Why is Procurement Vital in Supply Chain Management?

As businesses look to balance efficiency and resilience, procurement teams are increasingly recognising their role in driving sustainable supply chain management.

The traditional procurement focus on cost reduction is shifting towards strategic sourcing decisions that could support long-term business resilience and sustainability goals.

Procurement professionals took to The Supply Chain Management (SCM) Forum to discuss how procurement strategies must evolve to support sustainable supply chain operations at Procurement & Supply Chain LIVE.

Strategic procurement transformation

Procurement teams are now being asked to evaluate suppliers through multiple lenses, considering factors such as sustainability credentials, geopolitical risk exposure and long-term partnership potential. Due to ongoing volatility across the world, procurement professionals have become more data-driven and strategic in their supplier selection processes.

The function has evolved into an AI-powered operation, focusing on sustainability and collaboration in order to create unified sourcing strategies and remain unshakeable during turbulence. Leaders understand that it is not enough to react to supply disruptions, but rather it is necessary to build procurement strategies that could anticipate them.

"Everything used to be optimised in this belief that we could chase stability," says James Moffatt, Director at Baringa, speaking at PSC LIVE.

"Now it's impossible to get that stability. There's too many things that change. The complexity is too high, like the geopolitical things that go on – the events outside of our control are changing what happens.

"The main thing that I see change is supply chain leaders have gone from being people that are trying to create stability to people that now have to bring predictability, then work out what to do in the event things go wrong rather than trying to stop things there."

Supplier relationship management

For procurement teams, this shift could mean moving from transactional supplier interactions to building deeper, more collaborative partnerships. Procurement decisions at one point in the chain could have ripple effects throughout the entire network.

Whether it's a climate event having an impact on agriculture, or trade wars impacting the prices of manufacturing, seemingly singular events often have a much wider scope. Events over the past several years have therefore brought about more communication and collaboration across every step of the supply chain.

"Supply chain has been in the news now more than ever because it used to be a back office job that no one took much notice of, until we had Brexit and the pandemic," reflects Alex Johnson, Chief Transformation Officer at Clinigen, speaking at PSC LIVE.

"I spend a lot of time with my team developing them to be change agents. So I want them to be confident in problem solving, particularly when businesses change every few years."

Digital procurement capabilities

As supply chain management has become a more visible role within business operations, procurement teams are adapting their strategies and welcoming more technology. Modern procurement functions are implementing digital tools that could provide greater visibility into supplier performance, sustainability metrics and risk indicators.

Technology is being implemented in various ways across company operations, whether through digital twins, predictive analytics or automation. For procurement specifically, these tools could enable more informed sourcing decisions and better supplier evaluation.

"For us, it's productivity," explained Scott Corboy, Regional Director of AtkinsRéalis.

"What's it freeing people up to do? Can it help with the planning to get people closer to more valuable activities and the execution stage, or even getting closer to their supply chain partners who are the experts in what they do, unlocking the innovations and the value they can bring.

"But also traceability, understanding where your products are really coming from, which is important and obviously supports the conversation around scope 3 emissions."

Effective procurement is now about making sourcing decisions that could optimise the global supply chain network, through sustainable supplier selection, strong supplier relationships, the implementation of modern technology and operational transparency.