Representing more than 50% of companies’ revenue in France (Cegos)… Procurement functions are vital to business activity. We asked ourselves: what will Procurement look like tomorrow? What roles will the Procurement function evolve towards?
The Procurement function: decoding a role that is essential for businesses
Often reduced to the simple practice of purchasing goods and services, the Procurement function is first and foremost a profession, and it encompasses a strategic dimension that is not always well understood.
Procurement is a key partner in the company’s overall performance: supplier relationship management, cost optimisation, risk mitigation (particularly around supply).
Yes, the Procurement function also contributes to company performance
Put simply, Procurement has several roles; it is a strategic balancing act between savings and quality in the business world. Beyond the exchange of goods and services, a true Procurement strategy can, for example, help improve product quality and therefore the company’s competitiveness.
Moreover, where the function excels is in its role in risk management and anticipation. Crises can take you by surprise and completely block the company’s operations. Being able to anticipate and adapt flexibly makes the difference in difficult times, and it is very often what ensures a company’s long-term viability.
Roles that will shift towards anticipation and strategic decision-making with the emergence of AI
The question any cross-functional team is entitled to ask: what will my role be next year, in 3 years, in 5 years…? In reality, Procurement functions already know the answer to that question.
Because yes, we are aware that operational efficiency will be a key topic. Indeed, the emergence of technologies such as AI, process automation, blockchain and data analytics will transform the way procurement is carried out.
What is the value for Procurement in integrating AI and RPA?
The value for the Procurement function in integrating these technologies will be to improve operational efficiency, visibility across the supply chain, and data-driven decision-making.
According to a study by Axys Consultant, only 15% of Procurement Directors have already implemented AI applications, and 43% say they have started looking into the topic.
Still according to the Axys Consultant study, the main objectives sought with AI for Procurement Directors will be:
- Improving data quality and optimising procurement processes (84%)
- Saving time on operational activities (82%)
- Risk prevention and improving supplier knowledge (77%)
- Improving internal customer satisfaction (70%)
In the months ahead, Procurement functions will pay particular attention to document analysis and automated document generation, as well as conversational assistance such as chatbots/voicebots.
CSR: a major challenge for Procurement functions
Companies’ shift towards a more eco-responsible approach will push the procurement function to integrate sustainability and social responsibility criteria into the sourcing process.
Customers who are increasingly attentive
Today, many companies assess the carbon impact of their purchases and choose their suppliers based on these impacts. Likewise, more and more customers work only with suppliers that are approved in their own systems, using selection criteria often based on those suppliers’ carbon impact.
A matter of image and reputation
Non-responsible purchasing practices can create risks for the company, such as reputational damage, legal disputes or supply chain disruptions. By integrating CSR criteria into the purchasing process, companies can better manage these risks by selecting suppliers that comply with ethical, social and environmental standards.
Supply Chain and Procurement, like Tic & Tac
Supply Chain and procurement are closely linked, as procurement plays a crucial role in managing and optimising the supply chain. Procurement functions are responsible for acquiring the raw materials, products and services needed for the production and distribution of goods.
By choosing the right suppliers, negotiating favourable contracts, and ensuring the quality and reliability of purchased products and services, procurement helps guarantee the efficiency and profitability of the supply chain.
Likewise, an efficient Supply Chain requires close coordination with procurement to ensure that material and information flows are optimised throughout the process, from ordering to final delivery. As a result, effective collaboration between procurement functions and the Supply Chain is essential to ensure the company’s smooth operation and competitiveness.
The geopolitical context: a major challenge for tomorrow
Beyond the challenge of AI and automation for Procurement teams, today’s and tomorrow’s geopolitical context could represent a major challenge for Procurement and the Supply Chain.
Currently, with the war in Ukraine, exports have been heavily impacted, affecting prices. Known as a major grain exporter, the country saw its production fall by 29% between 2022 and 2023 according to the Council of the European Union. The reason? Its logistics were hit, forcing it to stop exports.
This example perfectly demonstrates the close link between the Supply Chain and Procurement. It highlights the importance of the geopolitical context. In an increasingly tense multipolar world, it is undeniable that tensions remain steady.
Procure-what? Here’s our take
At Althéa, we see it every day: Procurement is curious, Procurement is questioning, and above all, Procurement is changing.
It is still a little early to talk about a “new era”, but there is no doubt that a significant transition is underway towards a more sustainable model.
More environmental values, more social and collaborative criteria.
The function will consider more sustainable models such as the circular economy in order to adapt to tomorrow’s environmental and societal challenges, and leave behind yesterday’s role.
To find out more about the procurement function: Consulting firm for optimising your procurement processes | Althéa (althea-groupe.com)
