In the rapidly evolving world of procurement, Chief Procurement Officers (CPOs) face an array of challenges in 2024. From volatile market conditions to geopolitical disruptions and talent shortages, the landscape is filled with complexity. Smooth sea never made a skilled sailor, eh?
In this blog, we'll explore key themes shaping procurement strategies in 2024 and provide actionable insights for CPOs to thrive in dynamic environments.
Key themes shaping procurement strategies
Theme 1: Spend Cost Reduction and Combatting Inflation
Inflationary pressures continue to pose significant challenges for procurement teams, and challenging times require innovative approaches to cost management. CPOs are focusing on improving spend cost reduction, and cost avoidance strategies.
By leveraging data analytics and market intelligence, procurement teams can identify opportunities for optimizing spend and negotiating favorable terms with suppliers.
"Small incremental improvements can have significant impacts on cost reduction," Kimmo Kemppinen, CPO of Konekranes, stresses the importance of continuous improvement and LEAN practices (SievoFriends event, 2024). Adopting agile procurement practices are crucial for mitigating the impact of inflationary price increases.
Theme 2: Ensuring Supply Continuity and Geopolitical Disruption Management
The global supply chain landscape is increasingly susceptible to geopolitical disruptions and unforeseen events. To ensure supply continuity, CPOs are prioritizing Supplier Relationship Management (SRM) and risk monitoring. By building sustainable partnerships and enhancing visibility across the supply chain, organizations can better anticipate and mitigate risks.
Agile supply chain strategies, supported by robust contingency plans, are essential for maintaining business continuity. When supply chains need to adapt fast, data and creative thinking come in handy.
Jafles Pacheco, CPO of Oerlikon, reminds us about outside-the-box thinking: "We in procurement tend to be very rule-driven, that is needed with compliance and legislation, but we need to be creative as well." (SievoFriends event, 2024)
Theme 3: Stakeholder Collaboration and Enabling Business Success
Procurement plays a pivotal role in enabling business success and driving strategic initiatives. CPOs are championing stakeholder collaboration to align procurement objectives with broader business goals.
"Connection with the business is critical. You need to be clear and focused to make an impact. Focus on things that really matter to them," Sigrid Brendel, Founder & Strategic Advisor at Brendel Interim, advices (SievoFriends event, 2024).
As strategic advisors, procurement teams can contribute valuable insights to decision-making processes. People, communication and uplifting skills are must-have for driving business impact.
"In the end, this is people game," Kimmo Kemppinen, CPO of Konekranes (Sievofriends event, 2024).
Theme 4: Digital Transformation and Analytics for Talent Shortages
The digital transformation of procurement is revolutionizing how CPOs manage their supply chains and procurement processes.
Alex Streif, VP of Supply Chain Management of Northvolt notes the need for new ways of learning and growing within procurement: "We need to find a way to feed experience and skills to the junior workforce so they can make proper long-term decisions." (Sievofriends event, 2024)
Automation, generative AI, and advanced analytics are instrumental in addressing talent shortages and improving operational efficiency and decision-making skills. AI assistance in operational procurement tasks and routine decision-making accelerates process efficiency and enables procurement professionals to allocate their time and expertise more effectively.
Theme 5: Sustainable Procurement and Decarbonizing Supply Chains
Sustainable procurement is no longer a choice but a business imperative in 2024. CPOs are increasingly focused on integrating sustainable procurement practices into their operations. Corporate Social Responsibility Directive (CSRD) initiative and Scope 3 emissions reduction are central themes. Data insights guide CPOs from reactive to proactive decision-making. By collaborating with sustainable suppliers and adopting circular procurement principles, supply chain can drive positive change while creating value.
"Sustainability is not a threat, it's an opportunity to bring your supply chain ahead of the competition," Alex Streif, VP of Supply Chain Management at Northvolt (Sivofriends event, 2024).
Conclusion
In conclusion, CPOs needs highly capable team, robust data, and a bit of creativity to thrive and navigate through the challenges. True value delivery comes from having strategic vision, agility, and embracing everyday innovation.
By fostering business collaboration with AI-driven insights, and walking the extra mile in sustainability, CPOs can position their organizations for long-term success and stay ahead of the curve.
