Procurement has the once-in-a-lifetime opportunity to evolve into a strategic powerhouse.
Will we grasp it, or will we fluff it?
A lot of that will depend on how leadership reacts to the seismic shifts we are currently seeing in technology.
But let’s not lose sight of it not just being about the tech.
You can have awesome technology, but with a lack of mandate, dirty data, and a poor internal communication strategy, you could still fail.
Likewise, you could have a progressive organization who values and understands the contribution procurement could make. But then you blow this by futzing around, being cheap and running procurement ops in ERP.
Or, maybe you’re suffering from Cinderella complex: not bold enough to demand an upgrade to the outdated, clunky, legacy Source-to-Pay suite interfaces that both suppliers and stakeholders hate in equal measure.
The pendulum could swing either way.
So, let’s take a look at the bullish and bearish scenarios for procurement’s future.
The Future of Procurement: The Bullish Case
In this optimistic outlook, procurement undergoes a transformation driven by compelling external forces.
Increasing inflationary cost pressures, more supply chain disruptions, and the imperative for more transparency to satisfy Corporate Social Responsibility (CSR) directives, or recent legislation in countries like Germany and Norway.
Chief Financial Officers (CFOs), under mounting pressures to optimise costs and enhance efficiency, increasingly view procurement not merely as a cost-cutting entity. They start to be seen as a strategic partner capable of delivering substantial value beyond our more traditional remit.
This won’t happen by magic, let’s be clear. To get this right, you need to have most or all of these in place:
- Investment and commitment to clean data
- Visionary leadership
- Open-minded Legal and Information Security colleagues
- An effective communications strategy
- Business-partnering operating model
- User-friendly tech
So, how will a bullish case look like?
Automation and Efficiency
Automation liberates procurement professionals from mundane transactional tasks, allowing them to focus on strategic initiatives like category management, sustainability, and fostering innovation with key suppliers. This shift elevates procurement from a reactive cost centre to a proactive driver of both cost optimisation as well as sales enablement.
Visibility and Transparency
Heightened demands for supply chain visibility propel investments in technologies that enhance transparency across procurement processes. This transparency not only mitigates risks but also fosters trust and collaboration with suppliers, paving the way for agile and resilient supply chains. In addition, this will vastly reduce the amount of unnecessary email and reactive work performed by Procurement Managers.
Strategic Integration
We need either a seat at the executive table, or a couple of powerful allies and sponsors at board level. Once we have this, CPOs or Heads of Procurement can wield more influence in strategic decision-making. This, of course, is earned, not given. We need the building blocks in place above to get there. Their insights into market trends, supplier capabilities, and risk management strategies become indispensable in shaping organisational resilience and competitiveness.
Even in this bullish case, Procurement as a function will likely have less headcount than previously.
Advancements in automation will reduce the need for administrative and operational roles. Category Managers will be freed up to spend more time on execution rather than data gathering.
Do not be surprised to see even best-in-class procurement teams look substantially different in 2030.
The Future of Procurement: The Bearish Case
A very distinct and possible alternative to the bullish case is a scenario where we increasingly lose relevance to the business. As technology increasingly enables a lot of what we currently do to be automated or radically simplified, we could find ourselves more disconnected.
This more pessimistic scenario unfolds where procurement continues to languish in siloes. If we’re unable to effectively demonstrate how our contribution beyond just cost savings contributes to broader organisational goals, we will continue to lack strategic stature.
Just like the bullish case, there are certain traits which may result in this being a likely outcome:
- Poor data, with no clear ownership of – or willingness to – fix it
- Risk-averse, technocratic leadership
- Process being more important than the outcome
- Lack of investment in learning & development
- Stuck in an ivory tower, not effectively involved in business planning
- Procurement still being run in ERP or a legacy tech stack
Compliance-driven teams
Procurement teams who are more focused on the process rather than the end result are at particular risk. AI and RPA is making it easier to ensure that stakeholders follow corporate policy, without the need for a gatekeeper or policeman. Departments seen as being blockers, i.e. process and compliance zealots, will become increasingly irrelevant. Finance or Internal Audit teams can theoretically police compliance on their own now, if the bulk of these controls can be performed by AI with just minimal human supervision.
Siloes and Isolation
Despite advancements in digital technologies, procurement remains isolated, relegated to a reactive role focused solely on cost containment. Without integration into broader corporate strategies, procurement fails to leverage its full potential in driving business outcomes.
Digitisation Challenges
While digital tools proliferate, their implementation often fails to translate into meaningful business impact. Low user adoption and a poor UI/UX of legacy procurement tech has given us a bad reputation. We’ve made buying something into a chore for stakeholders, rather than enabling them. Agentic AI threatens to streamline transactional tasks, potentially diminishing the perceived value of human expertise within procurement functions.
Communication Deficits
Procurement leaders struggle to articulate their strategic contributions effectively to senior management and board members. This communication gap perpetuates the perception of procurement as an overhead or cost centre. If we’re not able to effectively show our value-creating capabilities of driving innovation and competitive advantage, we’re toast.
Automation Advancements
As automation advances, essential elements of the procurement function risk being automated away, leaving behind a hollowed-out role focused solely on tactical execution rather than strategic foresight. If this is where the bulk of your headcount is, your team will likely be 80% smaller in just a few years’ time.
Conclusion: Navigating Uncertain Waters
The future of procurement hinges on organisational vision and leadership.
In the bullish case, the technological advancements will massively help us get there. We will be the strategic powerhouse; the fulcrum of all business decisions that affect supply chain, supplier relations, and both top and bottom line growth? We stand on the cusp of AI and consumer-grade UI/UX being able to free up knowledge workers – such as Category Managers – to delivery way more value, and with fewer resources.
Best-in-class organisations who have a top-quartile procurement team are increasing the gap between themselves and those who are laggards. Technology is only going to accentuate and accelerate this.
The bearish outlook, however, warns us of what could happen if we see continued marginalisation. Failure to break out of just being a reactive and tactical department will ultimately decimate procurement teams. In this case, automation and digitisation will be an existential threat.
It will makes teams replaceable who are only engaged in day-to-day activities. If we haven’t demonstrated and effectively communicated our wider value to the business, do we have anyone else but ourselves to blame? If the business doesn’t see the value of procurement beyond just reactive negotiations and crisis management, it’s time to brush up your CV and look .
Life is too short to waste time working for a CFO or an organisation that doesn’t appreciate the full value of a highly strategic, business partnering approach to procurement.
Ultimately, the trajectory of procurement will be shaped by the ability of leaders to integrate procurement into the fabric of organisational strategy, communicate its strategic value effectively, and harness technology to augment human expertise rather than replace it.
The visionaries will be the winners. Is your employer one?