints limiting ability to navigate external challenges
Top Priorities for 2025:
- Cost reduction
- Minimizing supply chain disruptions
- Improving operational efficiencies
Generative AI in Procurement
- 70% of respondents are open to implementing generative AI throughout the process value chain
- 52% are focusing on quick-win use cases
The data points are sourced from Everests CPO report for 2024.
As always reach out to discuss more, and always happy to hear your thoughts!
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