What does the past tell us about the likely future of procurement: 30 years of change yet fundamental continuity

As I currently have some time on my hands I decided to do some research, well when I say “I”, I mean Chat GPT but let's not get distracted by that.? ?My hunch was that, despite significant change over the period I have worked in procurement, the core themes raised by CPO’s over the last 20 years when asked about the future are remarkably consistent. Rather than them changing radically, they have subtly adapted and changed with global conditions and events. ?

When you look at the evidence everything points to 5 key things: cost control, talent development, risk management, strategic sourcing & category management and sustainability and technology, but what does that mean for the evolution of procurement in the next 5-10 years??

Firstly, let’s dive into how the priorities of CPO’s have changed over the years.?

1995-2010:?Laying?the?Groundwork??

During this period the outlook was centred on cost control. ?Teams were hyper focused on reducing expenses and improving efficiency. Building strong supplier relationships and managing their performance became increasingly important. ?The emphasis was on process improvement through better technology and automation. ??Risk management started to gain traction as procurement played a more active role in managing supply chain risks including geopolitical and natural disasters. ?The shift towards strategic sourcing began and procurement started the process of integrating itself more closely to the overall business strategy. ?The early stages of sustainability and corporate social responsibility (CSR) also took root, setting the stage for future developments. ?

Key Themes - Cost Control, Supplier Management, Process Improvement, Risk Management, Strategic Sourcing & Sustainability?

2010-2020:?Integrating?and?Innovating?

The years from 2010 to 2020 saw Procurement become a more involved player in business strategy. ?Strategic Sourcing took centre stage with procurement driving business value, increasingly using overarching category strategies to help achieve that. The adoption of technology surged, with e-procurement systems, data analytics and automation becoming crucial for improving efficiency. Talent development emerged as a significant challenge, prompting a focus on attracting and retaining skilled professionals. ?Supplier relationship management continued to evolve emphasising collaboration, risk management and performance improvement. ?Sustainability and CSR became more important with it becoming clear that procurement was central to companies achieving their ESG goals. ?

Key Themes – Cost Reduction, Supplier Relationship Management, Risk Management, Sustainability, Technology Adoption, Talent development, Strategic Sourcing & Category Management?

2020-2025:?The?Modern?Era??

Since 2020 procurement strategies have had to increasingly focus on agility and adaptability, in response to the changing business dynamics and supply chain disruptions. ?The COVID pandemic accelerated this shift, highlighting procurement's key role in managing supply chain risks and ensuring business continuity. ?This is especially relevant in the more volatile world in which we live at present. Talent acquisition and retention remain major concerns, with many CPO’s struggling to attract and retain skilled professionals. ?Procurement is now beginning to be seen as a driver for growth and value creation beyond just cost reduction. ?

As governments have started to legislate for a zero-carbon world environmental, social and governance (ESG) criteria have become key priorities, with a focus on capabilities to meet sustainability goals in line with the evolving legislation. ?Data analytics and technology continue to be crucial for success, with investments in advance analytics to support decision making. ?Strategic sourcing is replaced with a focus on maturing category management practices to drive higher returns over time from key areas of spend. ?

Key Themes – Agility and adaptability, Talent Acquisition and retention, Value creation and Growth enablement, Sustainability and ESG, Data analytics and technology and category management maturity?

The?Core?Themes?Endure??

Despite evolving specific focus areas, the core themes in procurement have remained steadfast. ?Cost control, supplier management, risk management, talent development, strategic sourcing, category management and sustainability have always been, and continue to be, central to functional procurement strategy. While the approaches may have evolved their importance has not diminished one bit. ?

I have summarised the key themes and some of subtle evolution in the table below. ?

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2025-2035:?Looking?Ahead??

Based on the above, it's clear that while the fundamentals of procurement remain unchanged, the way we approach these core themes is evolving as we move toward 2030 and beyond. Here are a few emerging points within those themes that are set to shape the future of procurement. ?

Cost Control: This ever-present priority will become more complex. Procurement will need to continue delivering value beyond just savings, becoming more customer centric and navigating the complexities of greater ethical, societal and environmental requirements. ?

Supplier Management: I think this will focus on driving innovation and achieving strategic objectives from the supply chain through stronger partnerships with not just key suppliers but key or critical suppliers many levels down in the supply chain. ?

Risk Management: Building more resilient supply chains will be crucial. ?This involves not just managing risks but anticipating them and proactively mitigating them. ?

Strategic Sourcing & Category Management: These strategies must increasingly align with customer expectation, ensuring procurement decisions support broader business goals and enhance customer satisfaction. There will also be greater emphasis on championing supplier diversity, promoting inclusivity and equity whilst hitting cost and innovation targets. ?

Sustainability:?The focus on sustainability will intensify, with procurement taking a lead role in achieving carbon neutrality and other environmental goals.?

Technology Adoption: The ongoing digital transformation of procurement will continue focused on AI & Generative AI. ?It will enhance processes delivering better transparency, efficiency and improved decision making. ?

Talent Development: Developing our people so that they can embrace the new technologies and ways of working is essential if they are to cope with the complexities of the modern digital procurement world. ?

In conclusion, the foundational principles of procurement remain as relevant as ever, yet with increasingly more complex challenges. So what does this mean for procurement teams. It does not mean that we have stood still, or that the same solutions from the past can be applied today as they were yesterday. Our greatest challenge will be in fact findings new ways to more effectively and efficiently address the same problems.

Those who will be successful will be those who train their people on new technology, embrace AI and proactively seek out innovation and new ways of working. It may also mean that new skillsets will need to be brought into the function, helping to tackle age old problems in completely new ways. The question is whether people are up for it, with change comes pain but I am pretty sure it will be worth it in the long run.