BCG: CEOs Need Procurement Playbook Amid Geopolitical Shocks

Companies are used to building procurement networks that excel in speed, quality and cost efficiency.

However, the global landscape is shifting and with it comes a wave of geopolitical disruptions—wars, trade restrictions, evolving regulations and more—that expose the fragility of these once-robust systems.

This results in supply shocks that force companies to pay more for materials, delay production and suffer reputational harm.

CEOs must now rethink their strategies, adapting to a world where resilience and foresight trump traditional cost-driven approaches. Here, we explore the latest guidance from BCG on exactly how.

Shifting from best cost to best value

Experts at BCG assert that modern procurement strategies can no longer rely solely on the “best cost” principle.

Instead, a more comprehensive approach—focusing on best value—is essential for resilience. While speed, quality and cost remain crucial, they now share the stage with three additional priorities: sustainability, risk management and supplier innovation.

Best value asks leaders to look beyond today’s numbers. A supplier offering the cheapest materials might seem like the obvious choice, but if their region faces risks like domestic unrest, climate disasters or tariff changes, the hidden costs could far outweigh the initial savings.

This approach also positions companies to seize opportunities. For instance, government incentives promoting specific industries could turn a once-overlooked supplier into a strategic goldmine.

Importantly, the weight assigned to each driver will differ for every company. While the lowest-cost supplier might still win in some scenarios, businesses gain a critical ability: anticipating and navigating risks before they escalate into crises.

Building resilience through geopolitical awareness

Handling geopolitical risks isn’t just about reacting to the latest headlines—it’s about creating a proactive system that monitors and mitigates risks before they materialise.

CEOs must develop a clear understanding of their supply network’s global footprint, assess its exposure to geopolitical disruptions and build tools for detecting early warning signs.

This expertise can’t be outsourced. Companies need in-house teams skilled in geopolitical analysis, risk management and strategic sourcing. These specialists can interpret global trends, craft contingency plans and act decisively when signals point to trouble.

Several strategies can help businesses fortify their supply chains:

• Diversify supply sources: Relying on multiple countries reduces vulnerability to disruptions affecting any one region.
• Strengthen supplier relationships: Close ties with suppliers can yield early warnings about policy changes, joint problem-solving and even preferential treatment during shortages.
• Rethink design specifications: Simplifying or altering designs can reduce reliance on hard-to-source materials, making the supply chain more adaptable.
• Vertical integration: By bringing more stages of production in-house, companies can reduce exposure to external risks entirely.

"Geopolitical threats are the hardest to manage... Security of supply is critical, but we have been able to manage – we have great relationships with our suppliers," says Miguel Gonzalez, CPO at DuPont.

"The one that's hardest to manage and control is geopolitical. We have seen the global effects ripple effect from events like the war in Ukraine."

Embracing a new procurement era

The world order that shaped procurement strategies for decades is evolving into something far more fragmented and unpredictable. The companies that thrive in this environment will be those led by CEOs who embrace change, viewing it not as a threat but as an opportunity.

Adopting a best-value mindset, coupled with robust geopolitical risk management, can transform vulnerabilities into strengths.

CEOs equipped with these tools aren’t just weathering disruptions—they’re turning them into advantages that fuel their companies’ success.

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