Procurement in 2024 is a strategic function reshaped by digital transformation, the need for resilient supply chains, and the requirement to meet environmental, social, and governance (ESG) goals.
As businesses adjust to ongoing challenges, procurement professionals may find it helpful to reconsider their strategies and align with current trends to support long-term success.
Digital transformation
There was a time in procurement when digital transformation was just an option, but now it has become integral to managing today’s complexity in supply chains.
Advanced technologies such as AI, blockchain, and real-time analytics allow procurement teams to make informed decisions and optimise procurement processes. For example, AI-powered predictive analytics help businesses anticipate demand, predict market trends, and identify risks in their supply chains. According to a report by Allied Market Research, the global procurement analytics market is expected to grow to $32.3 billion by 2031, highlighting the increasing reliance on technology.
However, more than adopting new technologies, successful digital transformation also involves integrating these tools into broader procurement processes and aligning them with business goals. Many procurement leaders are focusing on technologies that offer immediate value, such as AI-powered spend analysis and cloud-based platforms, and so it is important to ensure that these tools are scalable and adaptable to changing market conditions as this scalability will be essential for navigating an evolving procurement landscape.
Resilience
Supply chain disruptions are still a major concern in 2024. Geopolitical tensions, trade issues, and the aftershocks of the COVID-19 pandemic have prompted procurement professionals to focus on resilience. Diversification, improved visibility, and close collaboration with suppliers are integral to building a resilient supply chain.
According to McKinsey, procurement teams are shifting towards a more entrepreneurial role, actively contributing to strategic value creation and margin management.
Near-shoring and re-shoring strategies are being adopted to reduce dependency on distant suppliers and improve supply predictability.
However, resilience comes at a cost, as companies weigh the financial implications of alternative sourcing strategies and enhanced supply chain management.
Regular testing of contingency plans and fostering transparency in supplier relationships are necessary steps for mitigating future disruptions.
ESG (Environmental, Social, and Governance)
ESG goals have become an essential part of procurement strategies in 2024. As companies set ambitious target to meet sustainability goals, particularly around Scope 3 carbon emissions (which encompass emissions from the entire supply chain) are now a focus. Accurately measuring and reducing these emissions requires collaboration with suppliers and a strong commitment to social responsibility.
In addition to carbon reduction, procurement teams are increasingly addressing other social responsibilities, such as ethical sourcing and preventing modern slavery. Embedding ESG into procurement processes involves selecting suppliers based on their sustainability performance and incorporating ESG metrics into sourcing decisions. Companies are also investing in technologies that track and report on environmental and social impacts.
Future predictions for procurement
Looking beyond 2024, procurement is expected to continue evolving with technology, resilience, and ESG playing central roles.
Several trends are expected to shape its future:
- Increased reliance on AI and analytics: procurement will become increasingly data-driven, with AI optimising supplier negotiations, demand forecasting, and other critical functions.
- Enhanced supply chain visibility: digital twins and blockchain will be used more frequently to provide real-time insights, improving transparency, and helping businesses manage risks.
- Stronger supplier partnerships: developing long-term, collaborative relationships with suppliers will be crucial for driving both resilience and sustainability efforts.
Integrating these trends into procurement processes
For procurement professionals, incorporating these trends into everyday operations is key.
Practical steps to consider include:
- Prioritising digital investment: focus on AI, analytics, and cloud-based platforms that offer immediate value, such as spend analysis and supplier collaboration tools.
- Enhancing supply chain resilience: develop alternative sourcing strategies, strengthen supplier relationships, and invest in real-time monitoring tools to respond swiftly to disruptions.
- Embedding ESG into procurement: ensure sustainability is part of supplier selection, contract management, and reporting processes, with tools in place to measure and track Scope 3 emissions.
By addressing these areas, procurement professionals can position themselves at the heart of their organisation’s decision-making process, contributing to both short-term success and long-term resilience.
